Sales of single-family homes in Austin in October mark a 16 percent rise in sales from the same time last year – setting the all-time record for the month, according to the Austin Board of Realtors. ABOR said single-family home sales reached 2,403 in October, up from 2,069 in October 2013 and three units fewer than September. The report also noted pending sales rose 9 percent to 2,255 from a year previous.
Inventory for single-family homes grew to 6,170 in the existing market, which means more opportunities for purchases for homeowners and investors. Bill Evans, 2014 president of ABOR, said there were some positive signs for the growing health of the Austin real estate market, but noted areas for improvement.
“This additional housing inventory is encouraging, but we’ve got a long way to go before homeownership options and availability meet demand in our city,” Evans said in a written statement. “To get us there we need a regulatory environment that supports all types of affordable housing options.”
Renting vs. buying for Austin residents
While there are fewer options for homebuyers, and perhaps as a result of this, a number of Austin residents may want to rent instead of buy as they wait for the market to return to full strength.
Trulia said Austin residents have the challenge of deciding whether to buy or rent depending on the direction of the market, Austin Business Journal reported. One of the obstacles for first-time homebuyers is the mortgage approval process. This is especially difficult for millennials who may not have the savings or financial standing to pay for a down payment and the monthly mortgage bill.
Jed Kolko, chief economist of Trulia, said millennials may have to resort to loans from the U.S. Federal Housing Administration, which require as little as 3 percent down for a home. However, changing regulations and high debt may make it harder for millennials to be qualified based on their credit score.
“For a millennial with little savings and no Bank of Mom and Dad, an FHA loan might be the only option,” Kolko said. “If our hypothetical twentysomething is not in a tax bracket that makes itemizing worthwhile and only stays put five years – those young people are restless – buying ends up costing more than renting in 27 of the largest metros.”
As more younger buyers consider renting in Texas’ capital, investors may want to think about purchasing Austin investment properties to meet demand for single-family rentals.