When it comes to Texas housing prices now, you can put historical data in the trash can

Austin buyers are paying nearly 70% more than historic prices would have suggested. Prices are also way up in San Antonio, DFW and Houston.

By Laura Rice & Yvonne MarquezJune 10, 2022 2:00 pm, ,

Housing prices across Texas remain very high, even as the Federal Reserve has increased interest rates for borrowers.

A new analysis from Florida Atlantic University shows the Austin housing market is nearly 68% above the historic trend line. A recent Axios headline put it starkly: How much are homebuyers in Austin overpaying?

Reporter Asher Price has been keeping an eye on home sales in other Texas markets too. He spoke with Texas Standard about how the pandemic has increased housing prices and what it means for Texans buying homes now. Listen in the audio player above or read the transcript below.

This transcript has been edited lightly for clarity:

Texas Standard: The first thing readers see when they click on your story is this graph of “actual” vs. “modeled” home prices in Austin. What’s that?

Asher Price: Basically, if you’re buying a house now in Austin, you’re paying a lot more than historic trend lines would have forecasted. You’re paying basically 70% more than historic prices would have suggested. And you’re seeing big differences in San Antonio, Dallas, Fort Worth, Houston, as well.

When you say “big differences,” you mean big differences as compared to the projected prices?

Exactly. That’s right. I think in San Antonio and Houston, you’re paying 30% more than what historic pricing would have suggested would be the case. And in DFW, it’s about 50% more.

Given the current state of markets post-pandemic, how much is history really a reliable guide?

Yeah, I think you can basically put history in the trash can right now because of forces that are at work that would not have been in play five, 10, 15 years ago, partly because of the disruption of the pandemic, which has changed the way people want to live and where they want to live. And because of technological change, we can now work remotely.

So that means that people who would have been confined to the coasts, to New York City, to San Francisco, to L.A., can now buy a home in Austin, TX or Houston or wherever. So that’s just kind of changed the whole calculus for home buying. It’s changed who the home buyers are because you have people who may be used to more expensive property on the coasts, who might have deeper pockets, who are now coming into these Texas cities and spending.

What are the experts saying about the risks for folks buying right now?

People who are buying right now are a little exposed because of the higher interest rates. The market may cool a little bit. However, in housing parlance, the supply is inelastic. That means you can’t build houses very fast. It takes time. And of course, with big supply chain issues going on globally, it takes even longer.

There are some underlying things that will keep the housing market pretty strong throughout Texas, just involving simple supply and demand. But experts say that we should start seeing housing prices stagnate, if not fall a little bit.

I think if you bought your house in the last few years, regardless of whether people say you overpaid or underpaid, you’re probably pretty relieved to have bought your house. So if you’re looking to get into the housing market now and flip a house in the next year or two, just because housing prices have been shooting up over the last two years doesn’t mean that they’ll shoot up over the next year or two.