These days, if you want to buy a home, you might find yourself on a mile-long waiting list. Real estate prices are skyrocketing in the U.S., not to mention in the local Austin/San Antonio markets. So what is going on?
Turns out, it’s a combination of things as our world continues to repair itself from the pandemic: price increases, inventory challenges, skewed supply and demand, and production limitations. Staying up to speed on these real estate trends can be a daunting task. But we’re here to help.
If you are a real estate agent, or you’re currently interested in buying or selling a home in these current market conditions, read on. We setup a panel with industry experts to help break things down.
First, let’s dig a bit deeper into the Texas Real Estate Market. We are dealing with an incredibly atypical real estate market right now. As Austin-based expert Rachea Pendley, Division Sales Manager of Meritage Homes, says, demand for homes is putting an incredible burden on supply. Many builders are even limiting contracts based on their production capacity – a capacity that is getting far outstripped by the demand. Meanwhile, production and materials costs are continuing to rise alongside the supply chain, putting extreme stress and limitations on builders. Lumber, piping, glass, labor: all these materials are costly, and the price is climbing, sometimes by thousands of dollars overnight. You may be asking yourself why? Unfortunately, this is because many vendors and suppliers are still suffering from pandemic manufacturing delays and shutdowns. This increases prices and creates a never-before-seen scarcity of materials all along the supply chain.
Builders are overwhelmed with backlog and demand, meaning they either have to slow sales or force buyers to bid up prices. Builders must negotiate materials from vendors not just for one home, but for thousands of homes. The demand for buying a house is far outstripping that capability, making it prohibitively costly for them to be able to build in the first place. As a result, many Texan home builders are putting a hold on the number of contracts they will even accept.
So, what kind of market is this creating? Far from being a buyer’s market or a seller’s market, the market today is a hyper-seller’s market because of the pandemic conditions. Usually, the supply relative to the demand of for-sale homes determines whether it is a buyer or seller’s market. The soaring cost of materials and shortage of workers are continuing to slow construction, creating a perfect storm of events contributing to today’s hyper-seller’s market.
Put simply, as local expert Chelsea Timmons of Tri Point Homes says, inventory is incredibly limited while demand is incredibly high. The builder’s job is not just trying to sell homes now, but rather focusing on getting those homes built in the first place.
So, what does this look like for consumers? Texas builders are turning towards a practice that is becoming increasingly common across the country: taking quick bids for lots and then picking the best price. Bidding can be a way to circumvent bloated waiting lists, at least. For example, Tiffany Amore of Highland Homes shares that they have a waitlist surpassing 140 for merely 10 available lots. This type of backlog is highly unheard of and forcing new home builders to create new ways to fulfil the supply demand. Sadly, with prices continuing to increase, many people on these waitlists are simply priced out.
Because of these unique challenges (and others) that we continue to face, if you are considering buying and selling a home in today’s atypical real estate market, we highly recommend consulting a real estate agent. Fortunately, now you can match directly with some of the best practicing agents in the U.S. for advice tailored to your needs, in Austin or San Antonio.