Austin Real Estate: What Months of Inventory Reveal About Buyer and Seller Markets

October 15, 2024 : In the Austin real estate market, understanding the relationship between inventory and days on market is crucial for both buyers and sellers. The recent report on the area’s zip codes provides valuable insights into these dynamics by categorizing markets as seller’s, neutral, or buyer’s markets based on the Months of Inventory (MOI). This analysis helps guide real estate decisions, providing a snapshot of local supply and demand.

The Months of Inventory metric is a key indicator of whether a market favors sellers, is neutral, or favors buyers. A seller’s market is defined as having less than 4.9 months of inventory, suggesting limited supply relative to demand, which often leads to faster sales and higher prices. In the Austin area, 31 zip codes, or 41% of the markets, fall into the seller’s market category. For example, in zip code 78739, homes have an MOI of just 1.5 months, with a median price around $799,000. Here, homes are selling quickly, presenting a competitive landscape for buyers.

A neutral market is characterized by an MOI between 5 and 6.9 months, where supply and demand are relatively balanced. In the Austin area, 23 zip codes, or 31% of the markets, are in a neutral state. For instance, zip code 78724 in Austin has an MOI of 6.89 months with a median price of $372,500, indicating stability in housing prices and demand. Buyers in these areas can expect moderate competition, while sellers have a fair chance of selling within a reasonable timeframe.

Finally, a buyer’s market is one with an MOI of over 7 months, suggesting ample supply and less demand, which tends to favor buyers through increased bargaining power and potentially lower prices. There are 21 zip codes, or 28% of Austin markets, categorized as buyer’s markets. Notably, zip code 78645 in Leander has a high MOI of 11 months, with a median home price of $550,000. Homes in these areas tend to remain on the market longer, offering buyers more time and choices.

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The relationship between Days on Market and Months of Inventory is significant, with a strong positive correlation of 0.81. This means that as inventory levels rise, the days a home spends on the market also tend to increase. For example, in the high-inventory area of 78612 (Cedar Creek), homes stay on the market for an average of 131 days. Conversely, in low-inventory seller markets, such as 78717, where the MOI is just 2.35, homes move off the market in a relatively short period of 67 days.

For buyers, this analysis provides a guide to navigating Austin’s varied real estate markets. In buyer-heavy areas with higher MOI, there’s more room to negotiate and less urgency to act quickly. Sellers, on the other hand, may need to consider competitive pricing and timing strategies, especially in areas where higher inventory levels correlate with longer listing times. In summary, the Austin real estate market showcases a diverse range of opportunities for buyers and sellers alike. By understanding the significance of inventory and days on market, individuals can make well-informed decisions in this dynamic market landscape​