For more crisp and insightful business and economic news, subscribe to The Daily Upside newsletter. It's completely free and we guarantee you'll learn something new every day.
"Everything's bigger in Texas." The often hyperbolic saying is right on the money when it comes to home prices in the capital of the Lone Star State.
This year, Austin, TX has seen 2,700 homes sell for $100,000 or more above their initial listing price, according to new data from brokerage Redfin. It's an extreme case of the nationwide phenomenon that's putting pressure on housing and rental markets.
Tech and remote workers residing in expensive markets like San Francisco and New York are starting to view Austin — which grew 22% in population size in the last 10 years and is now approaching a million residents — as an ideal blend of renowned music, arts, and cuisine and a lower cost-of-living. In May, a record 50% of U.S. homes sold above their list price, according to Redfin, but demand in the Texas capital has seen homes achieve even more colossal premiums:
- In April, 74% of homes sold in Austin went for above the asking price, selling on average for $35,000 above listing, according to Redfin.
- In the last 12 months, the amount of homes that sold at least $100,000 over the asking price has grown 10 times in Seattle and 5 times in Oakland. In Austin, that number grew 57 times.
"As a consumer, it seems scary to be in a housing market where the home you're looking at is priced at $400,000, then, when you go to put in an offer, you realize the true price is $500,000," Daryl Fairweather, Redfin's chief economist, told The Wall Street Journal.
Renting's No Better: The hypercompetitive conditions of the housing market are impacting rentals, too. In the second quarter, the number of occupied U.S. rental apartments grew a record 500,000 year-over-year. Supply is so scarce (occupancy last month hit a new record high of 96.9%) that some apartment hunters are checking into hotels to bridge the gap between abodes. Costs are surging, too; rent was up 17% on new leases in July compared to the price previous tenants paid, reaching the highest level on record according to RealPage.