More On 2021 Madness

In my last four posts this year you’ve been reading about the brutal scene this year for buyers. I have a little good news though, there is hope. After about two dozen aggressive offers since the turn of the year, I finally have a buyer client that has won an offer tonight! We got it at 45k over list, which might sound shocking in normal times, but it’s actually the LOWEST I’ve heard of anyone winning an offer in 2021. I’ve been making a VERY concerted effort to ask all seller agents about their bidding situations after it’s over. For updated, move-in-ready homes in higher-rated school areas, offers are going from 70-95k over list price every time without exception, 25-60 offers, waived appraisals, and other seller favored terms. The less desirable homes are getting only 5-15 offers. If you’re a buyer, those are the homes you’ll want to go after, probably the only ones you’ll have a shot at. The problem is you won’t always know which ones those are, so you’re going to have to be patient and place a LOT of offers.

Let’s think a little bit about where this is going though, from a broader perspective. If you have 3/4’ths of median priced homes in Austin metro going for 75k+ over list price, that’s 20% appreciation. There will be a few lower, and a few higher, but in the end you could LITERALLY see over 20% appreciation IN ONE MONTH in some parts of this city. Now I concede that some of my experience may be a bit in a silo, working in some more desirable areas of town than others, and at price points more affordable than others (thus more prospective buyers). That in mind, let’s say my anecdotal experience (even though I’m collecting lots of data) represents only PART of the picture. Let’s say it only represents half of the picture. I’m still going to go out on a limb and guess that if the second half of the month looks like the first half, we will see over 10% appreciation here, IN ONE MONTH! Who has ever heard of such a thing?! Some of you from other cities, can you educate me? Has anyone else from out of state ever HEARD of 10% appreciation in one month?!

And what if that continues?! Is that possible? That would amount to more than 100% appreciation in one year, if it did. Is that even POSSIBLE? I just don’t know where this is going, but it’s blowing my mind. If anyone knows any scholarly articles on the subject or case studies from other cities during strange short periods, I’d love to read about them. As for Austin, and Texas in general as far as I know, we’re just at a complete lack of precedence for something like this. Many will say “well, of course this can’t last” and I’m sure they’re right, but you can still slow down from this pace by a LOT and put up ridiculous numbers. ABOR hasn’t released their final 2020 numbers, but I’ve seen other number crunchers declare that 2020 produced more than 23% appreciation in the metro. Well, 2021 so far makes last year’s market look like child’s play by comparison. Can you come out of the gates THIS strong and not put up a number that high or better again?

Here’s a prediction. Although we’ve been “hot” for several months, we’ve only been at “scalding” level for about two weeks by my estimation. These ridiculous contract prices have not closed yet, so reporters can’t fully report on it without hard numbers yet. Indeed, they’re hearing things, but don’t want to put it to print until it’s verified, and able to measure it in a macro sense. In the next 2 weeks time, these sales are going to start closing, and you’re going to see this all over the news. It also won’t be only local. We’ll be making a lot of national press here. You’re going to see people talking about this much more eloquently than I do on my blog, and people will be shocked.