Austin-Area Leasing Market Echoes Steady Home Sales: Chuck Farr’s February 2025 Newsletter
Spring is almost here--homeowners, tenants, prospective buyers, and real-estate investors. If you bought a home last year and if you live there (it is not an investment) and you did not already do so, make a note to file your homestead exemption in February or March 2025 (also check on disability and over 65 exemptions if applicable) at your local county tax office to save money on property taxes. It can save you thousands of dollars this year.
Market Backchannel: As we move further into the new year, the Austin area real-estate market shows continued signs of strength with slightly more January sales year-over-year (demand remains steady) and a small downtick in mean prices. The latest January Central Texas data from my local realty network shows continued resilience as we head into Spring and move into historical seasonal patterns (March through May are considered peak selling months). Months of inventory increased to 4.7 or 5.6 months (depending on the source) in January, indicating a balanced market. Average days on market hover around 95 days. Current 30-year mortgage rates near 7% continue to throttle demand for some buyers. Tech hiring remains slow, and job postings in the Austin metro area have dropped 18% year-over-year; this metric will affect demand growth until it rebounds.
AI on the Economy: I am test driving a new section for the monthly newsletter. With the continued competing pressures of jobs, inflation, and interest rates, I was wondering if we are in a recession. So I asked the xAI interface Grok version 3.0 the following question: “Is America in a recession now?” Here is what the large language model (LLM) said in response:
“As of February 20, 2025, the United States is not officially in a recession based on the most commonly accepted economic definitions and available data. A recession is typically defined as two consecutive quarters of negative GDP (Gross Domestic Product) growth, though the National Bureau of Economic Research (NBER), the official arbiter of recessions in the U.S., considers a broader range of indicators, including employment, industrial production, and income.
“Recent economic data suggests the U.S. economy remains resilient. For instance, GDP growth in 2024 was strong, with the third quarter showing an annualized growth rate of 3.1%, according to the U.S. Bureau of Economic Analysis (reported in late 2024). While some forecasts indicate slower growth in 2025—such as the Federal Reserve’s projection of 2.1% median GDP growth—there is no indication yet of consecutive quarters of decline. Additionally, unemployment remains relatively low (around 4.1% as of late 2024 per Vanguard’s analysis), and consumer spending continues to support economic activity, though some sectors like housing and manufacturing have shown signs of softening.
“Economists’ opinions vary on the immediate risk. Goldman Sachs estimated a 15% chance of a recession within the next 12 months as of late 2024, aligning with historical averages, while J.P. Morgan raised their probability to 35% by year-end 2024 but still sees no imminent downturn. The New York Fed’s recession probability model, based on the yield curve, suggests a 29.4% chance by December 2025, but this is a forward-looking estimate, not a current state. Meanwhile, consumer confidence has weakened somewhat, and inflation persists above the Fed’s 2% target (core PCE at 2.7% in late 2024), but these factors alone do not confirm a recession.
“Sentiment on platforms like X reflects mixed views, with some users claiming a recession has begun or is imminent, citing layoffs or credit stress, though these claims lack official backing. The broader consensus among experts, as of now, is that the U.S. economy is slowing but not contracting. Without two quarters of negative GDP growth or a formal NBER declaration, America is not in a recession today. However, economic conditions can shift rapidly, so ongoing data—such as upcoming GDP reports or jobs numbers—will be critical to watch.”
In the News: According to the Austin Board of REALTORS® and their service, Unlock MLS, “closed sales across the Austin-Round Rock-San Marcos MSA saw a slight increase year-over-year of 1.1% to 1,761 sales, according to the latest Central Texas Housing Report released by Unlock MLS. While shifts in affordability and inventory continue to shape the market, the rise in active listings–up 17.0% from last year–indicates increased opportunities for buyers. At the same time, a notable 11.7% year-over-year increase in closed leases highlights the persistent demand for rental options as many navigate affordability challenges.
“Clare Knapp, Ph.D., housing economist for Unlock MLS and the Austin Board of REALTORS®, noted that rising mortgage rates and ongoing affordability challenges have driven first-time homebuyers to lease single-family homes as a more accessible option.
‘“The single-family leasing market is often a more affordable option for potential homebuyers, and with median rents stabilizing at $2,195 in the MSA, we’re seeing a shift in dynamics. While home prices increased nearly 40% from 2019 to 2024, rents rose a more moderate 25%, making leasing a relatively more accessible option–particularly for potential first-time buyers. However, while leasing provides short-term affordability and flexibility, renters miss out on the long-term financial benefits of building equity through homeownership. With more inventory in both the for-sale and for-lease markets, potential homeowners and renters have more options than ever before. This dynamic allows them the opportunity to plan for a transition into homeownership while still benefitting from competitive lease options.’
“Brandy Wuensch, 2025 Unlock MLS and ABoR president, emphasized that Unlock MLS’ expansion of the Central Texas Housing Report to include single-family residential leasing activity gives a more transparent and robust picture of the region’s real estate market.
‘“With the increased leasing activity we’re seeing alongside home sales, it’s clear that both buyers and renters are actively engaging with Central Texas’ housing market.”’
“Austin-Round Rock-San Marcos MSA
“January 2025 - For Sale
1,761 – Residential homes sold, 1.1% more than January 2024.
$409,765 – Median price for residential homes, 4.7% less than January 2024.
3,690 – New home listings on the market, 20.6% more than January 2024.
9,616 – Active home listings on the market, 16.5% more than January 2024.
2,202 – Pending sales, 7.5% less than January 2024.
5.6 – Months of inventory, 0.9 months more than January 2024.
$942,713,638 – Total dollar volume of homes sold, 0.2% less than January 2024.
92.3% – Average close to list price, compared to 91.9% in January 2024.
“January 2025 - For Lease
1,871 – Closed leases, 11.7% more than January 2024.
$2,195 – Median price for rent, 1.3% less than January 2024.
2,425 – New lease listings on the market, 10.7% more than January 2024.
4,246 – Active lease listings on the market, 8.0% more than January 2024.
2,179 – Pending sales, 13.9% more than January 2024.
2.6 – Months of inventory, 0.1 months less than January 2024.
$3,513,079 – Total dollar volume of leases, 4.8% more than January 2024.
95.4% – Average close to list price, compared to 95.1% in January 2024.”
For folks in the Austin MSA area, if you had bought a house in 2018 at the median price of $305K, its value would have increased to $502K by the May 2022 peak. Median price for the MSA is now near $410K, so you would have still done well investing in Central Texas real estate. Check the latest Central Texas Housing Report for more details and data for the city of Austin (Travis) and surrounding counties.
Winter Home Maintenance Tips: Winter is here--and has its own home maintenance checklist in Central Texas. Here are a few items to consider during February:
· Outdoor Tasks:
o If you are considering doing some big jobs, like HVAC, external painting, or roofing repair/replacement, remember that this is the slow season for many contractors, and you may get a better price and quicker scheduling now.
o Don’t forget to protect your people, pipes, plants, and pets when freezes come to town. Web search for “4Ps winterization” for details.
· Indoor Tasks:
o We put water heaters in this list randomly. It is good to remember to flush your water heater at least once per year to clean out sediment and keep the system in optimal condition. Annual maintenance will increase the number of years your water heater will function. You can flush your water heater with help from a YouTube video or hire a licensed plumber to do it. A plumber will charge at least $150 to flush your heater, but remember most professional replacements will start at $2000, probably more. Spend a little time or money every year to save in the long run.
o If you have ceiling fans, consider switching the rotation of the blades to conserve energy and feel warmer in cold months. Usually this means running the ceiling fan at a slow speed and switching the rotation from counterclockwise to clockwise in winter months. [[Watch this video for details.]]
o Have your furnace professionally inspected if you did not in the Fall; make sure they check for carbon monoxide leaks. Remember to change out your indoor HVAC filters on a regular schedule.
When considering your real-estate needs and situation in the context of macro-level data, remember that your potential sale or purchase will always be hyperlocal. Let us know if we can help. Issues of this and previous newsletters are located on the Blog tab of my website at www.chuckfarr.com.
