There are a lot of buyers out there waiting to buy. Waiting to see if there will be a crash. Waiting to see if prices will come down.
2022 started off HOT but with rising rates and inflation, it cooled dramatically. Price reductions are happening on homes priced above current market value. Comps from earlier this year are not a good barometer of the current market, so price accordingly. The more inventory, or competition, the more likely prices will need to be reduced to attract buyers. Areas and neighborhoods with high desirability and low inventory will fare better. Areas where new construction is abundant, for resales, it will be tough to compete with builders who have the ability to slash prices to move homes. The good news is that Austin is still growing and demand is still high, even if there is a lull in the market. For buyers who had a hard time competing with multiple offers and cash buyers, it’s a great time to take your pick of a house and negotiate a good deal. For sellers who have owned a long time, you will still get a good return. Maybe not as much as earlier this year, but there are still buyers if you price it right. If you haven’t owned that long, just hang in there. Your investment is sound as the Austin metro area is positioned for future growth and continued desirability. Take the media hype with a grain of salt and just do what’s right for you in your unique situation.
As full-time real estate professionals, we are in the market. We have experienced first hand the unprecedented demand for our area. We are monitoring the changing market closely for buyers and sellers. We have helped many buyers win bidding wars and have helped many sellers get top dollar for their homes. All while keeping a close eye on trends, attending local economic updates, reading Austin Business Journal, watching information from local Chambers of commerce and even following trends on social media.
In a recent economic update from Independence Title hosted by local economist Mark Sprague, the outlook for the Austin metro is still very good. A strong job market combined with strong demand for housing and low inventory will keep prices stable, even with a temporary lull. Interest rates are expected to rise, although not dramatically. They are still at historical lows. See Mark’s full presentation here ITC Austin Whats on the Horizon Jan 2022.
So what is the cost of waiting to buy?
Of course no one can predict the future, but what we can do is look at all the data and facts. Local economic experts do not foresee a slowdown in Austin’s growth during 2022 and for several years beyond that. Even with single digit appreciation, with rising rates, it will be more expensive to buy a home next year and you will have built no equity. Why pay rent and put nothing into your nest egg?
So, if you think Austin has gotten “too expensive to buy” and you are waiting for prices to come down, consider looking at Austin prices (especially the suburbs) compared to other desirable cities in the country. Compared to Seattle, San Francisco, Washington DC, New York and other business hubs, our prices still have room for growth long term, especially since many of the major projects like Apple and Samsung haven’t even been built yet. If our prices go up another 10% by the end of next year, it will cost you a lot more to buy a home, especially with rising interest rates.
The last 2 years have been a wild ride in the Austin market. With people being able to work from home and many major announcements for companies relocating to the Austin Metro, our prices skyrocketed. There was simply not enough inventory to quell the demand, which resulted in bidding wars and rapidly rising prices. The reality is that Austin was undervalued anyway for a major metro area with major job growth, good schools, mild weather and overall nice quality of life. There have been a lot of people eyeing making a move to Austin for many years and everything lined up to make it happen. However, panic buying following media hype cause things to get overinflated in my opinion.
If you are thinking of buying, let’s meet to discuss a game plan and see if buying now would be beneficial in your situation. My lending partners can run scenarios for you to see if it’s the right time for you.
Thinking of Selling?
For sellers, if you think the market is still hot, better look closer. While it may have seemed like people will buy anything at any price earlier this year, buyers are now very selective. Buyers are definitely more cautious, especially since homes are significantly more expensive than they used to be and with the uncertainties of the economy, they worry about overpaying. Today’s buyers are having to come in with a lot more cash which means they have less wiggle room for improvements. Property taxes are also a lot higher (based on increased values) so that can affect their purchasing power. One thing that hasn’t changed; most buyers don’t want a big project – unless the home is priced significantly under market. There are ways to maximize the appeal of your home without spending more than your return on the investment. If you are thinking of selling, let meet to evaluate the market and your home’s salability in today’s market. More more info about the home selling process, see our Listing Services and the 28 Things that Add Value.
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