Ring in a New Year 2024!
Ever ridden a roller coaster at a county fair? Highs and Lows, and you're dizzy when you disembark and put your feet back on solid ground.
Sounds like the 2022 and 2023 real estate market in the Central Texas/Austin area, as well as in much of the USA.
2022 had historically low interest rates in high2% and 3% range, negligible inventory of available homes, and sales at breathtaking paces for way over asking prices. Then mid-2023 happened, and the Federal Reserve Bank decided that doubling mortgage interest rates over the 3rd quarter of 2023 would be good for the US economy to lower inflation. It also had the effect of knocking out many buyers, who soon realized the effect that the higher interest rates would have on their monthly mortgage payment. Combine that with the higher property taxes that tended to track with higher market values, and the double hit led many buyers to pause or pass on the goal of buying or moving. And some with those attractive 2.8% mortgages saw that rate as an asset, and they didn't want to give it up, so they stayed put.
Austin Board of REALTORS economist, Dr Clare Losey, said about November 2023," A rise in mortgage rates reduces buyers' purchasing power, so a moderation in home prices helped to offset some of the decline in affordability."
Well 4Q2023 ended the year with rising inventory, and those rates started to come down slowly and ended the year in the 6-6.5% range, and many buyers woke up and decided 2024 would be their year to try again, and showings are up and sales are again regaining traction, given the lower price points combined with the reversal in interest rates.
City of Austin November median price was $518,000, with listings up 20.4% more than Nov 2022, and days on market (months of inventory) is 3.8 months, up 1.2 months more than Nov 2022. So a seller should be prepared to wait a little longer, because the buyers have more to look at and can be a little more selective this time around.
So let's leave that roller coaster ride and head to the pool. Jump in; the water temperature is fine!
What else drives home sales in the Austin area? JOBS JOBS JOBS. Today's Austin American-Statesman cover page lead headline was "Austin tech jobs up 40% in two years." Yes, the Brookings Institution report said that while there were " significant layoffs in the Bay Area", Central Texas saw a 40% growth in tech jobs. Austin has a great economy. Our quality of life is a major draw, and even with prices higher than in 2020-2021, our home prices are still not as high as on the Coasts!
We welcome 2024 with optimistic hopes.
