It’s important to adopt fresh tactics and strategies to succeed in today’s market. Partnering with experienced agents and keeping up-to-date with the latest market trends in your area can help you make informed decisions that set you up for a successful future.
The Austin housing market is facing some unique challenges in 2023. In this blog post, we'll take a closer look at what's happening in the market and explore some potential solutions for buyers and sellers alike.
Although home prices in Austin have fallen by 18% since May 2022, the market is still favoring sellers due to flat housing inventory. The median home price is now at $450,000 as of January. The biggest hurdle for the Austin housing market is the shortage of homes for sale compared to the number of buyers who are looking to purchase. While there has been a slight increase in the number of homes available compared to last year, it still falls short of pre-pandemic levels and has remained unchanged from last month. According to the Austin Board of REALTORS®, when looking at month-to-month changes from December 2022 to January 2023, sellers see opportunity in this market since new listings increased 63% and buyer activity picked up in January with an increase of 32% in pending listings.
So, what happened in the Austin housing market in January 2023? Let’s take a closer look:
- The number of homes for sale increased by 462% year over year, driven by homes sitting on the market for a longer time.
- The average days on the market increased to 76 days, up by 47 days, compared to a year ago. However, Realty Austin listings are selling on average in 30 days.
- The number of new listings entering the market increased by 16%, compared to a year ago.
- The number of homes under contract fell 16%, and the number of homes sold fell by 27%, compared to a year ago.
- Monthly inventory levels are at 2.7 months, compared to 0.4 months in January 2022.
- Median home sale prices decreased by 6% year over year to $450K.
- Over 7,000 homes are for sale and over 3,000 homes have reduced their price in the past 30 days.
Source: Austin Board of REALTORS®, Austin-Round Rock Metropolitan Statistical Area.
Why is housing inventory such a challenge right now?
Homeowners are feeling rate-locked, meaning they have such low mortgage interest rates that they fear being able to find something to buy if they move in a higher interest-rate environment. According to the Federal Housing Finance Agency (FHFA), the average mortgage rate for current homeowners is less than 4%, while the standard mortgage rate offered to buyers today is over 6%.
Despite rate-locked homeowners, motivated buyers still need and want to move. The current market can work to your advantage since housing inventory is still lower than pre-pandemic levels. This means that the market is still in favor of sellers, creating a challenging environment for buyers to find available homes. However, by working with an experienced agent and staying informed about the latest market trends, buyers and sellers can succeed in today’s housing market.
Will home prices continue to decline?
While we cannot predict the future with certainty, it's important to consider that the Austin housing market is still in a seller's market due to low inventory levels. This means that home prices may stabilize because there are fewer homes available for sale than the number of buyers who want to purchase. As a result, competition among buyers drives up demand and prices. On the other hand, with the number of new listings entering the market increasing by 16% compared to a year ago, and mortgage rates expected to come down this year, we may see more homes available for sale.
What’s the outlook for the Austin housing market in 2023?
Dirk Mateer, an economist and University of Texas professor, believes that Austin’s technology companies and housing market are two major drivers that are currently under duress. However, he also thinks that the Austin metro area, including Travis, Williamson, Hays, Bastrop, and Caldwell counties, is well-positioned to weather any economic challenges that may come in 2023 without significant pain. One reason for this is that unemployment in Austin is expected to remain low throughout the year, with the current rate at 2.8% and predicted to rise slightly to around 4%. Low unemployment is an important factor to consider for the housing market because it can increase demand for housing, leading to higher home prices and lower foreclosure rates. Overall, this suggests that the housing market in Austin may remain relatively strong in 2023, despite the challenges faced by its major drivers.
Are there signs of new life?
Brokers are expressing cautious optimism about a rebounding market. According to Jolene Weinstein, the Chief Operating Officer at Realty Austin, “Agents are reporting that buyers are once again calling and moving forward with home purchases. In fact, in some areas, multiple offers are being made, giving hope that sellers will feel confident to list their homes again.” This new interest from both buyers and sellers may indicate the potential for a turnaround in 2023. However, despite these positive developments, the current state of the housing market and the economy at large remains uncertain due to factors such as low housing inventory, rates, and inflation.
Regardless of the challenges the Austin housing market is facing, there are still opportunities for buyers and sellers, including creative financing solutions and affordability resources. Lenders and builders are also offering options like mortgage rate locks and mortgage rate buydowns, and motivated sellers may be willing to offer concessions to help make the sale.
If you're thinking of buying or selling a home this year, it’s essential to consult with a The Keenan Property Group for personalized insights and guidance.
