Homebuyers hold more power to negotiate in Austin, even as high interest rates inhibit first-time buyers.
The Austin housing market is shifting, as prices and sales volume have decreased, while inventory and days on market have increased, the Austin American-Statesman reported, citing February data from the Austin Board of Realtors.
Home prices in greater Austin skyrocketed last year, with homes lasting a day or two on the market. Limited inventory gave sellers the advantage, but brokers have plenty to be pleased about in a market pivoting to buyer friendliness.
“Remember, a healthy housing market isn’t defined by breaking records every month, but by market activity that’s steady-paced and sustainable,” said Ashley Jackson, Austin Board of Realtors president, in a news release.
Homebuyers will likely pay more than what they would’ve last year because of rising interest rates, said Charles Heimsath, president of Capitol Market Research.
“Based on the median sales price of $436,419, a typical home buyer would have to pay $2,981 per month for a 30-year fixed rate mortgage at 6.7%,” Heimsath told the outlet. “This compares with $2,210 for the same house at 3.5% interest (from last year).”
High interest rates will cause buyers to seek less expensive homes, and sellers will have to delist properties or reduce prices, Heimsath said. First-time home buyers are especially affected by the current market conditions because they typically have less monthly income, he said.
There were 577 home sales within the Austin city limits in February, down 30 percent compared to February 2022. The dip for that time frame was 17 percent in the surrounding counties.
Across the region, homes were on the market for an average of 84 days in February, up 29 days on the market from a year prior. Pending sales dropped nearly 10 percent to 2,465 transactions in the February annual comparison, the outlet reported.
Rising interest rates and shocking property valuation hikes are factors causing sales to slow, but the influx of new residents, ample job opportunities and an overall strong economy provide optimism, the outlet said.
The fate of Austin’s housing market is tied to the overall economy, so if well-paying jobs continue to be created, people are more likely to purchase a home despite high interest rates, housing analyst Eldon Rude, principal of 360° Real Estate Analytics, told the outlet.
“Will job growth remain positive, or will the region see an increasing level of layoffs? With so much of the homebuying decision tied to consumer confidence, Austin’s economy remaining resilient in the coming months will be crucial to the health of the housing market,” he said. “History shows that people will still buy homes in a high-interest-rate environment if they feel confident about their jobs and finances.”
—Quinn Donoghue
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