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What's going on with the Austin Market??

The Austin real estate market has been crazy since Covid hit in spring of 2020. First, everything went deathly still... then slowly momentum started to build on the buy-side, making it an extreme sellers' market for about 2 years. There was very limited supply (builders struggled with supply chain, permitting, etc) and extraordinary demand (150 people/day moving to the area, PLUS investors got wind of the appreciation and cash flow potential in central Texas). Roughly one in four SFH bought in Austin was purchased by an investor of some sort.

More recently we've seen a fairly significant swing in the other direction. A ton of new supply (mostly new construction and folks trying to time the peak) has come on the market, and demand dipped (higher interest rates and general economic uncertainty to blame here). Now we are seeing more and more price drops - in June closed prices were lower than original list price for the first time in a LONG time. Where we had been seeing less than two weeks of inventory, we now have more than two months' worth.

Now, all that said, six-months' worth of inventory is considered a "balanced market", where neither the buyer nor seller has a systemic advantage. So, we are still in what is considered a sellers' market... but, I think buyers have a unique and somewhat limited opportunity for the next 8-9 months, or so. Let me tell you why.

Between now and the spring of 2023, I think we will continue to see supply coming online, especially in the $350K-$600K range mainly east of I-35. I think rates will rise, though not as dramatically as the first half of 2022. My prediction is a mild recession for the overall economy, and rates will level off and maybe even come down, to settle in the high-fives or low-sixes. Once inflation is under control and growth starts up again, I see demand coming back for Central Texas - perhaps not the raging torrent of buyers that we saw from June of 2020 until May of 2022, but overall strong demand.

That makes the next few months a great time to buy in Central Texas. I'd also like to point out, if you're worried that rates could come back down to the levels that we saw last year - you can always refinance into a lower rate if one is available. But, if prices start rising again in 2023, who knows when they will stop.

These are my thoughts and projections - probably worth what you paid for them! :-) But, I've been in this town and this business for a while... time will tell. Interested in chatting about real estate or the economy (or football)? Hit me up!