There are a lot of moving parts in the Austin real estate buyer’s market. Interest rates, mortgage qualifications and structures like ARM and fixed-rate versions, new construction and more particulars vacillate this way and that. Yet perhaps the greatest impact in our region rests in supply and demand.
A Housing Shortage Creates a Seller’s Market
The shortage of houses in the greater Austin area in recent years created a “seller’s market”, with the folks in the selling position heavily influencing prices, no matter the amenities. Bidding wars and homeowners accepting sales prices considerably above the listing price were common in this environment.
But the winds have shifted. There are more homes for sale than buyers, and new construction has slowed down. House selling prices are down 1.6% from this time last year. Large houses with 4 or more bedrooms have seen a slight increase, but across the board, the 1, 2 and 3-bedroom houses have fallen by 4.2% to 6.4% and more. The city of Austin is on the low end at 1.6% down, while 6 miles away in the suburb of West Lake Hills, home prices have sunk by 12.1%. Homes are on the market a little longer, and buyers have more leverage in making offers and negotiating details in their favor.
How Austin Transformed into a Buyer’s Market
While Austin remains a very hot spot, appealing to all generations with copious jobs and entrepreneurial opportunities in private and public sectors, the real estate market has drifted toward a “buyer’s market” for having too many houses listed for sale. The phrase “buyer’s market” alone rings loud and clear to actively looking home buyers, as well as potential home buyers. Home buyers already on the prowl for a new residence may not have as much time on their side with a new job to show up for, a family with kids who need to enter school and others who have sold a home and must settle in fast, while camping out temporarily with in-laws and pushing the boundaries of friendship, paying for a large storage unit and maybe boarding Rufus, the family dog. In an Austin buyer’s market, people can move quickly and get a good price at the same time.
One key component in a buyer’s market, in addition to the active buyer relocating to Austin who needs a place to live, is the potential buyer. These are people across all generations considering buying for the first time, upsizing or downsizing or making the move to Austin. Many have been sitting on the sidelines, watching and waiting for the tide to turn. A buyer’s market represents the ideal time for first time home buyers to get serious about looking around. It also prompts the family who has outgrown their first home to seek out options for a larger home. Then there’s another decade or so up in age which wants to put their money to work for them and showcase it with an upscale property for entertaining and luxury accoutrements.
Boomers and the Austin Buyer’s Market
The oldest generation on the homeowner front, the baby boomers, who have been committed to aging-in-place, are finding the attractions offered nowadays in retirement communities hard to resist. Many can live in a very nice house, a large apartment or condo, with amenities galore, and have continuing care to the end. There is a time, age-wise, when it makes sense to convert property to cash, invest it and let others do the cooking, mowing and driving. As long as they stay in their big homes, it can stifle the entire move upward of the younger decades of home buyers.
The appeal of the Austin buyer’s market is grand. People looking to buy a new residence can take their time, and even go to properties they may not have once contemplated for the size and price. Now, if the price is right, even if a stretch, this would be a good move and investment in the long-term. Their negotiating position is strong for price, closing costs and repairs in advance, especially if days on the market exceeds 60.
The Job Situation in Austin
The job market is still strong in the Central Texas or Capitol Region, with the median household income above the national average. The climate, recreation, blended cultures, food, music and excitement are all still present. Buyer’s market conditions can attract newcomers who thought of relocating to or retiring in the Austin area, but couldn’t quite justify high housing prices.
For the seller, not all is grim in an Austin buyer’s market. The adage “a fast nickel is worth more than a slow dime” may be in play here. Sellers who can evaluate and price their residence fairly in a buyer’s market, with a little wiggle room in the listing price, can fare well to get out from under a house that is too large, too small, no longer suitable for this lifestyle or where a divorce, health issues or death of a spouse has occurred.
Timing is – or can be – everything in the housing market. In the current buyer’s market, we at Habitat Hunters expect to see local folks in all generations looking to move up or downsize, as well as far-flung people seeking a sweet home-sweet-home purchase to relocate for all the reasons people move — new jobs, new opportunities, retirement, mid-life crises, fresh start, warmer climate, and the BIGGER skies and lifestyles for which Texas is famous.
