Austin Housing Market Update for February 2023

Today I attended a very positive economic lunch presentation by David Brown, EVP, with First Continental Mortgage in association with David Weekley Homes. 

So what happened in the second half of 2022?  And how is 2023 looking forward? 

Austin real estate: then and now

Buyers had “Fear of Missing Out” because of excessively low inventory mixed with historically low interest rates.  It was a buying frenzy! Then suddenly the FED started raising interest rates, calling “Inflation” “Recession,” and making buyers afraid of” Fear of Buying at the Top.” 

Remember now you have 90% of homeowners with mortgages under a 5% interest rate, and 55% under 3.5% interest rates.  Many are saying keep this investment, don’t sell such a valuable “asset” at a 3.5% or lower borrowing rate! 

THe current Austin Housing Market is strong

Here are the optimistic statistics from the Texas A&M Real Estate Research Center: 

• Job growth fuels demand for homes and we will still see about 45,000-51,000 in job growth! 

• Austin’s non-farm employment index is 109% of pre-pandemic. 

• Existing resale home inventory is back to 2.5 month supply. That is comparable to 2017-2019 (prior to the Covid shutdown and stimulus money that drove inventory to all time lows). 

• Appreciation in the long term:  Since 1990, there has NEVER been a three-year period when the median price has declined in Austin! The average annual rate of increase over a three-year period is 5.9% since 1990. 

• Affordability headwinds have shifted!  The change in purchasing power is great.  Rates have come down since 4Q 2022 and mortgage purchasing power REGAINED 35%!  Additionally, 4Q22 average base prices went down in AUSTIN only 0.4% (unlike DFW, Houston and San Antonio). 

• Mortgage applications from December 2022 to January 2023 were UP 78% in Austin! And Austin is the 6th most active new home market NATIONALLY! 

austin unique buying opportunity

Austin has 18,000 new homes in inventory (a 10 month supply) and this gives options for buyers with better rates and terms than existing low inventory.  However, these incentives in this WINDOW will quickly fade as the 2023 buying season heats up and buyers reenter the market. 

2023 looks good for austin

So what does this data tell me? It tells me that the Austin area has a healthy market with strong job growth, affordability has improved, and new home builders are offering more incentives and better interest rates. 

2023 will be exciting to see if this early window of opportunity closes quickly as more buyers realize:

• inflation is getting under control,
• job creation is still happening in Austin,
• lowered rates and prices have returned some of their purchasing power,
• and they should consider reentering and relooking at their needs for a newer or different size home or location, and come back to the table. 

I'd love to chat with you about your real estate goals and how this Austin housing market in early 2023 translates with your goals.  Please give me a call at 512-917-1542 today!