The last 2 1/2 years have been crazy when it comes to real estate, across the country and specifically here in Austin.
The beginning of 2020 (pre-Covid) was met with a high buyer demand… We were already writing multiple offers on properties at – or slightly above – asking price as early as January/February BEFORE Covid.
THEN… Covid hit, and the real estate market came to a screeching halt.
The only sellers selling were those who HAD to move… Likewise, the only buyers BUYING were those who HAD to relocate.
Open houses were a thing of the past and we learned how to tour homes via Facetime and create videos and virtual tours.
People had to quarantine upon arrival, so they were buying homes sight unseen! (In fact, I had one client that didn’t see their home for almost 4 months AFTER they had closed on it).
To government then began giving away “virtually” FREE money! So, from November 2020 we started seeing bidding wars and significant “over list” offers as interest rates took a nosedive!
The last 2 1/2 years have been crazy when it comes to real estate, across the country and specifically here in Austin.
The beginning of 2020 (pre-Covid) was met with a high buyer demand… We were already writing multiple offers on properties at – or slightly above – asking price as early as January/February BEFORE Covid.
THEN… Covid hit, and the real estate market came to a screeching halt.
The only sellers selling were those who HAD to move… Likewise, the only buyers BUYING were those who HAD to relocate.
Open houses were a thing of the past and we learned how to tour homes via Facetime and create videos and virtual tours.
People had to quarantine upon arrival, so they were buying homes sight unseen! (In fact, I had one client that didn’t see their home for almost 4 months AFTER they had closed on it).
To government then began giving away “virtually” FREE money! So, from November 2020 we started seeing bidding wars and significant “over list” offers as interest rates took a nosedive!
So, what happened?
Interest rates… PERIOD. In December 2022, we saw interest rates on a 30-year mortgage teeter right around 3.0% +/-. In November, we saw rates skyrocket north of 7%.
- Buyers could no longer afford to purchase at the same price.
- Sellers didn’t want to “upgrade” when they’d be trading in a 3% interest rate for 7%!
- Buyers were afraid that the market was going to CRASH (thank you, media!)
- Buyers were TIRED from the past two years!
The truth is:
- The market conditions are NOT the same as they were in 2008… (more on that another time)
- Only .3% of ALL homes are in foreclosure… Less than 3% of all mortgages are delinquent. Back in 2008/2009, we had 6 times the current number of delinquencies (aka loans that are 30+ days late).
- We still have a nationwide housing shortage. We have less than 2 months of inventory nationwide when you take out all new construction (aka homes that are ready to move in now).
- Interest rates are already starting to drop and expected to continue into 2023.
- In the greater Austin area (5 counties), we have 3.2 months of inventory. 1-3 months is a seller’s market, 4-6 months is a “balanced market”, and 6+ months is a buyer’s market! We are in a healthy, balanced, market.
So what does all this mean?
Simply stated… real estate is still a very strong investment.
NOTE: The shift in real estate is simply a SYMPTOM of the larger economy… not the CAUSE for the economic mess, like it was in large part in 2008.
Sure, it can be scary to dive in when the media is full of doom and gloom! There’s a lot of uncertainty about the economy across the board.
And, honestly, if you’re goal is to buy and sell inside of a year, it may NOT be the perfect time, but if you’re purchasing your home, or looking for a long-term investment, then consider these factors:
- Interest rates are coming down and expected to ultimately settle in the mid 4s. Experts debate the timing on this!
- We are still historically low on inventory.
- People are STILL coming to Texas and companies continue to move here.
- There is a short window to get in and capitalize on the market when it does shift again.
Now I would NEVER pretend I could predict the top, nor the bottom, of the market! But the benefit RIGHT NOW is that you can get in on the lower home prices and capitalize when the market shifts again.
Less people can afford a home at any given price today than will be possible when interest rates drop to 4%, even 5%!
We will eventually come out of the recession and consumer confidence will increase. The newest inflation numbers are already causing the stock market to surge…
Our PERSONAL plan is to pick up 8-12 homes in the next 12-24 months, depending on how long the lull lasts. We like the renovation process so we’re buying distressed properties, fixing them up, putting in a tenant and refinancing to a postive cashflow. Rinse and Repeat!
HINT: As the pendulum shifts towards a “buyer’s market “it’s the time to buy (by definition ;-)! But media never tells you that!
So what are the benefits of buying sooner than later?
- Lower price (and cost basis) … (You set your taxable value lower especially on homestead properties).
- Possible cash flow (for the first time in a while) in Austin.
- Greater discounts and incentives from sellers (covering title fees, paying for a home warranty, covering closings costs, etc.).
- Ability to refinance when rates drop (depending on how much you put down, you may be able to cash out your equity in the not-so-distant future!)
As we get ready to go into 2023, I’d love to have a strategy session with you to discuss your particular situation…
Keep in mind, my husband and I do a lot of marketing for “off market”/investor-friendly deals, so if you’re interested in getting in on that list, register here.
