Fall 2022 Texas Real Estate Market Rundown: 3 Things You Need to Know
During the pandemic, the housing market has run rampant across the country, and Texas is not immune– the demand brought the average home price from around $300k to over $500k. But as the Federal Reserve raises rates to combat inflation, what does that mean for the real estate market?
Simply put, it’s slowing down. But it’s essential to understand the factors at play, so you can leverage your options to buy or sell property with the proper context.
We’ll run down top real estate views and give you the big picture in just three points. Let’s dive in!
1. Rates are Up, Demand is Down
Prices have risen dramatically, nationally over the past two years. And while some have been able to jump into home ownership, the recent Fed rate hike has become a significant obstacle. Mortgage payments have risen by several hundred dollars– but it’s not turning into equity. As a result, many would-be homebuyers are waiting until home prices or interest rates are lower.
And while the Fed isn’t likely to lower interest rates soon, the decreased number of sales leads to lower home prices. Experts say it’s still a seller’s market, however. Available homes are selling in about 2.5 months, and a balanced market clears available homes in 6 months. So sellers still have an advantage, but you won’t likely make the incredible margins of the past two years.
2. Construction is Slowing
A natural companion to lowered demand is lower construction rates. Permit requests have dropped by double digits compared to last year. So, developers and investors should proceed cautiously as they take on new projects.
Austin, in particular, has significantly slowed its closed sales rate. While other metropolitan areas have fallen in sales by about 5%, Austin slowed by 12% between last April to June. However, some smaller towns are still seeing an increase in home sales. So if you’re looking into development as a real estate investment, be sure to check the local market trends! Big cities might not be offering the biggest returns right now.
3. Renters Play a Part
The American Dream has often centered around land and home ownership. But the pandemic market made it difficult for many to jump into their home. And the housing shortage also severely impacted rent rates– some had payments increase 25% in just two years.
Put simply, renting is becoming less affordable, pushing more to try to buy a home rather than continue to pay steep rent. So many of the trailing hot market buyers are renters who can no longer afford to sit on the fence. If you’re developing land or selling your home, consider creating marketing that appeals to tired renters.
Looking to Buy Land?
At AltaTerra Realty and Auction LLC, we serve Texans in expanding their business through quality land purchases. It’s critical to work with a team that understands your vision and values– and that’s what we’re here to bring to life. Contact us today to begin your search!
References:
https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight
https://www.noradarealestate.com/blog/texas-housing-market/
https://www.texastribune.org/2022/09/01/texas-housing-market-cooling/