Looking Back at the 2022 Texas Real Estate Market
With the year ending, we wanted to review the Texas real estate market's rollercoaster year. 2022 was a year of flux, with home prices at an all-time high early in the year, exchanging for slightly falling prices with the increase in mortgage rates.
Predictions are flowing in for what to expect in 2023, so let's review the past year and plan for the next!
Inventory Supply: Still Low
The seller's market continues to have a lower supply than the demand for housing. However, the hot market that opened in 2022 slowed over the summer as inflation and interest rates changed. As a result, home sales in areas like Austin and Houston dropped over 16% month over month (MOM).
Some have concluded that a buyer's market is on the horizon because of the slowed rate of home sales in the second half of this year. And while a buyer's market may come soon, the slowed home sales are not solid evidence.
The increase in mortgage rates and continued inflation pressures have pushed many home buyers to wait. In response, many home builders have slowed the production of homes. So the calmer scene cannot be attributed only to an even supply and demand, but that fewer people can complete a purchase, and production has slowed accordingly. This means that inventory is still low for the demand.
Home Prices: Rising, but Slower
The pandemic saw rocketing home prices, with some areas of Texas valuing homes at nearly 20% higher than last year and over 63% higher than five years ago. But midway through 2022, prices dropped and have stabilized somewhat. The price stabilization is due to the slowed economy and higher mortgage rates.
So what can we take away from the change in home prices?
● Home values are unlikely to drop to pre-pandemic prices.
● Home values will likely continue to rise slower than in the past two years.
Local markets may experience different realities, but these predictions should hold for the national average, particularly in metropolitan areas with thriving job markets. Texas is home to several large cities with booming economies, like Austin.
Future Demand Predictions
So what's the takeaway for 2023? No one knows for sure, but we can make educated guesses about several important factors:
● The near future remains a seller's market. Demand is still significantly higher than supply, and it will take time before that need reverses.
● A potential buyer's market depends on several large-scale economic factors. Unrest in employment, recession preparations, and increasing federal rates currently lean toward a seller's market.
● If the national economy stabilizes and enough new homes supply enough inventory, a buyer's market could occur within the next few years. Check out our recent blog on our 2023 real estate predictions.
Need Help With Your Real Estate?
At AltaTerra Realty and Auction LLC, we serve Texans in expanding their business through quality land purchases. So 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!
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