The State of Austin Real Estate: Homes with a DejaView
You may have noticed that it has been a crazy last 2 years for real estate, not only in Austin but throughout all of the country. I have had clients that had to submit offers at or above $100K over asking to win the contract. That’s right, six figures over ask! To most that seems insane but even for myself working in the business, it pained me to write those offers. I have had clients offer over the asking price on leased properties as well. I even had a colleague who signed a lease at $1K per month over the asking price. What? Nuts!
The greater Austin area is shifting into something different than the stories above. We are seeing historic inventory levels that we haven’t seen since 2008. Interest rates for certain loans have doubled year over year. There have also been an extreme number of listings that have withdrawn from the market. I saw comments on a listing the other day – “client is holding on selling until next spring – will remain for this school year”. That’s surprising to think that this time last year that same property would have had multiple offers, most if not all over asking.
That said, now is still a great time to purchase real estate. With over 10K homes on the market to choose from, buyers have the opportunity to jump back in and have a much more solid chance of landing their next great home. Now, has their buying power diminished due to higher interest rates? Yes, of course. But, rates will always fluctuate and can always be refinanced when the time is right. Bottom line – purchasing real estate will allow you to begin gaining equity in the home the minute you leave the closing table. There are risks involved in being a homeowner, but the rewards far outweigh the risks, in my opinion. It is this very mantra that inspired me to leave my corporate life behind and be an advocate in real estate full time. We bought our first home in 2007 – right before the huge crash. Rightfully so, we saw first hand how this downturn happened. We got into our first home for $750. That’s right, less than a $1K. Now, we were well qualified and would always honor the terms of our mortgage. But, many others were quite the opposite, hence why so many foreclosures happened, banks failed and the lending terms of the late 2000s went bye bye. That said, we used the proceeds from our first home to buy our second home. The proceeds from the second home to buy the third, and so on. Each time, we were able to upgrade from our previous situation. Whether that be in the size, style or location of the next place – we had the capital to make these changes. These same principles apply today, whether rates or market conditions are ideal or not. For reference, we carried 2 notes on that first home. The first note was around 5%, the second was close to 9%. Neither of those are ideal but had we not made the plunge, who knows what our outlook would have turned into.
For sellers, now is still a great time to sell as well! The key is to make sure that you are prepared to go to market with your best foot forward. Even in the peak of the market there were junk properties that listed in a terrible fashion. Pictures that were subpar. Pricing that was out of line. Lack of property description – the list goes on. Those properties were snuffed out and fell off the radar. Now that you have a plethora of homes to choose from, your listing needs to be pristine. More importantly, pricing needs to be spot on. A comparative market analysis needs to be performed but also look at leading and lagging indicators. What a comparable home sold for 90 days ago is quite different from one that sold 30 days ago. Bottom line, every factor needs to be considered for a listing to be ideal. Photography of the property and any amenities present in the neighborhood have to be top notch. I have made it the standard for my own listings to invest in aerial pictures and video footage when the property calls for it. Also, making sure the house has the little things corrected that stick out to potential buyers. I can’t tell you how many times I have taken clients to a home where a light fixture doesn’t work, a doorknob is loose, or a screen is missing from a window. Those items might seem miniscule but now my clients are focused on what was wrong with the property more so than envisioning the big picture.
So where is Austin real estate headed? No one, including myself, has a crystal ball. But, if you pay attention to the headlines, the future still seems bright. Companies are relocating their headquarters from all over the country to the area. Commercial and infrastructural projects are still in high demand. Headcounts at local schools are buckling and new campuses are needed now more than ever. If you have any questions or just want to chat about all things real estate, I would love to borrow some of your time.