Thinking About Selling Your Home and, or Buying a New One? Wondering if It’s a Good Time?
Based on market indicators, it is still a good time to buy + sell.
1. Austin Expansion
Continues to outpace nearly every large metro area in the country. People want to move here. According to Forbes, Austin consistently sits atop its annual list of the best cities for jobs, scores highly in other demographics rankings, and is the third- fastest-growing city in the nation.
2. Robust Labor Market
- Strong Job Growth
- Lower Unemployment: the unemployment rate has dropped to levels not seen since 2000.
Ray Perryman, CEO of the Perryman Group, expects Austin-area employers to add more than 30,000 net new jobs in 2018, a roughly 3 percent growth rate. “These levels of economic growth are faster than virtually any other region of the country,” he said.
3. Limited inventory
“The housing demand and lack of inventory are so great, that if supply does not increase, we could see an upwards of 5 percent growth in median home prices within the Austin-Round Rock MSA,” Jim Gaines, a chief economic with the Real Estate Center at Texas A&M University, said in a press release. “Inventory will be a determining factor in the direction of this year’s market.”
According to the latest report from the Austin Board of Realtors® [ABoR]: In the city of Austin, the median price for single-family homes increased 12.2 percent to $367,701 year-over-year in February. Single-family home sales decreased 6.7 percent from the same period last year to 599 sales.
Inventory decreased from 1.4 months of inventory in February 2017 to 1.3 months of inventory this year. www.strubresidential.com In the Austin-Round Rock MSA, home sales increased 5.7 percent year-over-year in February 2018 to 1,955 sales.
The median price of single-family homes increased 3.6 percent to $299,900. Housing inventory remained flat at 2.0 months, the same as last February.
4. Rising Interest Rates
Expectations are that mortgage rates will continue to rise, which could put pressure on home prices. As rates increase, it will become harder for buyers to qualify
- Already increased 0.25% on 3/21/18, and the US Central bank forecasts two more increases in 2018.
- Three or four more increases are forecasted in 2019.
The strong job growth assures at least three interest rates hikes by the Federal Reserve in 2018. Because of the low unemployment rate, further normalization in monetary policy should be expected in 2019 as well, meaning another three or four rate hikes next year. Mortgage rates will therefore rise and rise. That in itself hurts housing affordability.
NAR Chief Economist Lawrence Yun, 03/09/2018.
5. New Tariffs
On steel will increase new home construction costs. Although tariff details are still being worked out (as well as some exemptions for US allies), it’s clear that the US depends upon importing steel and aluminum for building commercial, multifamily, and to a smaller extent luxury residential. So, for those constructions projects that haven’t yet completed construction or even started, your buyers can expect an increase in the cost to build.
According to Metrostudy, more than 8,000 construction starts in 2017 were priced below $300,000, nearly half of the new home market. These prices are expected to rise in 2018 and beyond, however, the full effect of these tariffs is still to be determined.
Buy + Sell Scenarios
Everyone’s situation + goals for real estate are unique. Overall, below are a few scenarios where the answers may differ.
for a free Custom Market Analysis of your home to determine what scenario is best for your unique situation.
1. Move Up
Is it a good time to sell your current house + buy a bigger one? YES, sooner rather than later, inventory low [good sales price. Prices are high for buying, but prices will continue to rise mortgage rates likely to continue to rise.
2. Sell + Move Out of State
Is it a good time to sell your current house in Austin + move out of the city-state? Yes, now is a great time, but later (1, 2, or 3 years) may likely be a good time as well.
- Now is the Highest we have ever seen prices.
- Are you a gambler? If not, sell now while Austin is experiencing its lowest inventory + highest prices of all time. If you are a gambler, ride it out a few more years in hopes of even higher prices.
3. Buying a Home
Is it a good time to buy a house in Austin? Yes + no, depends. But mostly, yes.
- Low inventory makes it competitive to buy right now. However, if you need want to buy in Austin, the sooner the better. Prices are expected to continue to rise, as well as mortgage rates are expected to continue to rise.
- If you decide to wait for a recession, the inability to forecast when that will happen means you could get lucky and see one in a couple of years, allowing you more probability of purchasing a home at a better price. It also means you could get unlucky and not see a recession for 5, 10, 15+ years, and at that point, you’ve seen home prices and interest rates climb even higher than what they are today. www.strubresidential.com.
4. Buying Investment Properties
Is it a good time to buy a cash flow positive investment property in Austin? Not really.
- Investment property inventory is high at the moment, which is lowering rental income rates.
- Property taxes are increasing, which lowers rental income potential too. Look to neighboring markets like San Marcos + San Antonio where their investment-rental market is where Austin’s was a few to several years ago- strong.
5. Selling Investment Properties
Is it a good time to sell an investment property in Austin?
Unless your goal is a long-term hold, now is one of the best times to sell.
For the same reasons mentioned in point number 2. Inventory of homes is low at the moment creating higher buyer demand.
For the same reason mentioned in point number 4. Rents + rental income are down because of high rental inventory + increasing property taxes.
Hit on both sides, so yes, it’s a good time to sell your investment property if you are considering doing so.