2023 - The First Half

At the halfway point of the year, it’s a good time to consider where we are. In 2021 and the first part of 2022 we witnessed a pandemonium induced real estate market. Mortgage interest rates were so very low, and demand was so very high, causing prices to skyrocket. Clearly this was not going to be sustainable. In April of 2022 market demand began its decline, and along with it came the decline in the number of home sales, and then of course price drops. The main culprit was ever increasing mortgage interest rates. Inventory has been building, largely due to the decline in sales. However, based on current inventory levels 70% of the cities in the greater metro area are still in a sellers market. 17% have stayed in a neutral zone, and only 13% of cities have enough inventory to be considered a buyers market. Those numbers speak to the fact that real estate is hyper-local, not only between cities, but even within zip codes in the same city. It also shows that the Austin real estate market remains strong. Another key indicator of where we are today is the sold to list price ratio. Currently our sold to list price ratio is 97.94%, close to the 22 year average of 98.3%. With all the above where does that leave buyers? They have more to chose from but prices and rates still remain high. Affordability continues to be an issue throughout the region, especially for first time buyers. Where does the current situation leave sellers? Many sellers are in a "rate lock" where their mortgage rate is so low they don't want to give that up, even with all the equity they may have in their home.

What is key for both buyers and sellers is overall appreciation. The two charts below represent the 30 larger cities within our metropolitan area. You can see how far we’ve come since 2000. Average appreciation rates for that period are pretty healthy, and the compound annual growth rates in these cities are good. Our local area market has been strong since January. If both home prices and mortgage interest rates remain moderated, we may finish out the year in a strong position heading into 2024.