Happy New Year!
We're looking ahead to predict what 2018 will have in store for the Austin real estate market. While our crystal ball is always a little fuzzy, we're mashing up national & local industry experts' opinions with our own observations to lay out the 5 things that we expect from our market this year.
1. Austin will remain a seller's market. If you're considering selling in 2018, breathe a little easy. It's still a great time to sell a home in Austin. The National Association of Realtors (NAR) suggests a "balanced" market is between 4-6 months of inventory. The entire Austin market is around 2.5 months. (As you know, our sellers on average sell in less than half that time!) Austin inventory levels and number of days a home is listed for sale are increasing, yet not nearly enough for Austin to be a "buyers" market. That is not expected to change.
Sellers do have to keep in mind that the market is normalizing, or becoming more balanced, as we've stated in recent posts. This means that not every home actually receives top dollar. Home sellers are advised to make sure that the value proposition of their home is in line with what buyers are expecting. If so, that's when you'll see top dollar. If not, those are the homes adding to our inventory and days on market.
2. Home prices will increase, just not as much. Since we are in a seller's market, home prices will continue to rise. Yet, with the inventory levels increasing, the amount at which prices will increase will not be as much as we've seen in recent years. The increases will look more like the past few months with 4-6% increase, in our estimation. In recent years, we've seen over 8% increases.
Again, sellers must present the value of their home to a buyer. Buyers will have a few more homes to choose from, so a home seller needs to be competitive to attract the buyers. When a home for sale does meet the buyers' desires, it's likely strong & even multiple offers will follow. To paraphrase a tagline... "when buyers compete, you win."
3. Interest rates will increase. Look for a handful of interest rate increases during 2018. The expert opinion is an increase of 1/2 to a full percent throughout the year. This is significant because an increase in interest rates has a real affect on home affordability.
For every 1% the interest rate increases on a 30 year fixed mortgage, you lose 10% buying power. Meaning, you'd have to buy a home at roughly 10% less to have the same monthly payment - all other factors being the same. So, that's either more money out of your pocket upfront, more money each month on your mortgage payment or buying a home that's less expensive. Historically, though, our interest rates are incredible. We're sitting around 4% right now. For perspective, we had a 6% interest rate on our first home purchase 10 years ago.
Point here is, acting more quickly will help keep your interest rates lower and put/keep more money in your pocket for the important things... (Like that new couch that you just have to get for the new living room! 🛋)
4. Millennials will be the largest buying force. In 2017, millennial buyers (classified as buyers 34 years old & below) made up the largest age group of buyers nationwide. Austin is a young city by many standards, which makes that even more apparent here. We predict that 2018 will continue with that trend.
So what's that mean? Millennial buyers are now the "young family" buyer. As always, schools are a big draw or possible detractor. Further, amenities are gaining in popularity. That's true both for the home and the area. For the home, well appointed homes that feel modern seem to get more attention. Especially true if the price is at the top of the market. For the area, being close to neighborhood amenities (pools, trails, schools, etc.) and close by shopping & hang out spots are super attractive. Notice how a lot of the more central Austin restaurants and shops are popping up away from the city core?? Not a coincidence!
Lucky for you, we know how to make homes attractive for buyers, which is why so many people choose us to sell their home for more money in half the time than the average Austin agent.
5. Austin will remain as one of the top real estate markets in the country. We're fortunate to live in such a unique place that people still clamor to call home. As our city/area continues to grow (that's showing no sign of slowing down), our market will remain one of the best in the country. Real estate market health is most reliant upon jobs. The more stable, good paying jobs a market has, the better housing will be. Austin is a leader across the country with jobs. Combine that with home prices not as drastically increasing, and you'll get a real estate market that many others envy.
What are your real estate plans for 2018? Get a jump start by scheduling an appointment with us to talk through your thoughts and get a game plan for you.