To say that 2021 was a once-in-a-lifetime year would be an understatement. The pandemic had an influence on every business, including real estate in Austin, where a rush of activity led to a record-breaking year with sky-high sales.
There is no crystal ball to tell the future as we learned last year, but if the economic predictions are accurate, how will the market affect buyers and sellers? First, fewer listings and record-low inventory will continue to create a huge advantage for sellers. Having thoughts about selling your home or property, now is the time. For a buyer, one must decide fast. The buyer should find the dream home or find it in a bidding war. It is also a good idea to get our financing in order while interest rates remain low.
1. Slight Market Stabilization
A new study reveals that Austin's real estate market is among the most overvalued in the U.S., with homebuyers paying almost 51% more for houses. In addition to this, Zillow reported that in the second quarter of 2021, 5.1 percent of homes in Austin sold for more than 30 percent over asking price. The Austin Board of Realtors has also upped the median home price in the Austin metro area to $480,000, up 37 percent from the year prior, however home sales have slowly started to tape off. Market stabilization is expected to come into play in 2022, but with rocket-high home prices, buyers are likely to turn to new construction homes.
2. Finally, More Homes to Choose From
One of the most common complaints among purchasers in recent years has been a lack of available properties. In fact, in the spring of 2021, the supply of dwellings reached historic lows and has yet to recover significantly. This sparked bidding wars, price hikes, and dissatisfaction for buyers. The supply shortage is predicted to ease slightly in 2022, with inventory growing 10 to 15 percent. However, the rise will be skewed toward the mid-to-high end of the market, particularly for newly constructed homes. That's great news for up-and-coming millennials. On the entry-level side, there is still a mismatch.
3. Rates Increase
Housing values are still expected to increase next year, but not at the gang-buster pace seen in recent years. It forecasts modest price growth between 2 percent and 3 percent, down from close to 5 percent this year and over 5 percent in 2020. At the same time, by the end of 2022, mortgage rates are predicted to reach 5.5 percent. Both of these variables increase the cost of buying a property. According to Hale, the predicted rise in prices and interest rates will result in an increase of 8% in the average monthly mortgage payment.
4. New Construction Booms & Affordable Housing Dwindles
Home construction is in high demand in Austin, Texas. Inventory is low for construction, and lead time for projects is far behind. The months of supply is just 0.8 months, this means that it would take just one month for the supply to rapidly drop to zero. This means that many are seeking affordable housing in Austin, and when paired with increasing prices, and lacking inventory, affordable homes may become a thing of the past.
5. Sellers Reign in 2022
For sellers, there is no time like the present to list your home and sell it quickly for top dollar. With a very low inventory, homes are selling quickly and often with many offers over the asking price. Low-interest rates also complement the rate of sales too, with buyers being able to secure loans. With a sea of qualified buyers, sellers can look forward to a fruitful sale of their home in 2022.