After a whirlwind of a year, 2023 has quite a tough act to follow. Spiking home prices, weeks-long bidding wars and bone dry inventory levels made for an exciting, though incredibly formidable and often frustrating year for Austin buyers. Now, with a stabilizing market and more inventory than the city has seen in some years, things are looking up. Though what’s to come may not be exactly as you’d guess, as interest rates, rising employment and the city’s persistent housing shortage come into play.
Though it’s a major increase from the 0.1 months of inventory Austin sank to last year, the current level of 2.7 months of available inventory is still less than half of the 6 months considered indicative of a “balanced” market.
“Even with the inventory gains made in 2022, our region still needs more housing,” said Mark Sprague, state director of information capital for Independence Title. “This need could be exacerbated as builders and developers continue to recover after overextending themselves nationally and increasing interest rates lessen people’s buying power. We could see 15-20% less inventory in 2023 as builders scale back their housing starts.”
Ashley Jackson, 2023 ABoR president, predicts the “theme of 2023 to be a lack of inventory paired with unwavering demand.”
“Signs point to [market stabilization] continuing in 2023 even as interest rates fluctuate, so buyers need to date the rate and marry the house,” said Jackson. “Bidding wars have subdued as homes on average sold for only less than the original listing price in 2022, but as we head into what is normally a seasonal peak for sales, today will still be the most cost-effective time to buy a house.”
While current trends may indicate a slowing growth rate in sales, Austin’s housing demand remains high above its available supply, in a market where median prices last year broke all-time records. But while the market in Austin can’t be called “balanced,” December’s 275% Y/Y spike in active listings is proof that buyers have considerably more leverage now than they have in several years.
“It is important to remember that we still have a desirable and sought-after market,” said Jackson. “It is just that now we are seeing our market return to a more normal level of high demand and activity than what we experienced in the years leading up to the COVID pandemic and subsequent boom in our market. If you are interested in purchasing a home, now is a great time to work with a REALTORⓇ to find something that works for you and your budget.”