As most of us know by now, the incredible boom that the pandemic brought with it in Austin and the country in general has passed. 2022 started as strong as 2020 and 2021 but began to taper off quickly around April. Sold property prices increased approximately 185% from January 2022 to May 2022 and then as if to define the term “market correction”, pricing proceeded to decline by approximately 18% by December.
The decline can be almost entirely blamed on interest rates and the Fed’s attempts to curb inflation. Mortgage interest rates quickly climbed which made a lot of buyers press pause on their home search and sit on the sidelines waiting to see what would happen next. Many listings went through significant price reductions or were even withdrawn from the market in the 2nd half of 2022 and pending properties dropped significantly.
Well, as of now (2/7/2023), mortgage rates have somewhat stabilized and have been fairly consistent for the past few months right around the 6% mark for 30 year fixed notes. So, the big question is; Where is the bottom and have we hit it yet? While many believe we are at or very close to it, others like Goldman Sachs believe we will see another 2.6% overall price decrease by the end of 2023.
Any way you look at it, 2023 can likely be considered a buying opportunity. Even if we are to see another 2.6% decrease, that will likely be quickly made up and more when we start to climb out of this low point. There are also loan products available like the 3-2-1 and 2-1 buy down loans that can significantly mitigate interest rates for the first few years of the loan. With these products buyers can get as low as 2-3% for the first year of the loan which would obviously help carry a buyer into lower future rates and refinance options. Please feel free to reach out to us for more info on those and we can also put you in touch with a lender for even more details.
We are excited about what 2023 has in store. We are always available to chat about your needs whether you are selling your property or looking to take advantage of the current lower prices to purchase something new. Please reach out any time if we can be of assistance!
- Natalie Russell