3 Challenges Sellers In Austin Are Currently Facing When Selling Their Home

Since 2020, Austin has shown consistent demand when it comes to housing. The Austin market has become the most active housing market in Texas and one of the most active in the entire country. Austin is a flourishing technology industry hub and has a relatively low cost of living, which has made it more popular in today’s day and age.

This presents a unique opportunity for those who own property in Austin, TX. Homes for sale in Austin have a 25% year-over-year increase in average listing price from 2021 to 2022. Moreover, new listings in this metro are trending downward, and due to supply and demand, this only makes houses on the market in Austin even more valuable.

The idyllic seller’s market, which resulted from the economic conditions of 2020, is showing signs of halting. This has to do with a federal increase in interest rates, rising inflation, economic uncertainty, and more. Though Austin’s real estate market is still red hot, new economic forces in 2022 should be considered when listing a home for sale.

Increased Interest Rates Resulting in Decreased Buyer Demand

Throughout 2021, interest rates on mortgages were very low, wavering between 2-3.5% APR. Fast forward to 2022, and mortgage interest rates began to climb again. Today, the average APR on a 30-year fixed mortgage rate is 6.9%, which is nearly double the average rate from one year ago.

The increase in interest rates really stems from economic uncertainty. Mortgage rates are directly impacted by U.S. Treasury bond yields, inflation rates, and the Federal Reserve’s current monetary policy. Increased inflation has caused the Federal Reserve to take a more aggressive monetary policy, resulting in higher mortgage interest rates.

Financial experts are predicting that the average 30-year fixed-rate mortgage interest rate will be around 5.5% by the end of 2022. So, what do these heightened interest rates mean on the seller’s side?

Those who want to buy may be deterred by a higher interest rate. Money lost toward interest payments provides no equity or value to the homeowner. Although homeowners can always refinance, many folks are hesitant about paying more than the home is worth due to high-interest rates.

Many soon-to-be buyers in this market are waiting until the interest rates hit a fair number. This means sellers may have less interest in their listing, need to leave their home on the market for longer, or lower their listing price if a faster close is desired.

Lengthened Time Spent on the Market

Due to the new economic hardships, sellers may notice homes are not closing as quickly as they were one or two years ago. Year to date, the average home in Austin spends just over 30 days on the market. With steadily increasing interest rates and an unstable economic environment, this average could become longer soon.

Having a home on the market for a longer period is not inherently bad for a seller. It does allow more offers to roll in over time. The downside is buyers can see how long your home has been on the market.

Some buyers may try to negotiate a lower price for a faster close. Many people want their homes to sell quickly so they can use the proceeds for their next house or big investment. A longer time spent on the market means more vulnerability to subpar offers.

Making Sure the Price is Right

It has been a seller’s market for quite some time. Starting with the pandemic and onward, homes were being listed and sold far above their estimated value, particularly in coveted areas like Austin. However, the tides have begun to change with the new economic conditions.

Listing a home at too high in the current market can be very detrimental. Buyers are acutely aware of the higher interest rates and inflated cost of living and are calculating this into their home-buying decisions.

As such, buyers will be less likely to look at a home if the price is above average. Buyers need to protect their own interests, which means factoring in higher interest rates, inflated costs of living, and employment uncertainty in today’s economy.

Sellers should consider their home type, size, neighborhood, and amenities. When deciding on the listing price, a realtor can help compare your home with similar properties in your area to get an estimated idea of recent sale prices for comparable homes.

Conclusion

Austin’s real estate market is still bustling. Austin provides lots of employment opportunities, a relatively low cost of living, and lots of space not often available in other U.S. metros. However, outside economic factors will impact the real estate market, and sellers in Austin and beyond should strategize how to get the most out of their home sales. Contact Friedman Real Estate for help with listing your home. Our real estate experts are here for you, ready to sell your home quickly. Call now!