The COVID-19 pandemic has had a huge impact on several areas of the economy in every country. One of these areas was the real estate and housing sector.
Years after the pandemic subsided, the U.S. Housing sector still suffers some serious problems, most notably the surge in housing prices. As inflation is also at a notable high, the impact is being felt in all the states.
The Problem in Austin
Austin, Texas, has a population of almost one million residents. Normally, this would be a good location for the real estate industry, but the opposite is the case, thanks to the Covid-19 pandemic. According to a local realtor, Jeremy Knight, things have changed dramatically in the past few years concerning Austin’s real estate market.
People who would have quickly sold off their properties are now having a hard time selling houses as buyers are now quite picky.
Homeowners Are “Screwed”
Knight believes that the homeowners that are trying to sell their properties for the same price that they would have been able to sell them a few years ago are “screwed.” This is because the market has fallen significantly, and now, it is hard to find buyers who are not extremely picky.
Since most buyers are quite selective, sellers have reduced their prices over the years to meet the market’s demand.
Selective Buyers
Why are buyers now so selective? The answer is quite simple. The market is totally different from what it once was before the pandemic. Austin’s housing market is now flooded with new inventory, and people believe they can always get something good for a lesser price.
Options are abundant on the market, and people know they can always check out more houses rather than buy a high-priced one.
A Difference Between Then and Now
According to Knight, there is a huge difference between the market a few years ago and now. He remembers that only a few years ago, if you put a home on the market for $400,000, it wouldn’t take long before selling for $450,000 or even $500,000.
However, this is not the case anymore. A house of $400,000 will probably sell at a much lower price if put on the market now in 2024.
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Jeremy Knight YouTube
The realtor made these comments in a recent video on his YouTube channel after seeing a recent report shared by the Austin Board of Realtors (ABOR) from UNLOCK MLS.
According to the report, Austin has seen a high price surge in real estate properties during the balsamic due to an influx of people from several parts of the country. This boosted competition and raised prices, making properties easier to sell.
Post Pandemic Reality
The city is in its post-pandemic days, and things are no longer how they used to be. After the pandemic boom, Austin’s real estate market dropped from late summer 2022 to spring 2023.
Before the huge fall, there was a shortage of homes in the city, which kept the prices of homes rising. Now, homeowners have had to slash their prices due to the abundance of houses in the market.
Austin’s Real Estate Statistics
According to the report shared by ABOR, the Austin-Round Rock-Georgetown metropolitan statistical areas (MSA) had 6.2 months of inventory for Austin in May. This was up from the 2.7 figure that was reported last year.
It is also the highest level that has been recorded in the city ever since 2011. The report also shows a 40.3% increase in year-over-year active listings and 85.3% new home listings in the past year.
What Do the Statistics Mean?
The 6.2 months of inventory shows that it would take roughly 6.2 months to sell all the properties on the market in Austin right now without adding any new listings along the way. However, just in 2023, the figure was relatively low at 2.7. Data also shows that there are now more home listings happening in 2024 than in 2023.
More people are selling their houses, creating a high supply and less demand on the market.
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A Shift in Demand and Supply
There has always been an imbalance between the supply and demand of properties in Austin. The demand often surpasses the supply by a far margin, creating scarcity and high prices.
However, the tables have turned, and a massive shift has occurred, making the city neither a sellers’ nor buyers’ market. There are now more houses on the market than buyers, which has made buyers very selective. People are no longer willing to pay high prices for properties in Austin.
Mortgage Interests
The country’s inflation rate over the past few years has also affected the real estate market, as mortgage interest rates have surged to as high as 7%.
Therefore, this is another factor that makes people feel the need to be more cautious when making purchases. The city’s buyers will now prefer to buy significantly cheaper houses so that their mortgage interest will also be low, helping them to save money.
A Press Release
Clare Losey is a housing economist for the Austin Board of REALTORS and Unlock MLS. She issued a press release agreeing with Knight’s point of view, saying that the city’s market does not clearly stand as either a buyers’ or sellers’ market right now.
While the city was once a sellers’ market, the shift has shown that things are no longer as they used to be.
The Future of Austin’s Real Estate Market
The next few years could see a massive change in the city’s real estate market. However, it is unsure what direction it will take. Despite the city’s high additional inventory, the prices that homes sell for are not very encouraging for realtors.
Knight said that homeowners are now more concerned with pricing their homes accurately to avoid driving potential buyers away. Knight says this situation depicts a buyers-friendly market, but it cannot be classified as such until it is confirmed to be stable.
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