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- Austin's housing market is heating up again, despite recent forecasts that it would tank.
- Nationwide forecasts now predict a rise in home prices, despite still-high interest rates.
- It's good news for homeowners and bad news for those hoping to get into the market.
Just when some people thought the Austin, Texas, housing market was going to crash, it's starting to heat up again.
It could be a sign of relief for homeowners across the US — but bad news for hopeful buyers.
This sudden surge in Austin housing sales is a bit surprising. Not only were some experts predicting the downfall of the city's housing market just a few months ago, but interest rates have been back on the rise in 2024, reaching their highest level since December. However, Austin isn't the only city beating the odds; prices are still rising in 85% of US cities even though 91% of all homes are deemed "overvalued."
The inventory of houses for sale in Austin and the number of houses that sold both increased significantly in January. In addition, national home price forecasts for 2024 have now been adjusted higher, and suddenly, the housing market is starting to look hotter.
According to data provided to Business Insider by Realty Austin, a large real estate firm in the area, the number of new listings for houses in the Austin-Round Rock area increased by 56% in January compared to December and 5.1% compared to the same period in 2023. In addition, the demand for houses appears to be surging, with sales up 19% compared to the previous month and 4.3% compared to the first month of 2023.
In another sign that demand from buyers is on the rise, the total number of active listings in Austin decreased in January by 3.6% despite the increase in new listings.
Despite high prices and interest rates, homebuyers are determined
In 2022, Nicholas Gerli, the CEO of real estate data analytics firm Reventure Consulting, named Austin the No. 1 city most likely to have a housing bubble pop and experience a downward correction in home prices.
In December, Realtor.com predicted Austin to have the steepest decline in housing prices in the US, with prices projected to fall 12.2% in 2024.
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To be certain, not everybody was predicting a crash. In January, the National Association of Realtors (NAR) named the Austin-Round Rock area the market with the most "pent-up demand" for housing, signaling that plenty of people still wanted to buy into the local market.
The impact of increased demand from buyers and the decrease in supply, despite more listings, should continue to push prices higher, and the NAR is predicting just that for the US housing market.
At the end of January, the NAR projected the prices for existing homes to jump 4.3% in the first quarter of 2024. That is up significantly from their August forecast of a 1.2% increase.
In addition, a February survey of 117 economists by mortgage finance Fannie Mae found that the average respondent predicted a 3.8% increase in housing prices for 2024. That was up from 2.3% in the previous survey during the final quarter of 2023.
It is too early to tell if the sudden demand increase means buyers are adjusting their expectations and accepting that high mortgage interest rates will not dramatically improve anytime soon.
Another possibility is that buyers and sellers are just starting to lose their patience in a market that has largely been put on hold since the Federal Reserve Bank began hiking rates to combat inflation. Over the last two years, nationwide demand had dropped considerably as potential buyers were scared off by high interest rates, and many homeowners were reluctant to sell and give up their low-rate loans, often below 4%.
In the Federal Reserve's December announcement, officials forecasted they would cut interest rates three times in 2024, leading to hope that mortgage rates would also drop, saving buyers hundreds on their monthly payments.
However, the Fed said in January it would keep rates at current levels until it gains "greater confidence that inflation was moving sustainably towards 2%," according to the minutes release. This has led to predictions that the first cuts might be delayed until later in the year.
Either way, if demand continues to grow and Austin can avoid a housing crash many had predicted, it is a good sign for other markets that surged in value over the last decade and may have been deemed as overpriced. The rise in home values may still slow, but it is starting to look like prices will keep going up.
from All Content from Business Insider https://www.businessinsider.com/austin-real-estate-housing-market-health-demand-sales-prices-projections-2024-3
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