Hi James -
Hello! We hope you're doing well and staying warm and dry. 2023 was a very interesting year to say the least. Today, we have the 2023 Austin real estate market year in review.
We generally run statistics directly from ABOR, but the bulk of our stats today are from the Texas A&M Real Estate Research Center. Because of this, the format is slightly different.
Before we dig in, it's important to understand that the market did decline, but we are likely not in a multi-year decline. Inventory remains tight and prices have stabilized. We'll dig into the details more, but we strongly believe that 2024 will be the beginning of a market recovery and we are likely to see modest price increases this year.
Key Highlights:
- Avg Sold Price declined -8.07% from 2022 to 2023.
- Med Sold Price declined -10.21% from 2022 to 2023.
- Units Sold dropped -9.75% drom 2022 to 2023.
- Inventory remains tight at 3.0 MOI in 2023.
- Avg Sold Price increased 46.2% from 2019 to 2023.
- Avg Annual Appreciation from 2013 to 2023 was 6.5%
The Pandemic Years: 2019 to 2023
2020 to 2022 was a disruptive period as the pandemic took hold, the real estate market froze, and the market then took off. The Fed dropped rates considerably during this period and buyer behavior changed considerably. With buyers stuck at home, there was increased emphasis on one's living situation and demand increased dramatically. The Fed poured cold water on the market in mid-2022, increasing rates considerably. Because of all of this, the Avg Sold Price reacted considerably. The net result was a 46.2% increase in Avg Sold Price from 2019 to 2023. Units Sold increased dramatically in 2020 and 2021, then dropped precipitously in 2022 and 2023.
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Long Term Perspective: 2013 to 2023
Real estate pricing is generally a slow moving ship, so it could be considered alarming to see price swings like this. However, when we look at a longer term perspective, we see that prices are generally stable. The pandemic caused extreme buyer behavior, but it appears that has now been corrected. Population growth has always been the primary driver of Austin's real estate market (people need a place to live). When comparing our Avg Sold Price with our population growth, it appears very healthy.
What's to Come in 2024?
The Fed intentionally caused the downturn through actions started in 2022. It's no surprise that higher interest rates cause reduced demand, but it's always surprising at just how effective they are. The highest likelihood is that the Fed will begin dropping interest rates in late Q1 or early Q2 2024 and markets are already pricing that in. If that comes to fruition, we will see the recovery take hold. Hiring has been frozen for roughly 18 months and jobs will come back. Mortgage rates climbed until the end of 2023 and we should see them consistently drop. Jobs and liquidity are the two fundamental components we need for a market recovery and we are likely to see both in 2024.
If You're a Homeowner
The average homeowner in Austin owns their home for 8 years. Given that time horizon, you are in great shape. You can go about your life and choose to sell (and hopefully buy again) when life dictates. The peak of the market appears to be in 2022. If you bought then, by the numbers, you will need 2-3 years of normal appreciation for your home to return to your purchase value. If you bought before 2022, your home's value is likely higher now than it was when you purchased.
If You're Considering Buying
While it sounds like a sales pitch, it's a great time to buy. Demand is returning and rates are improving. Austin's market is very safe and consistently appreciates in the long term. Our advice remains the same: If you are relatively certain you'll live in your home for 3+ years, it's a smart decision to buy. It becomes a smarter financial decision the longer you choose to live in your home.
As always, real estate is hyperlocal and hyper-situational, so please reach out to us to discuss your specific situation. We'd love to help you and strategize what's in your best interest!
Eric Bramlett
Broker | Bramlett Residential
512.289.1161 m
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Bramlett Residential - 5025 Burnet Rd, Ste 201 Austin, TX 78756 United States
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