2022 Mid Year Austin Real Estate Market Report w/ Chris Jacob

We're past the half-year mark and the Austin real estate numbers are in. I sat down with Chris Jacob of Housing Report and Christina Beitler with Loan People and went through the numbers to see where we currently stand with inventory, pendings, active listings, and what we think the market will do in the next 12 months. 



The Mid-Year Austin Real Estate Market Report

The Austin real estate market is in an interesting situation where the market is shifting back to a more normal business cycle which is something we’ve become more accustomed to in the last 10 years. We're starting to see a lot of craziness lead in the market.

We’re back to showing homes more than one time and we've got a slight decrease in incoming pendings. There’s nothing to be worried about, says Chris Jacob of the Housing Report. We’ve got good solid numbers going. There are a lot of interesting moving components in the marketplace right now that are impacting us.

Q1 and Q2 listings were up 17% from the year prior to Q1, the average value is up 22%. For new listings, pending listings are down about 18% to 19%. Because we’re still in a seller’s market, the average list price for a pending for Q2 was 684 which was 120%.

In the count for Q2, we're down about 13% sold and the average list price was 667. The average close price was 694, which close at a 5% premium, over the list price, and the close price was a 15% quarter-over-quarter increase from last year. There are still pretty healthy numbers. Chris thinks that we’re gonna end up between eight and a half and 10% year-over-year value increases, and we’re returning to this more normal marketplace.

Current Mortgage Environment

The market is trying to figure out where it’s feeding and what’s interesting is we’ve been talking about pendings being the most important thing we have. We had been on a six-week slide in demand and what’s interesting, you can speak to this is interest rates over the last 10 days have softened a little bit, it’s like the market has found where interest rates should land.

From Freddie Mac's perspective, APR-wise, we were pricing about 5.85 as of Friday. Now, that's not today's numbers, which the marketplace is a little bit better, because we're coming off that initial shock. Chris sees that there’ll be some tapering off as inflation starts to subside. Millennials are the biggest generation that’s buying right now and they’ve never seen interest rates over 5%. It’s a mind shift, so they’re holding out.

It’s a slippery slope with people who wait for rates to drop because of a layup. They wouldn’t race to drop a point but values go up. That home is a net 5% more expensive tomorrow than it is today. 

Jumbo Loan Rates

Christina Beitler, Senior Loan Officer from LoanPeople tells us about the loan rates for the mid-year real estate market report. The ARMs rate isn’t really doing that much to save a lot of money. The spread between a fix and an ARM is not far enough to really make them impactful, says Christina. Lender, the people who have backed these rates don't see the appeal in the risk that is involved. Rates are based on risk and sell ability on the back end, and ARMs are still a mentality thing. People hear the word ARM and they're like, I'll refinance my fixed rate down the line, then instead of getting into an ARM product.

We're seeing a big mind shift and a big cultural shift of this is a new norm. It's very unlikely we go back to those sub-three rates. Christina thinks that was a blip in history and doesn’t see us coming back.

Jumbo loans are priced lower than fixed ones. You’re gonna be in the low fives on a jumbo loan, says Christina. That’s because those are private lenders. They know most of the market is just now because of the average sales price.

If you do a minimum downpayment of 5 to 10%, you're right at the conforming loan limit. So the majority of your markets jumbo, they know there's that demand and appeal and so they price more competitively because people need them to have that product.


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Realtime Statistics

The real-time data is interesting. If we go look at the last day of Q2 actives, we had 275% more home on the market priced with a very similar list price. Consumers have a chance at going and finding a home on the market today and has the chance to look at it and pricing for average list is not that far off where we were last year.

If you look at how Q3 and Q4 real-time actives did, we actually saw the average list price drop as the year finished out. That’s floundering that occur every years. People need to know that we were so used to just values always going.

On the second half of Q3 and Q4, Chris sees a great opportunity for people who’ve been sitting on the sidelines to reach in and get a home and actually look at if for more than five minutes before they have to buy it.

What Agents Need to Know About the Mid-Year Real Estate Market Report

Agents have to set realistic goals. Let the people know. Agents need to be talking to everyone that was interested in the last year and say that those who can afford the increase in rate, this is your opportunity to really get something at a fair price without the stress that you’ve had for the last two to three years. Secure this home that you want for the rest of your life of for your foreseeable future.

Real estate agents will need to prep their clients and give them more information than they have before. Let them know what we’ll be doing with pricing because things are moving really fast with interest rates going up and down. You have to let them know that this is the price that we think we need, then you’re going to have to be able to check on the price adjustments every two to three weeks.

It’s really important for agents to be able to have a time cycle where they’re working with their clients and letting them know that after two weekends in the market, you’re going to check in and going to evaluate the data with the showing and how many offers you got, a pulse check on the market. This will help set agents up for success.

Why Agent Representation Matters

It’s more important than ever to have an agent on both sides. So many people went it without any representation, without any guidance because they were just thrown at the wall and see if it would stick right.

If you had any coaching or just pulled up a contract online, you had people doing it. Today, it’s super important to have those relationships for representation because it’s a true negotiation game. We’re going back to the basics of what makes our industry important. Having those people there to guide you in the best way so you’re not getting a bad deal.

Timing the Austin Real Estate Market

The longer you wait for interest rates to change, then you’re losing that equity position. We don’t know anyone that’s ever won by waiting on the Austin market. Maybe seasonally, but if you’re looking for your dream home, that’s not going to always work out for you either. Teaming up with a good lender and getting in the market if you can afford the payment, you’re comfortable and not stretched.

Tax Rate Predictions

Some of the things people tend to forget if the mortgage amount is less than 750,000 as your primary residence, you can write 100% of that interest off your taxes. As of now, the rules change every year, every tax cycle. There are some tax benefits where you don’t read the soft benefits and don’t realize your monthly cash flow.

If we go look it back and I'm using the year the Travis County did not reassess, so the only people who paid more taxes in that year were 19 to 21. The only people who pay more taxes were those with homesteads because of the Homestead cap went up, and every investor's taxes went down.

This year with this massive bump in values at the CAD, it was 56%, Travis County before the equalization process, the homesteads are gonna go up 10% in appraised value, but the free markets gonna go up to whatever market value is, except for we get this beautiful 3 ½ % budget cap at our government levels. Investors are only going to go up 10 or 15%.

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Posted by Ryan Rodenbeck on
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