Spring Real Estate Expectations for Austin, TX

As the spring housing market gets underway, you may be wondering what to expect this season to purchase or sell a home. While several variables produce uncertainty, like the ongoing conflicts in other parts of the world, rising inflation, and the Federal Reserve's first rate hike in almost three years, the housing market appears to be relatively unaffected.

Here's a glance at what you may expect this spring.

1. Mortgage Interest Rates Will Increase

According to Freddie Mac, the 30-year fixed mortgage rate has risen by more than a full percent in the last six months. Experts predict rates will continue to trend upward over the next 90 days, despite minor fluctuations in recent weeks. 

If you're a first-time buyer or a seller looking to upgrade to a house that better suits your needs, the delay will almost certainly result in a higher mortgage rate. And a higher interest rate raises your monthly payment, which can add up quickly over the life of your loan.

2. The Housing Supply Will Increase

Buyers looking for a home may soon be able to breathe a sigh of relief. Last month, we saw a considerable increase in listings entering the Austin market compared to the previous year. In addition, the National Association of Realtors (NAR) recently reported that the months' supply of inventory has climbed for the first time in eight months. The inventory of existing houses often increases in the spring, and recent activity suggests that the next 90 days may bring more listings to the market.

If you've been disappointed by the lack of available homes for sale, it appears that you may be able to find some respite this spring. If you do find the right home, though, be ready to act swiftly.

It makes sense to list now rather than wait for the added competition to hit the market if you're a seller. As more homes come on the market, your bargaining power will weaken in any subsequent negotiations.

3. Home Values Will Increase

Supply and demand are always at work when it comes to pricing. Even though the quantity of properties on the market increases, buyer demand remains high. 

Home prices will continue to rise as demand for homes exceeds supply. Many experts anticipate that the appreciation rate will slow down from the high double-digit levels witnessed in the previous two years. This suggests that prices will continue to rise but at a slower rate. Home values, according to the majority of experts, will not depreciate.

While some may feel that a 1% increase in mortgage rates will significantly impact demand that home prices will have to decline, we disagree.

Mortgage rates have risen by at least 1% six times in the last thirty years; home values grew in each scenario.

So, whether you're a first-time buyer or a repeat buyer, delaying your purchase will almost certainly result in you paying more for a home later in the year (compared to its current value).

Conclusion

Going into the spring housing market, three things appear to be certain:

1. Rates on mortgages will continue to rise.
2. The number of available homes for sale will increase slightly.
3. Home values will continue to rise, but at a slightly slower rate.

If you're considering purchasing a home, now is the time to act before mortgage rates and housing prices rise even more. If you're thinking of selling, your best chance might be to sell quickly so you can avoid the upcoming rise in competition.