Austin February Market Update

We don’t have data until the month is over, so here’s our market update based on what we saw in February. What a great time to compare market statistics too, especially as news outlets are talking about an impending crash. COVID lockdowns officially began March of 2020, which means February of 2020 was our last month before the COVID craze in the market. Let’s see how much things have changed and make some predictions about the future!

Months of Inventory

This metric has been one of the most commonly reviewed over the last few years as we hit a ridiculous low of less than half a month of inventory available in 2021/2022! To put things in perspective, what this means is that there were enough properties on the market for only HALF of the buyers at any given time to get a home. In February of 2020, before COVID threw the market out of wack, we were sitting at 1.5 months. The Austin area has slowed even since then and is now at 2.7 months of inventory.

With that, I have good and bad news. The good news is that we’ve seen prices come down slightly, but nothing indicating a crash (I guess this is bad for those who’ve been waiting for one). The bad news is that 2.7 months of inventory is still considered a “seller’s market” from an economics standpoint. While many houses are likely selling below asking and/or covering closing costs for the buyer, we’re still nowhere near the 5+ months of inventory after the 2008 crash.

Days on Market

Following a similar trend, the average DOM in 2020 were 98, they dropped significantly down to 77 last year, and they’re up to 120 now. Keep in mind that this is counting days to close as well, which usually take around 30 days. That means you’ll likely be looking at an average of around 90 days on the market before getting under contract with the end buyer. Keep this in mind when you’re preparing to list, but getting an expert opinion from someone like myself will help a lot more for planning. Depending on the price range, condition, and other characteristics, your home can sell much sooner or it may take much longer to find a buyer.

Current Economic Data

A major concern people tend to have regarding the economy is how the job market is looking. The Greater Austin area has seen an 8.5% increase year over year in the amount of jobs available, from 1,143,425 in 2021 to 1,240,641 now. With that, the unemployment rate has dropped from 4.25% to 2.9%, which is insanely low!

The largest factor driving interest rates currently is the Consumer Price Index (CPI, or commonly referred to as the inflation rate). The last measurement was done 14Feb23 at 6.4%, with shelter specifically at 7.9%. The Fed remains vigilant in their goal to bring the inflation rate below 2%, so we can expect interest rates to stay where they are for a while to maintain that course for a soft landing of the economy without a recession (or at least a significant one).

Current Events

I’m not going to pretend to be an expert in everything, so there’s only so many conclusions I can draw from world events and I’m sure I’ll miss quite a few. For the sake of brevity, here’s the most significant current events that may affect the housing market or that I personally found interesting:

• The war in Ukraine is still ongoing and is likely the most notable world event at this moment. As the Winter frost melts, troop movements are expected to increase. This is why NATO has been supporting Ukraine with significant equipment to be used to repel the Russian forces. With China refusing to offer any real support to Russia, it seems it’s only a matter of time before Russia is forced into peace negotiations. Ending this will likely bring a significant boost to all economies.
• This is unlikely to affect Texas, but the market in East Palestine, OH will likely be suffering after a train crashed and leaked several toxic chemicals. Several cars were carrying hazardous materials such as vinyl chloride, ethyl acrylate, and isobutylene. These are considered to be very toxic and possibly carcinogenic. Of note, vinyl chloride may be incredibly dangerous in its gaseous form, but it’s also used to make PVC pipes, wire coatings, and other common materials. It begs the question of whether this will cause additional safety restrictions on transport of these chemicals and how that will affect the economy in general.
• On a better note, fusion was achieved for the first time in a lab. While the technology is still a long way from being viable, this is another step towards clean and complete energy independence. As the cost of energy decreases, every industry is able to operate cheaper. Expect big things from this within the next decade.

Other Important Topics

• Both FHA and VA loans are receiving favorable adjustments in 2023 with the VA funding fee rate being reduced as well as a reduction in Mortgage Insurance Premiums for FHA buyers
• Fannie Mae (FNMA) updated their cash-out refinance eligibility requirements so that an existing first mortgage being paid through the transaction now must be at least 12 months old instead of the previous 6 months

Summary

There’s a pretty good chance you don’t want to read all of that. If you did, heck yeah! I hope you found it interesting. If not, here’s the TL;DR:

The market is currently a little lower than it was before the pandemic. Maybe not the prices, but the supply/demand curve. Around Austin, we’re seeing prices decrease slowly and we’re seeing buyers able to finally negotiate again. You may not get the deal of the century, but you have a good chance at getting your closing costs covered and maybe below the asking price as well. Isn’t that crazy to hear?!

The world has some crazy things happening with trains crashing with toxic chemicals to the war in Ukraine, but we’re seeing some fantastic scientific achievements as well with potential for fusion to be a thing within the next few decades.

2023 is bringing a few changes in the mortgage market with cash-out refinances requiring a longer seasoning period. This will change the way a lot of investors structure their loans as they will now need 12 months instead of 6 to get their money back out. Additionally, VA and FHA loans are getting a bit cheaper which helps with your buying power if you plan to use these loan types.

For questions on market updates or to talk about if it’s a good time to buy or sell, contact me at 512-803-7226 or message through the contact me page on this website.

If there’s a topic you’re particularly interested in, get in touch with me: 512-803-7226 orJankovichRealEstate@gmail.com