Let’s get to the real estate statistics for Austin, Texas. In November, 2021 there were 392,976 Single Family Homes sold in the Austin area which was down 8.6% from 3,256 sales in November, 2020. The average dollars per square foot increased 32% to $272.70. The average price increased 25.1% to $587,380 and the median price increased to $472,490 which was an increase of 30%.
Let’s talk about predictions for 2022. Keep in mind nobody predicted what’s happened in the last 2 years. Probably the only thing we can be sure of is something else is going to happen out of the blue that’s going to completely change everything.
The best advice I can give you for the next 3 months is to buckle up and hold on tight. I’m not saying we are going to see a market like last year, that was likely a once in a lifetime event, but I do expect the Austin area real estate market to pop again in mid-January. We have not seen an increase in listings over the fall and early winter. Previously I’ve talked about watching the number of active listings because that will show us where the market is going. We haven’t seen the increase in listings required to slow down the market. In addition, my phone is ringing off the hook again with relocation buyers moving to the area.
January is usually a great time to buy a home because many Realtors and home sellers’ price their home back in October or November and don’t re-evaluate the market in January. We helped a couple buyers get great deals at the beginning of last year because of that. If you are selling in January don’t let that happen to you.
As we get later in the year, I do expect we will see more and more sellers putting their homes on the market. Many of our potential seller clients are much more motivated this year. I pay attention to whether someone would like to sell compared to needs to sell and we are getting contacted by more people this year who need to sell. Overall and especially long term I am bullish on the real estate market but an increase in listings along with higher interest rates will cause a deceleration in appreciating prices.
With inflation being at a 30 year high it’s almost assured we will see higher interest rates later this year. In my opinion higher rates may affect our area more than others. Not only may the higher rates give some buyers pause but there’s an argument higher rates will cause a drop in the stock market value of technology companies. Part of the reason our market has exploded is we have so many tech employees moving to our area and many of them have the financial ability to pay way over asking price for a home due to the stock they have received. What happens if interest rates move up too fast and the Nasdaq crashes? That would definitely have an impact in Austin real estate prices. Let’s hope that doesn’t happen.
For sellers if you’ve already been holding off selling for 2 years it may be time to put a plan together. Some experts are saying it may take 3 years before things are back to normal. Our clients who decided to sell last year all wound up finding another great home and they’re in a better place. One of the fun things for me at this time of the year is to see pictures of their new homes.
It’s always tricky trying to time any market. That’s especially difficult when you’re trying to sell a home and buy another home. I must have talked with 10 families lately who are planning to move to Colorado. Many have to remember they aren’t selling a home in a vacuum and they have to consider what the market is like where they are moving to. I appreciate their situation; everyone wants to sell at exactly the right time for the most money. This chart shows the dramatic drop in active listings for the overall Colorado market. What that likely means for next year is any extra money you make by delaying your sale here you’ll probably pay even more in Colorado. If you are relocating out of the area, check out what the real estate market is like in your next destination and consider the overall picture of how that’s going to look financially for you.
For buyers it’s going to be more of the same. The best thing you can do is work with an agent who is active in the market and can give you great advice based on what’s happening on a daily basis. There are over 18,000 members of the Austin Board of Realtors. I saw a statistic that 60% of Realtors haven’t sold a single home this year. In my opinion most buyers in our area do a bad job when selecting the agent to help them with the largest purchase of their lives.
We have so many buyers in our area that work in technology and 99% of technology is working towards removing the human aspect of life. Due to that bias most buyers around here don't see the value in human interaction. They like to visit open houses and call the listing agent to see homes (this is why we do so many open houses) and then when they find a home, they like they reach out to several Realtors and try to negotiate the best cash back rebate. It's short sighted. What they don't realize is half the offers we receive are dead on arrival because the other agent is unprofessional, the offer is written so poorly or the terms are in the words of a recent seller client "goofy."
On some of the personal finance boards they make this seem like a good idea. What they think is happening isn't what's really happening. In a conversation about this I'm usually the only person who has personally reviewed over 2,000 offers with sellers. I'd like to think that gives me a good idea of what's really happening.
We just closed a sale where the buyer was working with one of the larger rebate brokerages. The buyer received ~$4,500 rebate from that company. We had multiple offers on the home and the seller had instructed me to tell any agent we had multiple offers and the terms of the highest offer to see if anyone wanted to beat that offer. This buyer came to the open house so I didn't know who his agent was to see if they were making an offer. Their agent never contacted me to ask about the other offer and instead only sent me an offer for $40,000 higher than offer #2. If they had understood any of the human aspects of real estate, they wouldn't have received a rebate but would have saved a ton of money.
You also want to make sure you are getting advice from someone who can help you make decisions based on your own risk tolerance. If you work with an agent that isn’t active in the Austin real estate market, they may be too conservative for you. You may wind up losing offer after offer because the advice you have been given isn’t up to date with what’s really going on.
Finally, this is a great book I just finished reading that can help you make better decisions. I make thousands of decisions every day. It’s human nature when making a decision to think about it as black and white. In reality most decisions are 60/40 and in most situations, there is so much unknown information and luck impacting the result it makes it challenging to decide and take action. This book will help you be more comfortable making decisions and analyzing the results from those decisions.
Thanks for watching and I appreciate your support. Please contact us if we can assist you.
A lot can happen between now and the end of the year in 2022. If your plans include making a move sign up for one of our in-person or online Free Home Selling Workshops in December. Sign up at KopaWorkshop.com. As always if we can assist you contact us at 512-791-7473.
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Posted by Eric Peterson on