Kopa Real Estate | Austin Market Report Jan 2015

Can you believe it’s 2015 already? Let’s talk about what I expect to happen with the Austin real estate market in 2015. Throughout the holidays people wanted to ask about the 2nd article that came out saying Austin real estate is overpriced.

Is Austin real estate overpriced? When you see a headline saying we are overpriced it makes people think we are in a bubble that’s about to burst. I don’t believe our market is overpriced and I definitely don’t believe we are about to see a bubble burst.

For there to be a bubble you need to see speculation and easy money. Instead Austin real estate prices have increased due to population and more importantly job growth along with a low supply of housing, particularly in the central Austin areas. I also believe our expected job growth and the fact that mortgages are more difficult to obtain today than 7 years ago will limit the downside our market could see under the worst scenarios.

I did some research for the area near South Lamar, one of the areas we have seen the largest price increases in the last year.  In November 2014 the average down payment in this area was 21%. For a bubble to occur we would need to see sellers be forced to sell in a hurry for less than market value or an increase in foreclosures. Because a buyer has to be more stable financially to qualify for a mortgage today and this 21% equity it is unlikely for a bubble to happen.

Even the author of the most recent study had this to say about the Austin real estate market “prices are starting to stabilize and are expected to remain flat over the next few years, and he doesn't expect the housing market here to bust because the state economy is so strong.’”

That doesn’t mean there aren’t plenty of homes for sale that are overpriced. I can show you a large neighborhood in town where there are several homes that have reduced their price 10%. You have to remember in most cases you are only buying one house and not the entire market so market statistics may not mean anything to you when considering a particular home.

Going forward I do expect to see more homes coming on the market. But I also expect a larger number of homes to be overpriced. 6 months ago it seemed like most sellers didn’t realize what their home was worth. Now it seems like some sellers are overvaluing their home, either by comparing it to homes that have been more updated or by pricing their home based on what a friend told them another neighbor sold for even though that information isn’t accurate.

On December 31st there were 272 homes that either expired from being listed for sale or were withdrawn from the market before selling. That’s a good indication that we are seeing more entire market, but it is something to keep in mind whenever you look at the asking price for a particular home. If you think the price is significantly too high it likely is and it likely won’t sell.

Overall my recommendation for 2015 is proceed with caution.

If you would like to talk about your situation give me a call/text or send me a message at (512) 791-7473 and I will be happy to talk with you.

Posted by Eric Peterson on
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