About this time last year we saw interest rates increase at a rate never seen before along with a dramatic increase in the number of homes on the market. As a result, buyer demand dropped off the cliff which caused prices to fall around here almost as much as anywhere in the country. Of course, our prices had gone up so much we had farther to fall.
Many buyers, especially those influenced by social media predictions, held off buying thinking they could wait for prices to crash like in 2008.
Instead of seeing a 2008 crash, this spring has seen a resurgence in buyer demand. It appears buyers have gotten used to interest rates in the 6% range and have realize we aren’t going back to 3% rates any time soon and likely not forever.
In addition, we have not seen a spike in new listings like we did in the weeks after Easter last year.
4 of the last 6 homes we listed had more than 1 offer. That doesn’t mean the market has returned to the 2021 craziness. I don’t expect we will see that again. Even when we have multiple offers the homes are not selling for $200,000 over asking price.
But it does mean, at least for now, real estate prices have bottomed out. We won’t really know until later in the year if this is just a normal spring seasonal increase in buyer demand or the new “normal market” because it is still entirely possible for worse economic data to come out later in the year. For example, Austin has been one of the largest cities hit by tech layoffs. Until last week I didn’t have anyone contact me to sell their home due to losing their job and having to relocate. In the last week I have had 2 families contact me in that situation. That could be a coincidence or something we look back on in 6 months as a sign of more to come.
Market Value Down – Tax Value Up?
If you’ve looked at your 2023 property tax assessment you may notice something strange that has been confusing many people.
Real life property values are down compared to last year, but for many people the assessed value of your home has actually gone up. How is that possible?
For many homeowners with a Homestead Exemption the maximum your assessed value could go up in a year is 10%. What that means is after the run up in prices over the last few years many homes are assessed at significantly under the true market value of the home.
This is just a hypothetical situation…Someone may have a home that was worth $800,000 last year with an assessed value of $600,000. In 2023 the market value might be $700,000 with an assessed value of $660,000 after the 10% increase. In that situation the market value dropped $100,000 and the assessed value INCREASED $60,000. Even worse, a homeowner in this scenario can expect the assessed value to go up again in 2024.
There may be some good news for property taxes. In the Texas Legislature there are 2 competing proposals to tax relief for homestead properties. One increases the homestead exemption amount and the other reduces the cap from 10% to 5%. We will have to wait and see if either gets adopted for this year.
Who Is Buying And Selling Right Now?
At our last Home Selling Seminar someone asked me this question. She didn’t think anyone would want to move with higher interest rates.
My answer was “people who want to live a better life sooner than later.” Our clients move for all kinds of reasons. Many realize we aren’t going back to a 2021 market as if we can hit the light switch and at the same time realize we only get so many more turns around the sun.
If you have been waiting for the market to stabilize now is the time. Contact me at 512-791-7473 to strategize about your situation.
Posted by Eric Peterson on
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