As we headed into the year I was interested to see what would happen to our real estate market. There has been talk that the drop in oil prices and that effect on the Texas economy combined with Austin real estate becoming what some believe is unaffordable would cool off the market. That has definitely not happened.

At the end of December our inventory of homes was up .2% over December 2013. That may have indicated the real estate market would ease up a little in January. It doesn’t look like that is a long-term trend. As of today the inventory of homes is back under 2 months. Homes that are in desirable areas are still selling quickly with multiple offers just like last year, if not even faster.

As an indication our first listing as a new business received multiple offers and is going to sell for $20,000 over asking price!

On the other hand I am seeing many homes that are being priced based on what other homes with more upgrades have sold for recently. Plenty of homes are priced 10% or more over market value. Yesterday I talked with a potential seller who wanted to base his home off a home that had been completely updated. His home has not been updated at all. What makes this even worse is the home he was comparing his too never sold and was taken off the market in December. Buyers have to be careful and understand that not every home is priced based on current market value.

The effect of oil prices also doesn’t seem to have had any effect on the market so far. Recent reports I have seen expect Austin not to experience a market shift because of the drop in oil. In the long run we may see oil prices causing real estate to become more affordable as builders may be able to build faster as oil field workers return to the construction business. It’s estimated we need about twice as many new homes being built than currently projected to meet supply. Part of what makes it difficult for builders to increase their production has been the inability to find enough workers who previously left the construction industry for jobs in the oil business.

Because of the inventory shortage of homes I recommend any buyers begin the process as soon as possible. Changes to the way appraisals are being done after January 26th will make closing take longer. 30-45 closings may be pushed out to 45-60. That means from the time you go under contract to closing may take 2 months. Buyers should know deciding to buy and finding a home you love may not happen right away. Great homes aren’t like a bus schedule where a new one will be coming along in another 10 minutes. I’ve seen buyers miss out on a home that is perfect for them by waiting too long only to have to wait a long time before another great home becomes available. As always it is difficult to time the real estate market.

If you are thinking about buying or selling real estate, or if you would like to know the value of your home in today’s market call me at (512) 791-7473.

Posted by Eric Peterson on
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