San Antonio Express-News (Sunday)
Austin slows, too, but agents don’t buy talk of ‘bust’
Those with vested interests in the Austin housing market have swapped emotional places over the past six months.
Sellers and landlords — who reveled in the leverage they enjoyed, able to insist on all-cash offers, waiving appraisals and refusing to fix anything — have come back down to Earth.
Meanwhile, buyers — who despaired that they would never be able to afford a home inside city limits without winning the lottery — have some hope.
Whether the sky is falling or the clouds are parting is a matter of perspective.
Median home prices in Austin, which peaked in May at $550,000, fell to $537,000 the next month and continued to fall for the rest of the year. In December, the month with the most recent data available, the median was $525,250.
According to Zillow, the Austin housing market is
“ice cold,” falling out of the 10 hottest real estate markets after topping the list in 2021 and landing at No. 10 last year. A story in the Real Deal describing a memo from Goldman Sachs to clients about looming recessionstyle housing busts, including in Austin, features an image of a thermometer exploding from the heat.
Austin real estate’s new reality is an extreme shift from a year ago. MySA spoke with some Austin Realtors about what it’s like as the real estate market shifts from where it was a year ago.
Media spin
Ashley Jackson, a longtime Austin real estate agent and president of the Austin
Board of Realtors, calls the current Austin housing market a “stabilization,” rejecting the notion that six months of a downward trend means the housing market is slumping. She said the Austin market has returned to a more normal pre-pandemic state, one that was already attractive to buyers.
The past 18 months have been characterized by accounts of low inventory, cash offers regularly trumping those needing financing and offers regularly exceeding asking prices. More recently, however, heavy bidding wars have subsided.
“Suddenly, (buyers) had a more stable marketplace in which to find a home. It meant they had some options,” Jackson said. “Some buyers have even enjoyed getting homes under the list price.”
During the COVID-19 pandemic, Jackson said, she had buyers offer up to $100,000 over asking prices for homes.
“We don’t have to do that right now,” she said.
Everything changed when interest rates began to rise in April. With asking prices still increasing and rates edging above 5 percent, many folks were priced out of the market and stopped looking.
But Jackson chafes at the idea that the Austin housing market is “ice cold” or “overheated.” It’s a great time to buy, she said, even with higher interest rates. She points to Austin’s vibrant economy, the continued migration to the city and large companies moving to Central Texas as reasons why people will still need to buy homes here.
Jackson said real estate needs to be examined on a hyperlocal level and that even Zillow doesn’t have its finger completely on the pulse. The day she was interviewed, she had two closings scheduled, one with multiple offers.
“You’re not going to see a headline about that,” she said.
And even as power has shifted away from sellers for the first time in years, local Realtors aren’t ready to label the new reality a bust.
A new reality
“I was extremely nervous about it at first,” Austin real estate agent Kristin Kreisel said of the downward trend in home prices beginning last spring. Kreisel started working in Austin real estate more than eight years ago. For almost that entire time, Austin has been a seller’s market.
But with the shift, she has adopted an almost Buddhist outlook on how to respond to something that is out of her hands.
“I’m not in control of the market,” she said. “I can only help my clients to respond to it.”
With sellers, managing expectations has been key. Whereas in 2021 and early 2022, suitors came running with arms full of cash, sellers now must price homes more competitively and be willing to lower their asking prices if offers are scant.
“The process for me hasn’t changed,” Kreisel said. “The data has changed.”
She has fewer investor clients now than before and said some homes still have cash buyers and multiple offers, but equilibrium has been restored a bit.
“A year ago, a buyer was giving up everything,” she said. “If they wanted a day to have the house inspected, they were getting passed up. And if you’re spending hundreds of thousands of dollars on something, you should understand the health of that home.”
The reduction in home pricing, while harming sellers on a macro level, might be what the city needs to regain normalcy in a real estate market that seemed overwhelming for buyers.
“In some ways,” Kreisel said, “I think there’s been some relief on all sides.”
Jackson agrees. Inventory has increased 1.6 months year over year to 2.1 months, although the Austin Board of Realtors’ most recent newsletter includes a quote from Independence Title claiming inventory could drop up to 20 percent in 2023 as builders scale back.
“I can tell you that over the past six months or so, as a buyer’s agent, it’s been a relief,” Jackson said. “It was painful to watch our buyers give up so much to get a home under contract.”