Eric Engberg - Austin Realtor

December is the second month of declining YOY values, which we expect to continue through Q3 of 2023. Does this mean that prices are still falling? Maybe not. More on that below!

Key Highlights:
-Inventory decreased to 3.6 Months of Inventory in the metro from 3.9 MOI in November. The City of Austin saw inventory fall to 3.4 MOI.
-Avg Sold Price decreased -5.95% YOY in the Metro and -3.71% in the City.
-Withdrawn/Expired listings increased +282% in the Metro and +255% in the city, which contributed to the tightening inventory.
-Contracts fell by -22% YOY, which is a sharp improvement from November 2022.

Prices are Dropping (But for How Long?)
December was the second month of price depreciation and the beginning of what we think will be a long Year Over Year depreciation trend. YOY Sold Price is very much a “rearview mirror” metric, meaning it is one of the last statistics to turn south or north with the overall market. In order to stay abreast of the market, we will now begin to monitor Month Over Month numbers. There is a reasonable likelihood that MOM numbers will appreciate in the spring while YOY numbers are still in decline.

Q3/Q4 Give Back All of the Strong Q1/Q2 Gains
Average sold price in December 2022 came back full circle to January 2022. We saw incredibly strong appreciation in Q1 and Q2 2022 and prices began to decline in June 2022. The question now is “have we bottomed”. We won’t know the answer until February/March of 2023 when we see how strong or weak buyer demand is during the peak season.

YOY Contract Decline:

April

-11%

May

-17%

June

-32%

July

-25%

August

-24%

September

-29%

October

-40%

November

-38%

December

-22%

The breath of fresh air was the sharp improvement in YOY contract decline in December from November 2022, which fell by almost half. While this does indicate more demand in the market, it’s important to remember that December is a very slow month for contracts, so this small dataset could be misleading.

Leading Indicators
We are a broken record with regard to leading indicators because they are so important.. Mortgage rates will be the predominant driver of the real estate market. Mortgage rates are a function of the bond market, which is heavily affected by the Fed Rate. The Fed’s decision-making is closely tied to the CPI Report. If we watch the CPI Report and the Fed Rate, we will be able to stay in front of the Austin real estate market trends. Note: This is a vast simplification and we’ll dive deeper into market analysis and predictions in a few weeks.

If You’re a Buyer
You still have a lot of leverage. There’s not a ton of inventory, but there is inventory to choose from. Mortgage rates are high compared to the past decade, but not exorbitant (or even high from a historical perspective). Now and during all of 2023 is likely the best time for you to buy if it makes sense for you. We do expect the market to strengthen by the end of 2023 and into 2024.

If You’re a Seller
It’s early to predict what the spring will look like, but it will likely look much better than Q4 2022. We expect more buyers to enter (or re-enter) the market and we don’t expect an influx of sellers (with the exception of some sub-markets). With very few exceptions, the spring market is the best time of the year for sellers. If you’re considering selling now, your decision should be “Do I sell this spring or in 2024?” We don’t expect to see the 2023 market change much or improve from whatever unfolds in the spring.

Always bear in mind that real estate is hyperlocal and hyper-situational so please reach out to us if you have questions about your specific market or situation. We'd absolutely love to help!

I was showing homes today in Windsor Park and came upon this tribute. Worth the read.