Mr Dream Home - Atlas Realty, Inc.
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Mr. Dream Home’s monthly state of the (real estate) Union address:
Let's start with unemployment. I've mentioned before that this economic downturn is the strangest I've seen. In over 25 years of working in real estate, I've never observed the market so soft yet still fairly resilient. Although prices are down 15-30% from the peak in many areas, they remain significantly higher than in 2020. I believe two main factors have prevented a larger real estate sell-off: first, there's been no catalyst for widespread panic. Unemployment is projected to peak at 4.8% in the first quarter of 2026, so most people still have jobs, and those with jobs are unlikely to panic sell. Second, about 51.5% of homeowners (according to Google) have mortgage rates below 4%, making them hesitant to sell. Selling and buying would mean higher prices and interest rates for most. This reluctance is understandable for many homeowners. The number of sales remains near the lowest level since the mid-1990s, which is quite remarkable given population growth and the total housing stock, and it is still below the 2008 real estate crash level. Despite all this, prices have stayed relatively stable.
With unemployment peaking in the first quarter of 2026, a full recovery this year seems unlikely. However, the signs are encouraging as we approach recovery. For Austin to emerge from the downturn, the tech sector needs to resume hiring. Given the current low inventory—less than a 6-month supply—and demand at its lowest since the mid-1990s, prices are likely to increase rapidly once recovery begins. I wouldn’t be surprised if prices rise by 15-30% within a year at the start of the recovery. If demand returns to normal levels, inventory will disappear immediately, and homeowners with low mortgage rates and lower purchase prices will likely hesitate to sell, making it difficult to find additional inventory.
The Trump administration appears committed to reducing the Fed rate and mortgage rates. Last week, ending 1/16, mortgage rates dropped to 6.04%, the lowest in years. This decline is largely due to the executive order instructing Fannie Mae and Freddie Mac to buy $200 billion in MBS (mortgage-backed securities). Increased demand for MBS tends to lower yields, thus decreasing mortgage rates. Additionally, Trump may pursue other strategies, such as reducing the fees lenders pay to Fannie Mae, which could further decrease mortgage interest rates.
What advice do I have for buying and selling? First, if you don’t NEED to sell, I recommend waiting. I believe we are 1 to 2 years away from a major purchase surge, which will likely lead to short-term price increases followed by stabilization. If you have extra money, it could still be a good time to buy. However, plan to put substantial down payments or pay cash to ensure positive cash flow. Even duplexes often struggle to generate positive cash flow in Austin. Nevertheless, I strongly believe property values will rise significantly in the next two years, so if you’re considering purchasing more investment property, now is the time.
01/19/2024
500 Strawberry Cv
$460,000
3 beds
2 baths
2 car garage
1,435 sq ft
Amazing Texas sized, tree covered, cul-de-sac lot and well maintained home! You will not want to miss this home with large oak trees, detached office/work shop with full electric and min-split a/c, updated roof (30 year only 5 years old) and siding. A/C system is only 5 years old as well. Open floor plan with rock fireplace lining one side of the large living area. Kitchen upgraded with granite tile counters, track lighting, double oven and bar top. Off the kitchen is the large pantry and laundry room. Large main bedroom and bath, with walk in shower, glass bowl sink and ceiling fan. "Wood" look tile, laminate and upgraded carpet flooring. Upgraded sliding rear doors lead to the backyard paradise with amazing covered patio and oversized yard. Don't miss your opportunity!
11/06/2023
Market update! Haven’t posted this data to the Mr D page in a while so here you go. First off looking at these numbers and considering buyer traffic is the lowest I’ve seen it in a very long time. We’re under 4 months of inventory and in a typical market under 3 months is a sellers market. If I’ve said it once, I’ve said it probably 112 times, this is exceptionally low inventory in a down market. We are very likely seeing the lowest prices we will see right now.
Looking at this chart you’ll see new listings at 868 new residential units on the market. Only 302 homes went pending this last 7 days (it’ll go up a little today as homes that went pending over the weekend will show up) then we have 768 homes closed, 296 withdrawn from the market, and 303 expired (they didn’t sell). Total removed from the market 1,669 this week and only 868 added to the market. This is declining inventory. we’ve been at about a 3 month supply of homes most of the year, that’s exceptionally low considering demand is through the floor. This means if rates dip into the 5’s and 6’s we’ll see prices rapidly recover. I suspect you’ll see this starting in 1st quarter of 2024 and by 2025 prices very well could be back to the peak! Then up from there.
The fed didn’t raise rates this past meeting and given the unemployment numbers and slowing inflation it’s unlikely they’ll have any more rate increases, in fact it’s probable they will lower rates some next year.
Long story short, don’t listen the naysayers, this is likely the bottom and seasonally adjusted sales and 8% rates make this a time to buy if you can afford to higher rates. Given the news or the economy and no change in the Fed rate we saw a massive drop in mortgage rates end of last week nearly 3/4 point! You can now get government FHA and VA loans under 7% and conforming conventional loans in the low 7’s or lower with points.
Expect unemployment to top 4% next year and likely still a positive GDP in 2024 but it will still be a slower year in general for the national economy but expect Austin to come out of it sooner than the nation as a whole. We will be one of the cities leading the charge in the next upswing. if you don’t need to sell wait until 2025 if you need to sell right now you’ll still have to price it aggressively if you can wait until 1st quarter of 2024 you’ll be better off than right now.
09/23/2023
1107 Big Bill Ct, Austin, Texas 78734
$3,950/mo rental rate
4 beds
3.5 baths
2 car garage
office/flex space
Wow! Amazing views and amazing home. Wonderful natural light throughout the home. Main bedroom suite/wing is on the first floor with canyon views, with high ceilings. Main bathroom features large walk in closet, soaking tub, dual vanities and walk in shower. Gourmet kitchen is open to the family room with amazing canyon views. Upstairs you will find three more bedrooms and two full baths along with a bonus office/flex room with....wait for it...amazing views! All this and just a short drive to lake Travis with highly rated schools.
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Austin, TX
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