2023 was a very interesting year, to say the least!
We hope you had a great 2023 and are looking forward to an even better 2024! Today, we have for you the 2023 Austin real estate market year in review.
Before we dig in, it’s important to understand that the market did decline, but we are likely not in a multi-year decline. Inventory remains tight and prices have stabilized. We’ll get into the details more, but we strongly believe that 2024 will be the beginning of a market recovery, and we are likely to see modest price increases this year.
Key Highlights:
Average sold price declined -8.07% from 2022 to 2023.
Median sold price declined -10.21% from 2022 to 2023.
Units sold dropped -9.75% from 2022 to 2023.
Inventory remains tight at 3 months of inventory in 2023.
Average sold price increased 46.2% from 2019 to 2023.
Average annual appreciation from 2013 to 2023 was 6.5%
What's to Come in 2024?
The Fed intentionally caused the downturn through actions that started in 2022. It’s no surprise that higher interest rates cause reduced demand, but it’s always surprising just how effective they are. The highest likelihood is that the Fed will begin dropping interest rates in late Q1 or early Q2 2024, and markets are already pricing that in. If that comes to fruition, we will see the recovery take hold. Hiring has been frozen for roughly 18 months, and jobs will come back. Mortgage rates climbed until the end of 2023 and we should see them consistently drop. Jobs and liquidity are the two fundamental components we need for a market recovery, and we are likely to see both in 2024.
If You're a Homeowner:
The average homeowner in Austin owns their home for 8 years. Given that time horizon, you are in great shape. You can go about your life and choose to sell (and hopefully buy again) when life dictates. The peak of the market appears to be in 2022. If you bought then, by the numbers, you will need 2-3 years of normal appreciation for your home to return to your purchase value. If you bought before 2022, your home’s value is likely higher now than it was when you purchased it.
If You're Considering Buying:
While it sounds like a sales pitch, it’s a great time to buy. Demand is returning and rates are improving. Austin’s market is very safe and consistently appreciates in the long term. Our advice remains the same: If you are relatively certain you’ll live in your home for 3+ years, it’s a smart decision to buy. It becomes a smarter financial decision the longer you choose to live in your home.
The Pandemic Years: 2019 to 2023
2020 to 2022 was a disruptive period as the pandemic took hold, the real estate market froze, and the market then took off. The Fed dropped rates considerably during this period and buyer behavior changed considerably. With buyers stuck at home, there was an increased emphasis on one’s living situation and demand increased dramatically. The Fed poured cold water on the market in mid-2022, increasing rates considerably. Because of all of this, the Average Sold Price reacted considerably. The net result was a 46.2% increase in Average Sold Price from 2019 to 2023. Units Sold increased dramatically in 2020 and 2021, then dropped precipitously in 2022 and 2023.
Long-Term Perspective: 2013 to 2023
Real estate pricing is generally a slow-moving ship, so it could be considered alarming to see price swings like this. However, when we look at a longer-term perspective, we see that prices are generally stable. The pandemic caused extreme buyer behavior, but it appears that has now been corrected. Population growth has always been the primary driver of Austin’s real estate market. When comparing our average sold price with our population growth, it appears very healthy.
As always, our goal is to provide you with the information you need to reach your investment goals. We hope you find this analysis useful in strategizing for your future.
Cheers!
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