As 2022 draws to a close, people think about what 2023 will bring, how things will be different, and how they will remain the same. For the people interested in buying, selling, or investing in real estate, the question is not merely hypothetical but essential. Since 2020, the real estate market has been through extreme fluctuations, setting records and being generally unpredictable, and nowhere is this more true than in Austin and its surrounding areas.
Knowing how the market is currently and how it is likely to change is an essential step in making any kind of real estate transaction. This is why buyers and sellers hire real estate agents and why experts spend time examining the current trends and historical tendencies to try and make an educated prediction for how the market will turn in the future. This is how people believe the Austin real estate market will change and shift in the coming year.
Increase in supply
As in any market transaction, supply and demand have a huge impact on every aspect of the real estate business. Recently, the Austin market has seen definite increases in available inventory, which is defined as the number of active listings in the market. The number of listings across the five counties of Austin has increased by a shocking 170.2%
, and the market has officially reached 2.9
months of housing inventory, which is the highest level since September 2018. Still, a healthy market is considered to be six to six and a half
months of inventory, so despite the increase, it is still below normal levels.
As of the September 2022 report, the Austin metro area had an inventory growth level of 138%
, meaning the active real estate listings have more than doubled within a year. Considering this jump and the supply of homes going from one month to three months
between the end of 2021 and August 2022, experts believe the increase in supply will continue and have a significant impact on the real estate market. More supply will slow the market and give buyers an advantage.
Increase in demand
However, despite the staggering increase in supply, demand may still be outpacing it, leading to a less significant market change. The population of Austin increased by 21%
, according to the 2020 population numbers of the U.S. Census Bureau. Due to a quickly growing economic industry, more and more people are moving into the city, needing houses.
Not only are individual people moving in, but large companies like Tesla, Oracle, and Google are also moving their headquarters to Austin or building locations in the city. The influx of companies creates more jobs, leading to more people moving in leading to more demand for housing. It also makes the city more attractive to outside investors.
The growth of jobs and population are not expected to slow down as 2022 turns into 2023. With the housing supply still below healthy levels, it is possible the high housing demand will continue to outstrip supply.
Change in prices
The fluctuation of supply and demand makes predicting changes in pricing difficult. According to some experts, home prices are still rising in Austin, even if they are increasing at a slower pace than in previous years. In August of 2022, the median home price rose by 5.5%.
With the price of housing going up at a sustainable rate, real estate experts believe the price rise is indicative of the market returning toward normalization. Despite continued rising, for the first time since 2020, the year-over-year price growth fell below 6%
However, other experts believe Austin home price growth will slow considerably. They predict for 2023 that sales will slow down, leading to sellers lowering the listing price. Further evidence of a potential downturn is that certain analysts believe the Austin market is significantly overvalued. Falling housing prices could turn the market in favor of the buyers; however, some buyers may prefer not to buy a depreciating asset.
Houses listed longer
One 2022 statistic says homes stayed on the market for 31
days on average, topping one month for the first time since 2018. Some experts believe this trend will continue into 2023, with homeowners finding themselves in the uncomfortable position of having their houses sit on the market for an increasing amount of time.
Remaining a seller’s market?
With prices going down and both supply and demand going up, what does this mean for the market? Well, as usual, the experts are divided. Analysts generally agree the housing market is stabilizing. Nevertheless, some people predict the market will still favor sellers in the near future, despite the stabilization, houses' longer time on the market, and buyers' greater negotiation power. Even though inflation and interest rates are on the rise, they believe Austin will remain, more or less, a seller’s market with the power still with the sellers.
Turning to a buyer’s market
Others believe the days of the sellers are nearly over, and a buyer’s market is on the rise. According to Knock real estate platform, the Austin area is expected to have an abrupt swing from a seller’s to a buyer’s market by July of 2023. These people think Austin’s market, whether gradually or all at once, will change into a buyer’s market, giving buyers more negotiating power. Because of the inventory growth and lowering prices, buyers will have more time and more options. However, despite all the predictions, there is no way to know for sure what the market will do in the future.
Work with The Cord Shiflet Group
For those looking to get into the real estate market with Austin luxury homes, a good realtor will be helpful. The Cord Shiflet Group is a realtor team founded on professionalism, hard work, and trust. Created by Cord Shiflet, who was listed as the number one individual real estate agent in Austin by the Austin Business Journal, the firm has a reputation for excellence and premier real estate.
Contact the Cord Shiflet Group today about your Austin property.