Q1 2023 Texas Real Estate Market update – Real Estate Real Fast EP17
Aaron Jistel gives an update on the Texas Real Estate Market in Q1 2023 and recaps the 2022 market noting that it had been affected by a sudden increase in mortgage rates, with sales and home values declining. He provides advice on pricing homes and how to negotiate, as well as what to expect for the rest of 2023.
- Overview of the Texas Real Estate market in Q1 2023
- Commonality among unsuccessful property sellers
- Why the luxury market is not as affected by downturns
- Uptick in showings, offers, and executed contracts in February 2023
- Home values may remain flat in 2023
- Why summer of 2024 could see an uptick in demand from buyers and sellers
- Tips for pricing homes competitively and why to help buyers cover closing costs now
[00:01:59] Recapping Texas Real Estate Market in 2022
The Texas Real Estate market in 2022 was rocked by a sudden increase in mortgage rates which caused the market to take a nosedive. There were 10 consecutive months of declining sales and many sellers had to recalibrate their expectations in order to get their homes sold. Things are starting to look up in 2023 with a break in mortgage rates.
“We saw a little bit of a break in rates at the beginning of this year and that helped kind of put a little spark in the market.”
[00:05:56] 2022 Real Estate Market in Austin, Texas
In 2022, transaction numbers were down 19.1% in Austin and inventory rose from 0.6 months to 2.7 months of supply. Home values dropped as much as 15%, erasing some of the gains made in 2021.
“2.7 months supply of inventory is getting to be much more balanced. It’s still technically a seller’s market, but it doesn’t feel that way when we have a 4.5x change in such a short period of time.”
[00:07:52] Real Estate Market in Austin Q1 2023
The median sales price for the greater Austin MSA area is currently at $450,000 and has decreased by 6% from the previous year. Closed sales in January were down 27% and new listings were up 16%. New listings climbed 63% month over month indicating that sellers are feeling more confident with the market.
“New listings climbed 63% month over month. So from December to January, we saw a 63% increase in new listings that hit the market.”
[00:09:33] How the Austin market in Jan 2023 compares to Jan 2022
Austin pending sales for the year were down 16% and month to month change was up 32%. Average days on market is up 47 days from January of last year. 2021 saw a meteoric rise in home values with average appreciation rates between 25-30%. Month over month changes are a more fluid way to track the market.
“When you used to be able to get under contract with multiple offers after a week close, 30 days from that, that’s a huge difference than taking closer to 100 or north of 100 days from list to close.”
[00:13:22] Commonalities among unsuccessful property sellers
Aaron discussed the commonality among unsuccessful property sellers, which is usually not being realistic about the price of the property.
“Price drops became an absolute norm. It was extremely rare for a home to have a 100% list price to sales price ratio.”
[00:14:56] Dallas Real Estate recap for 2022
Dallas real estate transactions in 2022 were down 13% compared to 2021. Average price in Dallas climbed 14.4% to $484,000. Month supply of inventory climbed from 0.8 to 2.2. Median price was up 4.2% year over year in January. Homes in the $300,000 range made up 27.9% of the market share and closed sales were down 27.9%. Average days on market climbed to 60 with an additional 36 days to close.
“Dallas was definitely less affected than Austin was due to the slowing market.”
[00:18:43] A look into San Antonio and Houston’s real estate market in 2023
Houston and San Antonio saw declining home sales in 2022, with Houston experiencing a 13% decline and San Antonio experiencing a 12% decline. Both markets also saw a significant increase in inventory, with Houston’s months of inventory climbing from 1.4 to 2.6 and San Antonio’s climbing from 2 to 3.1.
In 2022, both markets continue to see declining home sales, with San Antonio experiencing the smallest drop of any major market at 30%. Buyers are expected to have more leverage in these markets, while sellers will need to exercise patience as the average close date ranges from around 100 days.
“Buyers are going to have more leverage than they’ve ever had over the past decade. Basically a generation of homebuyers is going to have more leverage now than they ever have if they’re entering the market.”
[00:23:39] Why the luxury market is not hit as hard when the market goes down
Aaron explains that the luxury market is not always hit as hard as lower price points, and that buyers in the 1.5-3 million range often have the money and resources to make purchases.
“If you’re buying a one and a half to $3 million house, a lot of times you’re a market maker, you’ve got your money, you maybe saw the writing on the wall and you pulled your funds out of the market.”
[00:24:55] How does more time on the market affect a seller’s price
Aaron explains that when looking at houses, we’re looking at the law of averages. When the average days on market in a neighborhood is 60 days, sitting on the market for 60 days is not a terrible thing. Right now, sellers should expect to negotiate either on their price or offering a credit for closing costs for the buyer. Sitting on the market longer is not hurting a seller nearly as much as it would two years ago.
“Now keep in mind, we’re seeing the list price to sales price ratio change. And so the expectation shouldn’t necessarily be that you’re going to get your asking price.”
[00:26:35] Texas Real Estate Market in February 2023
The real estate market in February 2023 saw an uptick in showings, offers, and executed contracts. Interest rates were at their lowest since the beginning of the year. Austin was hit with a freeze during this time but the market still saw growth.
“Buyers who had been just kind of waiting for their opportunity grabbed it, grabbed that low interest rate, got under contract, got a house.”
[00:29:18] Predictions for the Real Estate Market in 2023
Aaron Jistel predicts home values will remain flat in 2023 due to economic instability, but there is hope for an uptick in 2024. He also believes that this summer will be better than last summer with more pent up demand from buyers and sellers.
“We’re going to just start seeing both [buyers and sellers] come back into the marketplace.”
[00:32:10] Final advice for selling a home in Texas in 2023
Aaron gives advice to sellers on pricing their homes, being prepared to negotiate, and understanding the local market. He suggests that sellers should price their homes competitively and be willing to help buyers cover closing costs.
“Price is the number one by a mile factor when it comes to selling your house. Everything else pales in comparison to that.”
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