The prevailing message in the media is that the economy is tanking and that house prices are dropping. The data in Austin point to a different story – a strong sellers’ market for many first time home sellers. Let’s take a look at first time home buyers and some supporting evidence from the Austin MLS and from Move.com.
Which homes are selling fastest in Austin?
The strongest market in Austin is the first time homebuyer market.
The chart on the right shows that the lowest time on market, and most sales in Austin are under $300,000. (68% of homes sold in the last 12 months).
A cursory look at homes under $200,000 shows that there are 499 homes under contract to be sold and 1,353 for sale. That means that homes in this price range are in relatively short supply – a sellers’ market.
Each of the last three homes I’ve helped buyers write offers on in this price range have received two or three offers in the first week on market. One had three offers by 6pm on the first day on market.
Look at the chart below which shows how many buyers are looking to buy their first home or to downsize:
So if you bought your first home and are looking to sell to another first time homebuyer, now is a good time to do so. First time home buyers are motivated by a few things:
Interest rate drops significantly change the affordability of homes in Austin. A drop from 6% to 5% means that a buyer can qualify for around $20,000 more home with the same monthly payment – from $180,000 to $200,000.
First time home buyers may be eligible for the $8,000 tax credit. If you look at the survey results from Realtor.com ® below, you see that the word about the tax credit hasn’t yet made its way into almost half of the ears of Americans. As this message filters through and people get their credit scores in order, there may be an acceleration in sales as the deadline for getting $8,000 from the government approaches.
Is now a good time to move up the property ladder in Austin?
If you have stable income and have been considering a move up from your first home, then the ideal conditions would be:
- Good selection of homes to choose from – there is more inventory above $200k in Austin than usual, or a buyers’ market in higher price ranges
- Lower interest rates than when you purchased so the new payment is kept low – mortgage rates are lower than they’ve been in over 30 years.
- A strong market to sell your existing home – plenty of first time homebuyers.
- A weaker market (more negotiating room and lower pricing) in the homes you’re moving up to – higher inventory at higher prices results in more supply and lower pricing.
All of these things are true in general in Austin right now. Local markets are not homogeneous so make sure to get a local market snapshot for the areas of Austin you are moving to and from. Yes, it’s a great time to move up in Austin.
While local markets vary within Austin, in general it’s a great time to sell your first home and get an attractive deal on your second home. First time home buyers are gradually becoming aware of the $8,000 tax credit they may receive, and the under $200k market is seeing multiple offers.