Since the pandemic's start, the real estate market has changed drastically. At first, cautious decisions were being made while the world navigated how things could look moving forward. Then, it became a seller’s dream and a buyer’s nightmare because housing prices soared and competition for homes was stiff.
Most recently, as interest rates have skyrocketed and home buying has become less attainable for many, shifts are starting to take place once again. And Texas is at the center of it all.
With blue skies, wide open land, and plenty of big-name companies headquartered nearby, it’s only natural Texas has become a hotspot for people of all kinds. As such, the population in the Lone Star State is continuing to grow.
The state’s capital of Austin has seen a population increase, and as a result, the Austin real estate market has proven competitive. But the real question is, will it stay competitive in 2023, or is another shift in store?
The answer is dependent upon a number of factors. The Austin housing market is part of a much bigger industry that ebbs and flows based on the state of the economy, rate of unemployment, and cost of living as determined by inflation, for example.
To know what real estate in Austin could look like in 2023, keep an eye on these things.
Shift to a buyer’s market
One of the biggest drivers of the seller’s market of the last few years has been the lack of homes available for sale. This naturally creates a seller’s market.
And it makes sense. When people were spending more time at home, it would lead to feeling the desire to switch things up. Whether that’s in the form of more space, a different layout, or a new lifestyle altogether, big moves were the trend.
However, given the limited supply and higher-than-expected demand, houses were hard to come by. Bidding wars led to almost unimaginable price increases on homes, and many buyers were willing to sacrifice to make their moves happen. That included all cash offers and waiving contingencies in the process. It was worthwhile because most homes weren’t on the market for long before being bought.
In 2022, though, the market has cooled a bit as demand has reduced, and it’s more normal for homes to be on the market for a while before being sold. It’s also becoming increasingly common for homes to sell for asking or even less than asking, which is a welcome change for buyers and a disappointing update for sellers.
As these things become more par for the course and stabilize to more typical conditions, the real estate market will likely dip a bit and put
buyers in control.
Rent price drops
While many people are still making the move to Austin, they may not be buying homes. The scarcity of homes in the past few years led to increased rent prices because more people were needing a place to live than there were places available.
Especially in sharp contrast to reduced rent prices due to the pandemic, these sharp increases in rent costs were a concern to many. However, as the market has cooled off, rent prices have and will likely continue to trend down. This could deter people who may have wanted to buy a home back when mortgages were averaging below the cost of rent in most apartments and push them back into the rental market.
If renting becomes a more affordable option, as projected, it’s likely to have a direct impact on the housing market. And in a place as popular as Austin, expect to see changes to real estate demand.
Texas living draws people
Whether it is the lack of a state income tax or a lower cost of living in Austin versus other large cities, there are many factors encouraging droves of people to relocate.
As the perfect mix of Texas living with a big city feel, Austin satisfies those seeking a southern lifestyle without sacrificing urban luxuries. And with all types of terrain and relatively mild winters in comparison to much of the country, Texas will likely continue to be a hotspot for those searching for something new.
Plus, Austin is centrally located in the United States, making travel to either coast easier. Whether you travel for work or pleasure, that’s a luxury many prefer.
And the culture of Austin is continuing to grow and change. Its bustling music culture that features festivals to the tune of Austin City Limits (ACL) and South by Southwest (SXSW) makes it all that much more desirable. With high ticket demand and sold-out concerts left and right, music lovers are setting their sights on Austin.
If you’re considering moving to Austin, it’s best to get set up with a real estate agent sooner rather than later.
Rica Greenwood has a number of homes available in some of the best, most competitive neighborhoods in Austin.
Property taxes
A big question mark for many looking to relocate or wanting to buy in Austin is property taxes. While it varies depending on the county the home is located in, and the estimated value of the home itself, fluctuations in property taxes can be deterrents for home buyers.
In 2022,
Travis County’s property tax was roughly $0.32 per $100. Projections for 2023, though, will see
property taxes drop by an average of $18.10. While not a drastic change, the trend down in tax rates could drive more people to purchase homes in Austin, making the market more competitive.
Of course, the value of the home and relevant deductions will influence these rates, so although they can prove insightful, they are not the most important factor to consider when it comes to market predictions in a new year.
While it’s hard to say for sure what the real estate market will do in 2023, one thing is known for sure: Austin is a hot spot and will continue to be in years to come. From Texas’ lack of a state income tax to the hustle and bustle of a city at the heart of Texas, people will continue to be drawn to the area.
