Find out why our Austin market is hotter than ever here in 2021.
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In roughly two months, our seller’s market—characterized by aggressive bids and sales above asking price—accelerated significantly. Between Thanksgiving and Christmas last year, we saw a sizable drop in inventory, though that’s part of the natural seasonality of the market. What’s not normal, however, is that demand remained high, and since our market was already battling low inventory to begin with, the seller’s market hit hyperdrive.
Where is all this demand coming from? A lot of it is local. Interest rates are still incredibly low. (We just had a client get approved at 2.5% for a 30-year fixed loan). We’re closing in on a full year of battling COVID-19, and many folks are still feeling the depression of being cooped up inside their homes; they’re eager to optimize their lifestyle by taking advantage of cheap money and upgrading to a nicer and/or larger home.
Seeing a property receive 20 to 30 offers is fairly commonplace nowadays.
Out-of-state demand, however, is very real. For example, we’re seeing the proverbial Cali buyer (the Golden State exodus has reached Austin), and industry leaders like Tesla and Apple continue to add jobs to their existing or incoming facilities in our area. As you likely know by now, Elon Musk moved here at the end of last year. It’s no wonder that we’re getting more investor activity than ever.
All of these factors are combining to create a lightning-fast market. Roughly 90% to 95% of Austin homes are selling within several days—for many, a weekend is all it takes—and garnering many, many offers. If you’ve heard rumors of homes fetching 70, 80, or even 90 offers in our market recently, they’re likely true. While those instances are by no means the norm, they certainly couldn’t exist in a tamer market. Seeing a property receive 20 to 30 offers is fairly commonplace nowadays.
Buyers are having to reach farther above list price than ever before to secure contracts. Offering 10% to 15% over list price and strong terms has basically become a starting point. The terms required to win a house these days, like option money well above $200, have been the norm in major markets across the country for some time but are coming as a shock to Austin buyers. Many are opting to waive the inspection period, and this sort of “just take the house as is and deal with any hidden problems later” sentiment speaks to homebuyers’ exhaustion.
For those buyers financing their purchase with a loan, it’s mandatory to put down what’s called an appraisal waiver on the contract. This means that if there’s a gap between the appraised value and the contract price, the buyer will have to make up that difference in cash. Luckily, for the most part, appraisals have been keeping up with the market.
That said, low appraisals are happening, and we need to prepare for them. If we’re going after a resale home in today’s market, we must be aggressive and make sure that we have cash on hand, just in case. It will be very difficult to land a home for an FHA buyer who’s going in with a down payment of 3.5% and nothing else to back that up. We’re steering those types of buyers toward new construction homes and condominiums.
Even still, purchasing a new construction home today is a lot tougher than it used to be, because many of them are selling out and can’t be built again in that same respective price range. Many new construction buyers are having to put their names on waiting lists. If new construction is something you’re interested in, contact us first; we can identify the new-build communities that have available inventory or, at the very least, waiting lists that are reasonable.
On the flipside of these buying woes, it’s an incredibly great time to sell a property. Countless sellers are getting much more than they ever expected to, and you could be the next one.
If you’ve even considered a 2021 home sale, please give us a call or send an email. We’re always looking for more inventory, and we can help you maximize your home sale and transition into the next phase of your life. As always, we’re happy to simply answer any real estate-related questions you may have. We pride ourselves on being a resource for you.