Prices are up and inventory is down both here in Austin and on a national scale. As a whole, our local economy is growing, which has its share of benefits and drawbacks.
What’s the latest news from our local and national real estate markets? What shape is our economy in overall?
Our national economy is doing pretty well. The unemployment rate is at an all-time low, which means there aren’t a lot of jobs out there and wages are going up. Home prices are also going up, though there is a lack of inventory which is slowing down sales.
Overall, we have about 20% less inventory right now than we did at this time last year. The rate of new construction is going up, but there is a labor shortage and material costs have risen, so it’s taking longer for homes to be built.
Mortgage rates are expected to rise 1% by the end of the year, which will result in a decrease in buying power for homebuyers. Usually, a 1% increase in interest rates equated to an 11% drop in purchasing power. This means if you’re on the fence about buying, you might be better off buying now before this expected rise.
That being said, interest rates are still pretty low overall in a historical sense. Since 1994, the average interest rate has been 6.25%, and we’re still well below that.
“Our national economy is doing pretty well.”
Here in Austin, the average home price has increased 3.2% since this time last year, which is lower than normal, but it’s still a pretty good increase. As a city, we have the second-fastest growing economy in the entire country for large metro areas, and we should continue to see strong job growth this year. A couple challenges that will come with this growth, though, are home affordability and inventory.
One of the hot topics in the news has been where Amazon will put their second headquarters, and Austin has a lot going for it in this regard. We’ve got a great culture, a large tech labor force, and a vibrant downtown area. Also, since we’re in Texas, we also have no state income tax for employees.
We do have some drawbacks, however. Since our unemployment rate is so low, there aren’t a lot of available workers. Also, our airport is small and we don’t have much in terms of mass transit. Austin isn’t offering any financial incentives for Amazon to move here, either. We’re still a prime candidate in most publications’ opinion for Amazon’s second headquarters, but I have a hard time imagining it will happen.
If you have any questions about our local housing market or you’re thinking of buying or selling a home soon, don’t hesitate to reach out to me. I’d be happy to help you.