As it relates to Austin real estate, we’re pretty certain you’ve heard someone say to you, “You’d better buy a home now because it’s probably the best time to buy!” or some such similar phrase. There could be multiple reasons why “now” is indeed the best time but usually it relates to home values or demographics or housing inventory or it could be from the financing side of the fence as the Fed is likely to raise interest rates at their next round of FOMC meetings. But this time around, there are some hard facts that can’t be ignored and the ‘buy now”’ mantra might be truer than ever and here’s why.
The most recent data released by the Austin Board of Realtors shows yet another increase in home sales as well as an increase in the median home price. According to the report, in the city of Austin alone, unit sales increased by a respectable 7.5% reflecting 703 home sales just in October of this year alone compared to October of 2015. Details for November data will be released mid-December. Typically the fourth quarter of any calendar year shows a decrease in home sales but there appears to be very little cooling off, if any, from the brisk pace we saw last spring and summer. Further, the Austin-area median home price for single family homes jumped 9.0% to $279,000. In Austin proper, the median home price rose by 6.5% over the previous period one year ago to $332,250. Now hold that thought.
Let’s now take a look at interest rates. The last time the Fed raised rates was in December of last year and while many thought the Fed would sit on the sidelines come this December and would leave rates alone until at least into the first quarter of 2017 are rethinking that analysis in light of recent economic data. Existing Home Sales and Durable Goods Orders are coming in much higher than expected, indicating an economy that’s starting to show some strength. As well, Retail Sales and Housing Starts are up while initial jobless claims are down. These are all numbers the Fed pays attention to when considering making a move on interest rates. In light of this, we have seen interest rates for move upwards well in advance of the Fed’s next round of meetings. In fact, Fed Chair Yellen recently commented that an interest rate hike could come “relatively soon.”
If you consider the median home values here in Austin and the surrounding areas along with an increase in rates weeks before the next Fed meetings and you can see why there is credence to the statement that “It may not be a better time to buy a home than now.” There doesn’t appear to be anything that will cause Austin area home prices to fall nor does it appear that interest rates will fall back to their historic levels.