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Let’s talk about some negative news regarding the Austin real estate market. Over the past couple of months, I’ve heard and read more and more about our real estate market slowing down. Dee & I have seen this firsthand and other Realtors in our office have commented about it, too.Just this past June, I wrote quite extensively in my past blog posts about economists predicting a national recession in 2020. Here is an example of some recent negative news articles:
Study: Foreclosures Rising in 44% of Metros More foreclosures sprang up this summer across the country. Forty-four percent—or 96 of 219—metro areas saw foreclosures tick up in July compared to a year ago, according to a newly released report from ATTOM Data Solutions, a real estate data firm. This marks the first annual increase in foreclosure starts nationwide after three years of year-over-year declines each month.
Home sales decline for fourth straight month U.S. sales of existing homes slipped for the fourth consecutive month, declining 0.7 percent in July to the slowest pace in more than two years as the real estate market shows signs of cooling. The National Association of Realtors said Wednesday that homes sold last month at a seasonally adjusted annual pace of 5.34 million. Home sales have fallen 1.5 percent during the past 12 months.The U.S. housing market is hurt by a widening wealth gap, as inventories of lower-priced homes remain tight.
What Does the Recent Rash of Price Reductions Mean to the Real Estate Market? Last week, in a new report from Zillow, it was revealed that there has been a rash of price reductions across the country. According to the report: 1) There are more price cuts now than a year ago in over two-thirds of the nation’s largest metros; 2) About 14% of all listings had a price cut in June; 3) Since the beginning of the year, the share of listings with a price cut increased 1.2%; and 4) This is the greatest January-to-June increase ever reported, and more than double the January-to-June increase last year
Why are Existing Home Sales Down? The latest Existing Home Sales Report issued by the National Association of Realtors (NAR) revealed that home sales have decreased for four consecutive months and are at their slowest pace in over two years. This has some industry leaders puzzled considering the fact that the economy is strengthening, unemployment is down, and wages are beginning to rise. This begs the question: “Where are the buyers?”
Is the Housing Market Normalizing? One Sign the Tide’s Turning With demand strong and supply weak, the housing market is overwhelmingly partial to sellers. The average homeowner is profiting $40,000 at resale (with decade-high returns in 2017), and higher in the hottest markets, where they’re attracting multiple offers in record time. Now, there’s an early indicator that the market may shift.
Finally, here is a snapshot from our local MLS which shows more price decreases than all other categories:
So, what is the truth here...are we-in fact-seeing our real estate market do a 180? Is this very long-in-the-tooth 8+ year real estate bull-run finally over?Good question. I saw Mark Sprague speak again today.Mark is a local economist who specializes in the Austin metro area and has seen a lot since he moved here in 1964. I’ve seen him over a dozen times the past few years and can say he has always been conservative with his assessment of any market in the country that he assesses for his many clients across the globe. He stated that he thinks the Austin market has “2-5 more years” of this current bull run even though we have never had a bull market in Austin real estate that has lasted more than 6 years.He ended his presentation with a slide that said it's a great time to buy real estate in Austin. Consider that and the article that follows (below).This article states an interesting fact (and has a chart to back it up) that “in 5 of the last 6 recessions over the past 40 years home values actually appreciated” (the sole exception being the Great Recession which was primarily the result of loose lending standards which haven’t been present in this bull run).
Top 3 Myths About Today’s Real Estate Market There are many conflicting headlines when it comes to describing today’s real estate market. Some are making comparisons to the market we experienced 10 years ago and are starting to believe that we may be doomed to repeat ourselves. Others are just plain wrong when it comes to what it takes to qualify for a mortgage. Did you know that in 5 of the last 6 recessions over the past 40 years home values actually appreciated? Today, we want to try and clear the air by shedding some light on what’s causing some of these headlines, as well as what’s truly going on.
So, what should you do? If you are buying, I will echo what Mark says all the time: “If you plan on staying in the house for 5-10 years, you will be fine regardless of what the market does since real estate looks good when viewed over any 10 year period.” And, if you’ve owned your home for awhile and you are considering whether to sell now or wait until the peak of the market, I would first ask you “when the peak will be”?If you sell now and prices do go up for another couple of years like Mark predicts, wouldn’t you have still made great equity gains over the past years you’ve owned the home?
Contact the Thomas & Kauffman Team at 512-730-1252 or info@AustinTxHomeSales.com so we can go over your current situation, answer any questions you have about the real estate market and provide you with any information needed to make your decision easier.