Travis County, home of Austin, is the fifth-most populous county in Texas. As a result, the county has served as the epicenter for many Austin housing market trends. In addition to being associated with one of the hottest markets in the country, however, Travis County is now the beneficiary of Tesla’s latest Gigafactory. With Tesla moving to the south of Austin, the area expects a surge in employment and household income.
The opening of the new Gigafactory has already impacted local real estate prices. Travis County and Austin are one of the hottest markets in the country, according to ATTOM Data Solutions.
Among the 43 counties in the US with a population of at least 1 million, the most significant year-over-year gains in median prices during the third quarter of 2021 is in Middlesex County (outside Boston), MA (up 32 percent). Travis County (Austin), TX is third up 23 percent,” said ATTOM Data Solutions’ third-quarter 2021 US Home Affordability Report.
Austin Real Estate Market 2022 Overview
- Median Home Value:$625,905
- Median List Price:$532,367 (+25.0% year over year)
- 1-Year Appreciation Rate:4%
- Median Home Value (1-Year Forecast):9%
- Weeks Of Supply:2 (+0.6 year over year)
Real estate in Austin and Travis County is more expensive than ever, and there’s nothing to suggest the trend won’t continue. Austin was already becoming an influential tech hub. The addition of Tesla will only draw more high net-worth individuals to the area and increase home values.
What is the Outlook for Housing in 2022?
Price increases are primarily the result of higher demand, lower interest rates, more average savings in bank accounts, and a distinct lack of inventory. The unique culmination of these factors inherently drove up competition at a time when homeowners weren’t willing to put their houses on the market. As a result, sellers have increased prices accordingly, to more than forty percent over the last 12 months.
The Fly in the Ointment!
The FED has told us that there will be many more rate increases after this last interest rate hike. For example, the 2021 national average ended with a 30-year fixed interest rate of 3.19%. The latest 30-year fixed interest rate is 5.06%. That’s a 58% increase in rates in four months, with much more to come.
According to a report by Redfin, mortgage applications are already down more than 6%. That suggests sellers may have to be more realistic when setting their asking prices, which may be a shock considering market conditions over the past few years. However, that seems to be the trend, as there are growing reports of listings reducing their asking prices. Indeed, Redfin said listing price reductions have grown fastest since 2015.
“The sharp increase in mortgage rates is pushing more home buyers out of the market, but it also discourages some homeowners from selling, said Redfin Chief Economist Daryl Fairweather. “With demand and supply both slipping, the market isn’t likely to flip from a seller’s market to a buyer’s market soon.”
The National Association of Realtors cited the rising mortgage rates as the main reason for forecasting a 10% drop in home sales in 2022. The NAR says rising rates are pricing out more and more would-be buyers. However, it still expects home prices to increase by 5% in 2022.
For first-time home buyers, the cost of buying the same home this year compared to just one year ago has jumped by 40% – a combined impact of higher home prices and mortgage rates.
