AUSTIN (KXAN) — Real estate brokerage Redfin said it’s seeing housing demand start to cool off across the country, thanks to soaring mortgage rates — but not yet in Austin.
Redfin said mortgage rates are rising at their fastest pace in history, which means a typical monthly payment has gone up more than $500 since the beginning of this year.
The average rate on a 30-year fixed mortgage passed 5% Tuesday for the first time since 2011 — except for two days in 2018.
The company said right now, many homebuyers are trying to lock in their rate before it gets any higher.
That’s what Caitlin Floyd and her husband did for their new home in Kyle.
“The interest rate was 5%, and like a few weeks ago it was 3.7, and we’re like, ‘gasp!’ So, we had to lock in at a 90-day lock, because we’re like, we can’t risk the interest rate going up anymore, because … our house payment will continuously go up. We won’t be able to afford it,” she said.
Redfin expects other buyers to step back as rates exceed their budget. It said there are signs that shift is already happening.
“We’re starting to see some early signs demand is cooling — fewer searches for homes to buy, less tour activity and also a few more price drops than we saw … this time last year,” said Daryl Fairweather, Redfin chief economist.
Fairweather expects price growth to slow down in Austin in a couple of months. That means fewer homes going for hundreds of thousands of dollars above asking price, she said.
“I think we’re going to hear fewer and fewer of those anecdotes, and things will come a bit down to earth,” she said.
But Fairweather cautioned it’ll still be high compared to last year.
“It may go from 22% growth to 10% growth, which is still quite a lot … for any market,” she said.
She said that’s because even though mortgage rates will price some buyers out, more will be coming in.
“Austin is a bit of a special market, because there are so many people moving in from more expensive areas like San Francisco, Los Angeles, New York,” Fairweather explained.
Floyd’s current Austin home was only on the market three days before it sold for $30,000 over asking price.
“Crazy,” she said. “We got a few offers before the open house, and we just ended up not doing the open house, because we liked the contract that we got.”
But even with that extra cash, they couldn’t afford to stay in Austin.
“I feel like that’s just like, the new normal. People are moving out to Bastrop, people are moving out to Kyle, people are moving out to Georgetown,” she said. “We’re really grateful, but it’s just sad … what’s going on in the market.”
The Texas Real Estate Research Center at Texas A&M University indicates based on data, the Austin metro area should be seeing an increase in housing inventory for the rest of 2022.
It said that should help alleviate supply struggles slightly, but we’re still nowhere near a balanced market, which they put at about six-and-a-half months of housing inventory.
According to the Austin Board of Realtors’ most recent report in February, we currently only have 0.4 months of inventory.