AUSTIN (KXAN) — There’s a window of opportunity for homebuyers right now, according an expert, and it means many home sellers are at a major disadvantage.
“When I look at who suffers in this market, in my opinion, it’s really… the people that have bought a home in the last two years,” said Ryan Rodenbeck, owner of Spyglass Realty.
He said those folks would have bought their home when the average appreciation was about 36% in the Austin-area. He said selling it now would give you much less equity.
“If you don’t have to sell your home, then wait until another time,” Rodenbeck suggested.
He said a record number of sellers took their homes off the market last month.
If you do decide to list, you’ll have to go by current market rates.
“You have to take the last two years and throw them out the window; that’s not the way the market is,” he said.
As of right now, Rodenbeck said if you’ve owned your home for more than two years, you have equity — as long as you feel comfortable pricing it at 2019-2020 prices.
“We look at COVID and 2020, and 2021 as anomalies,” Rodenbeck said. “So, if you’ve bought your home anytime before, then you have equity in your home.”
He said his team is seeing a trend of sellers listing high and dropping prices down.
That’s called “chasing the market,” and that’s not a good thing, he said, because if your home is on the market for longer than the market rate, which right now is 35-40 days, it’s less likely to sell.
“There’s a stigma that comes with that home, there’s something’s wrong with it. It’s better to price your home right in the beginning,” Rodenbeck said.
He said the other group that suffers in this market is home builders.
Scott Turner, owner of Riverside Homes, said construction costs haven’t come down.
“In the coming year, our costs are still expected to be high– certainly higher than they were last year… But [home] prices are not expected to be higher than they were last year,” he said.
In this market, they can’t raise home prices to make up for higher costs. But they will build fewer homes.
“From a builder standpoint, certainly, I have scaled back. So rather than start projects as quickly as I can, which is what we were doing for the past several years, we are slowing down,” he said.
Turner and Rodenbeck say it all makes for a pretty good buyer’s market.
“We are more negotiable, we have a couple of units left that a townhome development down south… and so we’ve reduced our prices on our remaining units and are offering some interest rate incentives,” Turner said.
“It’s absolutely a good window because the last four to five, six years, it’s been a seller’s market,” Rodenbeck said.
It’s not a full buyer’s market, since there’s still constriction with high interest rates, but he said there are good opportunities that haven’t been in the market recently, like being able to negotiate a home price, or asking for the home seller to pay your closing costs.
“And even though interest rates are higher right now, you can buy down the rate,” Rodenbeck explained. “If you’re looking at a 6.5% interest rate, then you can buy down the rate using seller closing costs that you negotiated from the sale from the seller to make your interest rate lower than it is in market right now.”
He does expect interest rates to increase one more time, then fall later in 2023.
“I don’t expect to see rates in the 3s and 4s again, maybe not in my lifetime. They may go back down to mid-to-low 5s toward the end of the year,” he said.
The best deals to find a home in Austin next year?
“Look for established neighborhoods within 20-30 minutes of the domain in North Austin,” Rodenbeck suggested. “The domain is Austin’s ‘second downtown.’ It started as a shopping center but is now host to companies like Amazon, Facebook, HomeAway, IBM and Bizaarboize.”
He added that you can also still find a home for under $400,000 within 30 minutes of Austin, like in Cedar Park, Pflugerville, Leander or Liberty Hill.