Navigating the Austin Real Estate Landscape: A 2023 Recap and 2024 Outlook

In 2023, the Austin-Round Rock MSA experienced a 10.2% decrease in the median home price, settling at $450,000, according to the Austin Board of REALTORS® report. Despite a 3.0% decline in pending sales to 30,353, the Central Texas housing market showcased resilience amid macroeconomic challenges. With the decrease in median home price and interest rates starting to lower, Austin and the surrounding cities seem to be moving toward a more sustainable pace.

Sellers: Enhancing Properties in a Transitioning Market

In 2023, City of Austin sellers faced a necessity to enhance their properties before listing, navigating a transitioning market marked by 8,554 residential homes sold—a 14.9% decrease from 2022. With a median price of $540,000, down 8.2%, and 13,362 new home listings, sellers continue to encounter heightened competition amidst a landscape of evolving buyer preferences.

The increased inventory, evident in 2,489 active home listings (57.5% more than 2022), necessitated strategic approaches. Proper staging, renovations, precise pricing, and effective marketing emerged as vital tools when contending with both a more crowded market and higher interest rates than in previous years.

Despite the challenges, success stories emerged when properties met these criteria. Notably, in instances where homes aligned with the strategic enhancements, multiple offers frequently materialized, and sales occurred within a faster timeframe than the average median days on the market.

Buyers: Seizing Opportunities in a Balanced Market

The Austin-Round Rock MSA witnessed a significant 10.2% decrease in the median home price, coupled with a notable remark from Kent Redding, 2024 ABoR & Unlock MLS President, stating that "housing inventory reached the highest level it’s been in more than eight years." This surge in housing inventory provides buyers with substantial purchasing power, offering opportunities for selectivity and negotiation of favorable terms. As we approach 2024, the correlation between future home prices and mortgage rates becomes paramount, making it imperative for potential buyers to carefully navigate the balance between interest rates and home prices as they look to buy. If interest rates reduce, it is very likely we will see home prices stabilize and begin to rise. If interest rates hold or increase, the opposite will be true. Monitoring this will be essential for those looking to make a strategic and informed home purchase decision in the coming year.

Investors: Evaluating Trends and Capitalizing on Inventory

Investors eyeing the Central Texas market should take note of the trends observed in 2023. Sales dollar volume in the MSA dropped by 17.0%, resulting in a $17,498,390,950 impact on the Austin-area economy. However, the 2024 outlook suggests that trends will likely remain consistent, with a 5.0% increase or decrease in home prices and sales as Austin and the Central Texas housing market moves toward a more sustainable pace. The growing inventory of homes in 2023 provides more options for repeat buyers, creating a favorable environment for real estate investments. Home values and activity will likely be closely tied to housing interest rates throughout 2024.

The cities surrounding the Austin MSA present the greatest opportunities for 1-4 family residential home investments, specifically the $300,000 price point. Clare Losey, PH.D., and housing economist for ABoR, says “The single biggest factor constraining the Central Texas housing market in 2023 was the gradual rise in mortgage rates, which peaked in late October. This caused sellers, and buyers essentially, to continually readjust to the current rate environment. While we have seen some leveling off in home prices, the Central Texas region still lacks a sufficient inventory of affordable homes for sale, especially those homes priced below $300,000, which is keeping many would-be first-time homebuyers on the sidelines.”

2024 Outlook: Consistency and Advocacy

Looking ahead to 2024, as mortgage rates continue to reduce, the market seems to be finding its footing. We believe that annual trends will remain relatively consistent with 2023. Home prices and sales are expected to return to pre-pandemic fluctuations, to see a modest change of around 5.0% increase or decrease. For Sellers, it is paramount to properly stage, renovate, repair and price your property as you take it to market. For Buyers, you will likely continue to be in the driver's seat with increased inventory and options. And for investors, opportunities should continue especially in the greater austin area and surrounding cities notably at the $300,000 price point.

For more information and data on the austin market and specific counties, you can head to ABOR for their monthly statistics.