Austin Market Report Week of December 5th, 2022

Housing Market News: Fact or Fake?

We’re talking about fact vs fake in today’s housing market.

People will click on titles that offer fear and scarcity and doomsday…. anything to do with uncertainty. And, come back for more. Over and over.

So, we’re breaking down our Top 8 FACT VS FAKE MisInformation and DisInformation so you don’t get duped. Because if you’re thinking about buying or selling a home in Austin Texas or beyond, there are things you must know to insure that you (and your family) are in the best possible position to buy your dream.

There’s a tsunami of misinformation and disinformation bombarding us daily in the media. Who do you believe? What do you believe about the housing market and mortgage rates? Your ability to purchase your dream home, assuming you’re not rolling up in a Brinks truck filled with cash, is based on knowledge – yours and those whom you surround yourself with.

What precipitated the theme of our show today was a call that I had with a girlfriend of mine this past weekend. She is Ivy League brilliant, owns investment properties across the US and in the midst of our conversation she gasped, “What do you mean, you’re sitting at an open house in a multi-million dollar property? People aren’t buying houses.”

I shot upright in my chair and chuckled, “What are you talking about? People are buying and selling houses all day.  In fact, we actually lost on a multiple offer situation a week ago.”

“I’m scared Sh*less! Everything I read and hear about is a housing market catastrophe and price dropping and ….” she countered.

“You cannot take national “headlines” designed by professionals who expect that you will not read the full article or listen to the full “story” to find the parts of the truth that they’ve scattered within; the factual parts may actually give you some power and feelings of safety if you dive in and understand the data … but that doesn’t sell. People are buying houses in Austin Texas everyday. 800 houses sold last week. I guess they didn’t read the headlines.”

Welcome to media click bait: Headlines designed to stop you in your tracks, sell ads, watch videos and create revenue for the company who just grabbed your reptilian brain (fight flight freeze) and then hijacked your limbic system (emotional response). It’s ridiculous. And, it works. Shock and awe. If it bleeds it leads. That’s really the world that we live in now.

Misinformation is a false or inaccurate information. It simply means you’re getting the facts wrong.

Disinformation is false information which is deliberately intended to mislead. Intentionally making misleading facts… like the click bait we see in our newspapers and all the other news around the world.

So, without further ado, let’s dive into our Top 8 Fact vs Fake considerations for today’s housing market.

#1 We Can Have Another Housing Market Crash like 2008. 

FAKE

  1. Fundamentals that existed in 2007 no longer exist.
    We have more Americans who want and need homes than we have homes to sell. In 2007, we had too many homes and not enough home 
  2. Buyers Equity levels are a lot higher. Today’s average Homeowner has much lower mortgage rates than anybody had in leading up to 2008.
  3. We now have Federal preventions and loss mitigation. It’s possible to proactively avoid and prolong a potential default or foreclosure. If you’re going through hard times, please contact your servicer and talk to them directly about it.  

#2 Price Decreases in Homes Means Home Values Are Depreciating

FAKE

Highway analogy. When we’re going 90MPH on the highway and we see a cop ahead. We slow down. Are we still going forward? Yes or no? 

This is same as home price values and appreciation. Just like we slowed down our speed on the highway, we’ve slowed down on the price increases and therefore the rate at which our home values are increasing.

The speed with which our home prices and home values were appreciating was unsustainable.

In 2022, many homes are worth more than they were in 2021. You’ve built equity as an owner the entire time. If you didn’t need to sell then and wish to sell now, then we look at today’s market value. We don’t go back in our time machines with house prices or crypto or stock. Today’s value is today’s value. Only in your home, you’ve built equity while in crypto or stocks transactions you only receive today’s price.

During Q4 (October | November | December) every year, Builders lower prices on their inventory homes that are ready to close before year-end in order to sell and get those homes off their books so they’re not paying taxes into the new year. Those price decreases are factored in every year at this time. PS Right now in Austin Texas 1 in 4 (or 5)  homes with a stated price decrease is a new build home.

#3 When Purchasing A Home The Only Real Consideration Is Your Mortgage

FAKE

Before you purchase a home: consider as many financial factors as possible including: your mortgage payment, homeowners association fees, insurance, utilities, building and grounds upkeep ie windows, airconditioning, weekly lawn or pool care? 

And, there’s also taxes. Property taxes in Austin Texas can make a big difference as a budgeting line item.

Take it a step further, you can have two properties for the same exact price in the same zip code, with completely different payments.

At the Jennifer S. Goodman Group, our Home Buyers are very clear, what their payments (range) will be in terms of affordability before buying a new home.
It takes a lot of teamwork and communication upfront and throughout process. And, that’s where we’ve got our clients covered.

#4 If I Wait To Purchase I May Have a Better Buying Opportunity

FACT AND FAKE

This is subjective and my crystal ball is broken when it comes to future home values and mortgage rates. Anyone who suggests they emphatically know what the mortgage rates will be in the future… run.
Currently, there’s a lot of evidence that suggests that now will offer you a better deal as there are less Buyers in the market place competing for houses. Time will tell. How the market reacts to the Fed’s next rate hike and Unemployment rates… also factors.

1. As a REALTOR®, not everyone should be buying a house right now. I’m not talking about this in an effort to get someone to buy a house. Let’s be super clear about that.

In the month of December, there are opportunities because builders are trying to get houses off the books. They don’t want to pay taxes on those houses in 2023.

So there are opportunities for new build construction now (and I have access). Call me I’ve got plenty of them for you.

2. There are less homes for sale during the winter months. Even living in Austin Texas there have historically been more homes for sale in the spring or fall months. Real estate is cyclical for many reasons.

However, the most serious Home Buyers who want to buy homes, who are moving their families for business or any other life reasons, they’re pre-approved with their Mortgage Lender and they’re out shopping for a new home.

If you are considering selling your home now, the most serious Home Buyers out there and they’ll do whatever it takes to buy your home… if it’s priced right for the neighborhood and school zone and city that it’s in.

Home Buyers, you have less Buyers to compete with to purchase a home right now. Therefore, you actually have a better opportunity to get a deal written and sold right now versus later in the spring when it starts to get more competitive as new Buyer enter the spring market.

#5 Better Buyer Opportunities In Spring: More Homes Will Be For Sale and Mortgage Rates Will Lower

NO FACTS. NO CRYSTAL BALL.

There are many different possibilities. What’s the opportunity cost of not knowing? Families that Mark spoke with in 2018 didn’t think it was a good time to buy then because rates were approaching 5%. And, they couldn’t compete in the Seller’s market of 2021. They are still renting.

I have so many stories of people who waited for “a housing crash” the past 11 years. The loss of equity and opportunity of home ownership has either vanished completely or affordability greatly changed based on today’s home value appreciation.

As mentioned earlier, we do not have a crystal ball and our local economy is strong. What we don’t know is how the global economy will affect the Austin Texas housing market. What we don’t know is what the stated mortgage rates will be.  People buy homes regardless of lending rates. Today’s rates are not tomorrow’s rates and they’re not the rates of the 1980’s when people were purchasing homes at 18% mortgage rates.

Our mortgage rates could not remain artificially low. Many people were lulled into a false sense that 3% mortgage rates were sustainable and would last. Turns out printing trillions of dollars wasn’t the best idea for the United States economy. How’d that work for us? Now everyone pays. Global economic reset triggered?  Quite possibly so.

#6 Buying a House Creates More Wealth Than Renting

FACT

You paying someone elses mortgage for them by “paying rent” is a great deal for the investor. You’re effectively paying for someone else’s home appreciating in value over time. Today’s equity and tomorrow’s future equity and their wealth portfolio is looking better with every rent check you send in.

When you are a home owner, a portion of your mortgage payment pays down the principal sum you’ve borrowed. That’s why we call it a “forced savings account”. That additional equity gain (over time) is an added bonus.  Real estate appreciation is how most millionaires have made their fortunes and created generational wealth.

#7 There Are Better Purchasing Opportunities For Investors Today vs 6 Months Ago

FACT

There was very limited or no inventory to buy in Austin Texas 6 or 12 or 18 months ago. Off-market properties (not found on the Multiple Listing Services) were also very limited and sold just as quickly. In today’s real estate market, some of those residential and/or multi-unit Investors that didn’t sell may be more likely to accept lower offers if they’re not capable of holding onto properties, considering the long-haul or have other opportunities they’re considering. And, Investors looking to buy may be able to afford more investment properties with price decreases.

FYI: There were a lot of rookie investors that got into the market in 2020 and 2021 feeling like investor ownership is not as easy as they thought. Right now is a great time for an educated Investor to pick up property.  That said, know your numbers first! Mortgage, taxes, operations, lease rates, vacancy rates, etc. in order to create a winning financial solution.

#7 You Can Buy a House At Last Year’s Mortgage Rate

FACT

The posted daily mortgage rates are higher today than a year ago. And, there are ways to buy down your rate. There are temporary buy downs that will allow you to buy down your mortgage rate up to 3% less than the posted mortgage rate.

Shortstrokes: To buy down your rate, you pay to the lender upfront for the privilege of having an overall lower mortgage rate. You’ll find specific content about 3:1 Mortgage Buy Down Rates, 2:1 Mortgage Buy Down Rates and Permanent Buy Downs on the Jennifer S. Goodman YouTube Channel HERE.

Anecdotally, Mark has an FHA Home Buyer right now closing on a property at 5.5% mortgage rate.. Her first 12 months is -3% so she’s going to be paying a 2.5% mortgage rate.

#8 A 20% Down Payment Gets The Best Mortgage Rates

FAKE. 100% FUGAZI.

You actually get a relatively worse rate than if you put down 15%, 10% or 5% down payment depending on your credit score. Whaaat?!

You will have a lower mortgage payment with 20% down payment. But, you will likely not actually save money relative to various strategies that can save you even more money. If you want to save money, if you want to save a lot of money, read on.

Or better yet, check out the video about how Mark saved his friend $300,000+ in loan payments on an $800,000 house with a simple (yet rarely discussed) pre-payment strategy. I don’t know about you but if someone saved me $300,000+ in a single conversation I’d be considering how I could put that money to work and buy an investment property ASAP.

Mark and I both love the “mortgage pre-payment strategy” for good reason!

Back to Why We’re Talking About Fact or Fake

My goal, and the goal of all of my partners, is to offer you information and data interpretation that you won’t find easily (or maybe not at all) elsewhere so that you can make the best home buying and selling decisions for you. We are hyper-local with our fingers place firmly on the heartbeat of our city and nuances of each pocket. Our eyes and ears are listening and interpreting data across our nation and globally. We do so daily. We localize community so that you can understand the truth about what’s happening where it counts… And, not mistake the misinformation and disinformation you may be subjected to.

It’s hard not to listen to and it harder to avert your eyes to the clickbait.

Back to the conversation I had with my girlfriend mentioned earlier. When I explained that if she (or you)  had ballooned her previous mortgage payment vs placing a 20% mortgage down payment and how that the balloon payment is immediately applied to the principal so her total cost of borrowing was lowered substantially

She said, “Oh my God!  Why didn’t anybody tell me this?!” 

I said, “You have to talk to Mark. He’s the Doogie Howser of Mortgage Lenders.”  Mind blown. We are now talking about buying her another investment property with a down payment structure that saves her money from Day 1.

Thing is, there’s a lot of thinking – a lot of misinformation – that gets passed down generation after generation. A 20% down payment is a big misnomer.

We think our beliefs are truths. Until someone shares another point of view and allows us to consider another truth.That’s the power of having the right team behind you as a Home Buyer or Home Seller.

At the end of the day, next to insurance, home ownership is the greatest vehicle for to create wealth.

Between your real estate dreams and reality is an action plan designed with you at the center. We’re here to empower you. So you can live your best life in Austin Texas. And, when you dream bigger or farther, we’ve got you there too. My trusted network of exceptional professionals spans the globe for that reason. We talked almost daily. With your interests at the forefront.

The Austin Housing Market Numbers At A Glance

  • As of Monday morning there were 9,493 homes for sale in Austin Texas. Let’s get in the numbers and the housing market conditions because the media around the globe is having a field day creating story and boosting their ad revenues.
  • There are 709 new listings that came to the market up in the week prior.
  • There are 1374 home price decreases (660 more houses had price decreases vs last week).
  • There are 98 home price increases up from 64 last week which tells me Sellers are starting to understand the effects of mortgage rates and economic forecast.
  • There are 176 properties that fell out of contract now back to the market that is down from the previous week.
  • There are 311 properties that went Under Contract. 
  • There are 397 Pending properties for Sale.
  • When we add up the “Under Contract” and “Pending”  708  homes are currently in the process of being purchased.
  • We saw 734 homes Sold which is up from the previous week (356 more).
  • 334 were withdrawn which means they are no longer for sale.
  • 251 homes had listings that expired (up from last week when 53 home listings expired). Expired means that the house was for sale for a specific period and that it did not sell. It is currently off the MLS. This tells us that Sellers and their Agents who are not following the market closely did not adjust for the market.
  • 116 Homes are now on hold. (up for homes on hold vs last week).

When buying a home during a shifting market there’s a lot to think about. This can be a big opportunity if when you have clear goals, up-to-the-minute information and the right REALTOR® by your side. Want to chat? You can reach us HERE.

Mark Karetskiy is a Mortgage Lender at Movement Mortgage. You can find him at Mark10k.com.

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Jennifer S. Goodman
Jennifer S. Goodman
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