AUSTIN (KXAN) — As 2023 comes to a close, the Austin Board of Realtors released its thoughts on the city’s housing market in the coming year. ABoR economist Claire Losey spoke to KXAN about looking back on 2023 and predicting 2024.
Looking back at 2023
The past year for metro Austin has been a continuation of local trends that began in 2020, with rapid growth and evolution and “unsustainable” increases in home prices, Rosie said.
“Over the past year and a half or so, the initial wave of homeownership demand during the COVID-19 pandemic has gradually dissipated as mortgage rates have gradually increased, especially here. “In Austin, we are seeing some normalization in the housing market and a more sustainable level of home sales activity and price appreciation,” Rosie said.
But affordability remains an issue for the city and nationally, with Rosie calling the supply of such housing “constrained.”
“We know that homebuyers in the Austin MSA typically need an income of $90,000 to $100,000 just to enter the home buying market,” Rosie said. “Finding an affordable supply of inventory at a price level that leads to that income is another story.”
What will happen in 2024?
Whether the trend is sustainable through 2024 will depend on the interest rates set by the Federal Reserve.
“Housing is the most interest rate sensitive sector in the entire economy,” Rosie said. “Mortgage rates are likely to peak towards the end of October, and mortgage rates should gradually continue to fall to the low 6% range, maybe even the mid-6% range, which could boost homeownership demand to some extent. Generally speaking, we don’t expect to see any major changes in the housing market over the next year. ”
Rosie’s prediction is that the market will stabilize and become healthier. A key measure of ABoR is how many months of demand can be met with the current supply of housing on the market.
“[In] In 2023, inventory typically hovers around 3-4 months in any given month. Typically, in Austin, we would expect it to take about five to five months for a market to be considered healthy. ” Rosie said. “There is no doubt that inventory in the Austin market remains at a relatively healthy level.
However, this metric does not differentiate between affordable and non-affordable housing. In Metro Austin, only 10-15% of homes on the market are considered affordable (less than $300,000).
“If we are talking about policy initiatives aimed at increasing or promoting the supply of new housing, its implementation will take several years before new housing is built. At the moment, generally 18 We think it’s between a month and 24 months,” Rosie said. “Any housing policy initiative will take time to penetrate the new housing supply market.”