The Central Texas housing market showed continued strength last month with both home sales and home prices rising, the latest figures show.
For the Austin area, sales are up 5.7%; median price climbs 3.6% to $299,900. That means half of the homes sold for more than $299,900 and half sold for less. Housing supply remained unchanged from a year ago with an inventory of two months based on the current sales pace, according to the Austin Board of Realtors.
Mortgage rates are at their highest levels in more than four years. The 30-year fixed-rate mortgage averaged 4.45 percent last week, according to Freddie Mac, and that’s largely expected to increase since the Federal Reserve said it is likely to raise its short-term interest rates multiple times this year. That could prompt mortgage rates to move higher at least three times this year, starting this month.
Rate increases—even minor ones—can add up over time. Consider this example: On a $300,000 house with a 30-year fixed-rate mortgage and 20 percent down payment, the difference between a 4 percent and 5 percent mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000.
With rising prices and rising rates, what does that mean for buyers? Well, you don't have to be a professional to figure that one out. That means for some, the amount they can afford is decreasing.
Those homebuyers working with an agent who is on top of these trends are positioning themselves to buy now. In some areas of Austin we still have multiple offer situations while other areas are starting to see a decline in days-on-market. To find out which areas are hot and which are not, contact an on-call Allure agent today.
Will these trends continue? As long as inventory doesn't change and the demand to live here in Austin is still strong, then our market will continue to be a seller's market. Though the rates are the highest they've been in the last 4 years, they are still low when you look at where we've been since 1985. If the Federal Reserve does raise the short-term interest rate again, we could see a trend upward. If you're waiting for a drop in prices or lower interest rates before you buy, then you might want to rethink your strategy!