Trevor Schick

August 2024 Austin Real Estate Market Update While the Austin real estate market continues to cool, pricing has remained relatively stable. The average home sold for $573,000, a slight drop of -0.9% year-over-year (YoY). However, the median sold price experienced a more significant decrease of -5.0%, landing at $435,000, highlighting ongoing affordability challenges for buyers. Price per square foot also fell by -2.9%, indicating softer pricing trends across the board, especially for more budget-conscious buyers. Homes are staying on the market longer, with the average days on market (DOM) increasing to 70 days, a 12.9% rise compared to last year. Additionally, months of inventory have grown to 4.6 months, a 21.1% increase YoY. This shift in market dynamics is giving buyers more leverage, as sellers face stiffer competition. These conditions favor negotiations for buyers, but sellers must adjust to the slower pace of sales. Austin’s job market has been under pressure, as evidenced by a decline in job postings on platforms like Indeed.com. Mortgage rates, while slightly lower at around 6.5%, continue to weigh on affordability and dampen buyer interest. The combination of high mortgage rates and fewer job opportunities is influencing the market’s overall slowdown. There is growing anticipation that the Federal Reserve will implement its first rate cut in September 2024, which could mark the beginning of multiple cuts continuing into 2025. As mortgage rates are expected to decrease in response to these actions, buyer affordability should improve, likely boosting demand in the housing market. Additionally, these rate reductions are expected to spur hiring in key sectors such as tech and construction, both of which are vital to Austin’s economy. This anticipated shift could signal a rebound in both job growth and real estate activity heading into next year. Advice for Buyers: 2024 offers favorable conditions for buyers, with increased inventory and longer sales times. If you’re comfortable with current mortgage rates, you may find greater negotiating power when making offers. And with the possibility of lower rates later in the year, now could be a good time to start your home search while there’s still a wide range of options available. Advice for Sellers: As the market adjusts, pricing your property competitively is more critical than ever. With rising inventory and longer days on market, sellers should be prepared for a slower selling process and may need to offer concessions to close deals. However, well-priced homes are still selling, so thoughtful pricing strategies are key to success in this market. Real estate remains highly local and situational. Whether you’re buying or selling, it’s essential to stay informed about market conditions and adapt your strategy accordingly. Reach out to me, and I’ll help you navigate this changing market to make the best decisions for your situation!

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Ashley Fahey, Austin Business Journal. Commercial real estate (CRE) loan delinquencies in the U.S. have risen for seven consecutive quarters, reaching 1.4% in Q2 2024. This trend is largely due to the struggling post-pandemic office market, with increasing vacancies and falling property values. Banks, especially those with large office portfolios, have responded by increasing loss reserves and cutting back on new CRE loans. Year-over-year CRE loan growth has slowed significantly, from 12.1% in Q3 2022 to 2.2% in Q2 2024. Many banks are extending or modifying terms for maturing CRE loans, with the peak year for loan maturities anticipated in 2027. Regulators are closely monitoring banks with elevated CRE exposure but are still allowing loan extensions. Mergers and acquisitions (M&A) involving banks with significant CRE holdings are expected to rise, with Bank of America purchasing Washington Federal Savings Bank's multifamily properties for $2.9 billion in one example. Despite these challenges, the financial system remains insulated from a crisis like the 2008 downturn, thanks to stricter pre-pandemic underwriting standards and private equity interest in real estate. Interest rate cuts from the Federal Reserve may offer some relief but are unlikely to solve the underlying issues in CRE. The gap between current and maturing loan interest rates remains a key concern. #commercialrealestate #creloans #loandelinquency #realestatefinance #postpandemicmarket #realestateinvestment #bankingindustry #officemarket #loanmaturities #mergersandacquisitions #privateequity #realestatedevelopment #propertyvalues #interestrates #federalreserve #financialmarkets #loanextensions #officevacancy #realestaterisks #regulatoryoversight #economictrends

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"Apartment demand is picking up in the Dallas-Fort Worth region, with net absorption, or the change in occupied units, of about 20,200 units over the past year. That demand level translates to 2.3% of inventory, outpacing the U.S. share of 2.1% for the first time since 2022. The share has steadily risen over the past year and though improving, it is below the pre-pandemic average of about 3% reported from 2018 to 2019. It is a reflection of Dallas-Fort Worth's outperformance in demand thanks to nation-leading population growth and a steady supply of new apartments."

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Is the Multifamily market beginning to get back to "normal"? As the supply that entered the market gets absorbed, we should see vacancy rates and rents stabilize. Could there be a reversal given the slow in new construction starts? Time will tell.

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