After years of sellers calling the shots in the real-estate market, the balance may finally be tipping towards homebuyers in some US cities.
Since 2022, high mortgage rates and expensive home prices have created a potent cocktail of unaffordability, sidelining many would-be buyers in some of the country’s most popular cities.
But with fewer prospective buyers in the market for homes, home prices are now declining in several cities across the US.
The National Association of Realtors found that home prices dropped in 15 of 221 markets across the United States in the first quarter of 2024 compared to the same period last year, including two in the Lone Star State: Austin-Round Rock (-0.3%) and San Antonio-New Braunfels (-4.6%).
The Austin-Round Rock area had a median home price of $466,700 in the first quarter of 2024, down from $467,900 in 2023. The median home price in the San Antonio-New Braunfels area — New Braunfels is a satellite city of San Antonio between it and Austin, and one of the fastest-growing cities in the US — was $320,500 in the first quarter of 2023, and has now fallen to $305,800 in 2024.
The reason homes are getting a bit cheaper is because demand has slowed, real-estate agents in Austin and New Braunfels told Business Insider.
Over the past few years, Texas has lured hundreds of thousands of transplants with its relatively affordable housing and abundant job opportunities. Cities including Austin and New Braunfels have attracted many Californians and tech professionals enticed by remote work and the state’s lower cost of living.
Demand from movers and other buyers, buoyed by record-low interest rates from 2020 to 2022, fueled a surge in home prices, driven by heightened competition.
But the higher prices and higher mortgage rates diminished affordability for many locals, leading to lower home-buying demand. Without eager buyers lined up at open houses, homes listed for sale are lingering on the market longer than they have in the recent past.
In April, the average time for homes to sell in Austin increased to 40 days from 38 days the previous year, according to Realtor.com. Similarly, in New Braunfels, homes are now staying on the market for an average of 53 days, compared to 49 days in April 2023.
The trend, has led many sellers to lower their prices — though prices still remain significantly higher than a decade ago.
Some Texas home sellers are slashing prices and offering concessions
Austin real-estate broker Nicole Marburger told Business Insider that the city’s real estate market is finally coming down to earth.
From 2020 to 2022, Austin saw a huge boom in its real-estate market, marked by intense competition, bidding wars, and quick sales. But now, the market has changed.
“Most homes are no longer selling within a matter of hours or days,” said Marburger, the founder and owner of Austin-based Legacy Real Estate Group at Compass. “Some might sell in two to three weeks, while for others, it could take two to three months — it just depends what area a home is listed.”
As homes linger on the market, sellers are reducing their prices to draw buyers, she added.
Marburger said she recently worked with a client who purchased a home initially listed for $1.25 million for just $850,000 — it even came with a concession, which is when a home seller offers a buyer additional incentives such as money for home repairs or mortgage-rate buydowns.
As homebuyers become more choosy, she said more sellers have to adjust their expectations.
“Sellers who are holding out for peak market prices may unfortunately find that, unless their property truly stands out, today’s reality does not align with their aspirations,” she said.
Some Texas cities have become buyers’ markets
New Braunfels — an up-and-coming area located about 47 miles from Austin and 35 miles from San Antonio — is experiencing a similar shift in its housing market.
Broker Mercy Boatright, the owner and founder of real-estate agency House Hunters, told Business Insider that New Braunfels’ homebuyers now have the upper hand.
“It’s definitely a buyers’ market right now,” Boatright said. “Prices are going back to the norm. Homes are no longer being appraised at sky-high prices.”
Boatright said that homes in New Braunfels with higher price tags are struggling to attract offers. Sellers who resist reducing their listing prices are learning their lesson, she added.
“Homes aren’t selling unless the seller’s price goes down,” Boatright said.
On the other side of the closing table, Boatright said she encourages her buyer clients to consider submitting offers on homes even if they’re beyond their budget — a seemingly modest bid could still potentially secure a sale.
“I’m like, ‘Hey, if it’s the house you want, let’s make an offer. I don’t care if it’s $30,000 off,'” she said. “We try it, and I’ve been getting them every time.”
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