October 2024 Market Update

Written By Olivia Connett

Austin Real Estate

As we approach the final quarter of 2024, Austin’s real estate market is providing both challenges and opportunities. Selling is challenging. Buyers are very patient and are continuing to show that they will buy, but only if it’s a good deal for them. The opportunities are on the acquisition side of the business. Over the last 6 months, prices have started to stabilize a bit more. We can’t for sure call this the bottom, but if mortgage rates continue to hold steady or move down, then-current prices will likely represent the bottom. The following is a summary of some important factors.

Current Market Conditions

Mortgage rates increased to 6.5%, up from around 6%. While these rate levels are what we are used to dealing with, they kill the little bit of optimism that was returning to the market. Potential buyers continue to exercise caution due to high borrowing costs and economic uncertainty.

  • Home Prices: September’s average home prices declined 5% year-over-year.

  • Closed Sales: The volume of closed sales is down 8% compared to last year.

  • Days on Market: Properties are sitting on the market longer, now averaging 80 days before sale.

  • Inventory: There is now a 5.2-month supply of homes available, giving buyers more leverage in the negotiating process.

These trends confirm that we are operating in a buyer’s market, with buyers having the upper hand due to increased supply and a slower market pace.

Broader Market Considerations

Several larger economic forces are affecting real estate and influencing buyer behavior. These factors are critical when navigating the real estate market.

  • Federal Reserve Stance: After a robust jobs report for September, which saw 254,000 jobs added (far exceeding the forecast of 140,000), it appears less likely that the Federal Reserve will cut rates aggressively. This suggests that high borrowing costs will persist, likely dampening buyer enthusiasm.

  • Global Instability and Energy Prices: Ongoing geopolitical tensions have pushed oil prices higher, further squeezing consumers. With U.S. strategic oil reserves running low, energy prices may remain elevated, which could dampen economic growth and affect real estate demand.

  • Labor Market and Consumer Debt:

    • The recent port labor strike has resulted in wage increases, which could raise the cost of goods in the long term, making economic conditions even tighter for consumers.

    • Consumer debt continues to rise as 63% of household income is now spent on essential expenses like housing, food, and transportation, leaving limited discretionary income. This is increasing buyers' reliance on financing and making it harder for them to commit to purchases.

  • Federal Debt: Government debt continues to climb at an unprecedented rate, with deficits doubling over the last twelve years. This adds to overall economic uncertainty, which may affect buyer sentiment moving forward.

So What Does This Mean?

Buyers: There is opportunity with more inventory and sellers motivation. Properties are staying on the market longer and therefore, there is more room for negotiation.

Sellers: We can’t say it enough, pricing is very important! Days on the market are increasing and there is more inventory, so pricing competitively is key. Make sure that the Buyer feels like they are getting a deal on your home. The market is not fast-moving, but there is still opportunity.

Lets Talk Real Estate

Olivia Connett

REALTOR®, Senior Real Estate Specialist®, Attorney

512-789-3603

olivia@wgrouprealestate.com

Information provided by Williamson Group Real Estate

Olivia Connett