AUSTIN (KXAN) — Zillow said in a Thursday report that while the Austin metropolitan area is one of the “coolest markets in the nation for competition,” it is now one of seven metros it considers to in the buyer’s favor.
The real estate company isn’t ready to call Austin a buyers market just yet. According to Zillow’s market heat index, a composite score of for-sale inventory and demand in the market, Austin is 0.9 points above the threshold.
But it indicated that falling mortgage rates could spur competition in the fall, if that trend sticks around.
“If this relief from mortgage rates continues, we should see more buyers restarting their hunt for a home,” said Skylar Olsen, Zillow’s chief economist. “But although rate lock among homeowners is easing, they probably won’t be as motivated to jump back into the market and sell. With housing inventory still scarce, this improved affordability picture could reignite competition and sales as we head into the fall, or at least delay the usual post-summer cooldown.”
“Rate lock” is when a prospective home seller delays listing due to having already signed a low mortgage rate.
“Lower rates aren’t likely to encourage a comparable wave of current homeowners to sell,” Olsen said. “Zillow surveys show 80% of recent sellers were influenced by major life events, such as a change in their household size or working situation.”
More importantly, lower rates do make home buyers more likely to re-enter the market, Olsen’s report said.
What makes a Buyer’s market?
Clare Knapp, housing economist for Unlock MLS and the Austin Board of REALTORS, said Friday that the local market is still “relatively neutral” with neither side holding an advantage.
“The significant shift in supply that we’ve seen over 2024 has taken some time to percolate, Knapp said. “We’re seeing preliminary signs in our June and July housing stats that buyers are cognizant of the considerable uptick in supply and the fact that, despite the decline in purchasing power from higher rates, they do have more negotiating power with more inventory on the market.”
According to her, the common metric to differentiate between a buyer’s and a seller’s market lies in months of inventory. Currently, the Austin metro is at 5.1 months of inventory, with around six months as the threshold for a buyer’s market.
Knapp said that it’s important to use more metrics to make these evaluations, however.
“Buyers face the constraints of lower purchasing power from higher mortgage rates and still-elevated home prices but gain negotiating power from the significant uptick in supply,” Knapp said. “Meanwhile, sellers face the constraints of the reduction in buyer’s purchasing power and the uptick in supply, but benefit from still-elevated home prices.”
Credit: Source link
