Buy now, or wait? That’s the question prospective homeowners are struggling to answer in today’s housing market, where both home prices and mortgage rates in the Austin area and around the country have skyrocketed for much of the past year.
And with real estate experts like the Knock real estate platform predicting that the Austin metro region is anticipated to have the most drastic shift from a sellers' market to a buyers' market among the 100 largest metro areas in the United States by July 2023, the question remains, is it a good time to buy a house in Austin?
In this article, you’ll find out several reasons why it could be the perfect time for YOU to buy a house in Austin. We’ll help you decide here!
Housing Market Factors to Consider
Potential homebuyers eager to start looking for a home to purchase in Austin have faced a harsh reality over the last two years. Below are some Austin housing market factors to take into consideration in 2023.
Mortgage Rates Are on the Rise
Even with the Federal Reserve raising interest rates to combat inflation, there seems to be no end in sight to the slowing down of the booming Austin housing market. In fact, homebuyers are still faced with low housing inventory, high demand and inflation in the city, and now rising mortgage rates.
While waiting may have seemed like a good idea in the past, the federal reserve plans to increase interest rates six times this year to slow the economy and battle inflation may affect the rate of home affordability for homebuyers in Austin. New numbers show that as of December 2022, the average rate for a 30-year fixed mortgage is 6.47% and 5.88% for a 15-year fixed mortgage APR.
Let’s say you buy your first home for $500,000 at a 3.1% interest rate, with 20% down and a 30-year mortgage. Your monthly payments would be $1,708 before taxes, insurance, and other additional costs. Over the lifetime of the loan, you’ll pay the loan and interest at $614,918.
Assuming the home would be priced at $450,000 in a cooler market in 2023, with the mortgage rate going up by a single percentage point over the next year (4.1%), your monthly payments would be $1,739 before taxes, insurance, and additional costs, your total amount owed would be $626,403. By paying $50,000 more while locking in that lower mortgage rate, the first scenario predicts that you will save money over the life of the loan by buying soon.
Although it’s impossible to predict what will happen in the market accurately, you won’t necessarily save money waiting around patiently for the Austin market to cool down in 2023. According to the second scenario, you could end up paying more waiting for a better deal that may never come.