In 2022, the median price for a home in the Austin-Round Rock MSA set a new annual record of $503,000, according to the December 2022 and Year-End Central Texas Housing Market Report released by the Austin Board of REALTORS®. Despite this record, the housing market continued shifting towards buyers as home sales declined 18.3% to 33,547 homes sold last year and inventory increased, with homes on the market for 31 days, 11 days more than in 2021.

“After two years of unprecedented demand, activity and price increases, our housing market began to stabilize in 2022,” Ashley Jackson, 2023 ABoR president, said. “Signs point to that trend continuing in 2023 even as interest rates fluctuate, so buyers need to date the rate and marry the house. Bidding wars have subdued as homes on average sold for only less than the original listing price in 2022, but as we head into what is normally a seasonal peak for sales, today will still be the most cost-effective time to buy a house. It is important to remember that we still have a desirable and sought-after market, it is just that now we are seeing our market return to a more normal level of high demand and activity than what we experienced in the years leading up to the COVID pandemic and subsequent boom in our market.”

In 2022, the median price in the MSA rose 11.4% $503,000. Sales dollar volume dipped 9.8% to yield a $21,018,159,929 impact on the Austin-area economy. New listings stayed flat, and the year ended with 45,949 homes listed as pending sales dropped 24.2% to 31,633 homes.

In the month of December, closed listings across the MSA declined 31.5% to 2,435 year-over-year as sales dollar volume decreased 36.1% to $1,357,155,494. Median sales price dropped 3.7% to $457,426. New listings declined 15.1% to 1,828 listings, active listings skyrocketed 275.4% to 7,493 listings, and pending sales dropped 22.8% in December to 1,949 sales. Last month, homes spent an average of 73 days on the market, 47 more compared to December 2021.

“December tells us a lot about how the market has shifted and started to rebalance as there was a sales price drop and a staggering increase in how long homes take to sell. If you are interested in purchasing a home, now is a great time to work with a REALTOR® to find something that works for you and your budget.”

Mark Sprague, state director of information capital for Independence Title, pointed out that economic factors, including increasing construction costs, supply chain and labor issues that could take years to return to normal, could cause inventory to fall in the coming year.

“Even with the inventory gains made in 2022, our region still needs more housing. This need could be exacerbated as builders and developers continue to recover after overextending themselves nationally and increasing interest rates lessen people’s buying power. We could see 15-20% less inventory in 2023 as builders scale back their housing starts.”

Affordability will continue to be a major issue in the year ahead, particularly as interest rates impact people’s budgets and companies continue to create jobs across the region.

“Every time interest rates increase buyers lose 12% of their purchasing power. By this summer, if rates increase by one 1.5 basis points as expected, buyers will have 72% less buying power than they did at the beginning of 2022. With Austin’s unique attraction as a magnet for job creation, we should continue to expect employment growth for several years to come, which is positive. However, when combined with expected lower levels of inventory and higher interest rates, affordability concerns will continue to be a factor in real estate transactions at the micro and macro levels.”

Jackson added that with elections over, now is the time to make meaningful and lasting changes to our region’s approach to housing.

“Now more than ever is the time for local elected officials to prioritize housing and take bold actions to help increase our region’s housing stock,” Jackson said. “Communities across Central Texas must come together to meet the challenge of housing our rapidly growing population by collectively finding ways to increase the abundance and variety of housing. If we work together, we can change the trajectory we’re on by crafting housing policies that address housing access, availability, and affordability and create a more inclusive housing market.”

City of Austin

In 2022, residential home sales in the City of Austin decreased 25.1% to 10,014 sales, as sales dollar volume dipped 17.0% to $7,324,437,024. The median sales price for residential homes rose 10.3% year over year to $590,000 this past year, an all-time annual record. New listings slightly decreased 6.4% to 13,978 listings while active listings rose significantly by 103.6% to 1,586 listings, and pending sales decreased 29.2% to 9,574 pending sales. In December 2022, the median sales price in the city of Austin dipped 4.5% to $525,250. Residential sales decreased 47.4% to 593 sales, and sales dollar volume also decreased 49.7% to $390,054,396. During the same period, new listings dropped 24.2% to 488 listings, while active listings increased 227.8% to 1,780 listings, and pending sales fell 31.9% to 539 pending sales. Monthly housing inventory increased 1.6 months year over year to 2.1 months of inventory.

Travis County

During 2022, residential home sales decreased 23.8% to 15,705 sales, while sales dollar volume dipped 16.1% to $11,556,938,031. The median price for residential homes increased 10.6% year over year to $575,000. This past year, new listings decreased 3.6% to 22,105 listings, active listings rose 121.9% to 2,718 listings and pending sales decreased 27.9% to 14,919 pending sales.

In December 2022, residential home sales decreased 44.9% to 984 sales as sales dollar volume in Travis County dipped 47.8% to $649,319,748. Additionally, the median price decreased 2.8% year over year to $520,000. During the same period, new listings declined 16.5% to 825 listings, while active listings ballooned 250.6% to 3,166 listings and pending sales decreased 27.6% to 873 pending sales. Monthly housing inventory rose 1.9 months year over year to 2.4 months of inventory.

Williamson County

In 2022 in Williamson County, home sales decreased 17.7% to 11,432 sales, and sales dollar volume dipped 6.5% to $6,112,373,708. The median price for homes increased 12.7% to $479,204. New listings ticked down 1.3% to 15,280 listings and active listings rose 209.6% to 1,941 listings in 2022. However, pending sales decreased 25.5% to 10,657 pending sales.

During the month of December, residential sales in Williamson County decreased 21.9% to 927 sales, and sales dollar volume decreased 21.3% to $464,228,556. The median price dipped 0.4% to $439,250. In December, new listings decreased 22.1% to 595 listings, while active listings skyrocketed 374.7% to 2,549 listings. Pending sales dropped 22.7% to 676 pending sales. Housing inventory increased 2.2 months year over year to 2.7 months of inventory.

Bastrop County

In 2022 in Bastrop County, home sales decreased 4.9% to 1,499 sales, and sales dollar volume rose 15.2% to $663,109,837. The median price for homes increased 22.8% to $395,900. New listings increased 30.4% to 2,226 listings while active listings also rose 175.8% to 331 listings. However, pending sales dipped 10.3% to 1,409 pending sales.

In December, Bastrop County home sales dropped 16.8% to 119 sales, and sales dollar volume decreased 24.5% to $48,073,981. The median price for residential homes decreased 4.3% to $360,000. During the same period, new listings increased 35.2% to 119 listings, while active listings also rose 248.0% to 508 listings. Pending sales fell 30.9% to 65 pending sales. Housing inventory tripled by 3.0 months to 4.1 months of inventory.

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What will the new year bring for homebuyers, homeowners and home sellers? Lower or higher home prices? Higher or lower mortgage interest rates? Or a continuation of the overheated pandemic-inspired housing market?

There’s no question that the blistering housing market of the past three years was hard on homebuyers. By October 2022, the average mortgage interest rate for a 30-year fixed is 7.24%, more than double the 3.22% level in January 2022.

According to Fannie Mae, the combination of high inflation, monetary policy tightening, and a slowing housing market is “likely to tip the economy into a modest recession in the first quarter of 2023.”

Many economic forecasters believe housing prices will decline, but that homebuyers shouldn’t fear buying during a declining market. Morgan Stanley predicts a 7% dip in home prices for 2023 that would return housing prices to where they were in January 2022 – 32% higher than prices were in March 2020 when the pandemic began. Economists with Goldman Sachs and Moody Analytics are predicting 5% to 10% declines in home prices, based on lack of homebuyer affordability, slowing housing sales, fewer mortgage applications and a looming recession, however mild.

BusinessInsider.com reports that the Federal Reserve’s overnight rate hikes have raised mortgage interest rates, pushing affordability to new lows, but that a recession could bring interest rates down again. That combined with softer homebuying demand due to inflation and sellers lowering their prices would make spring and summer 2023 great times to buy a home.

Property management and home watch companies offer a wide range of services for second-home owners. From routine maintenance to concierge services, they can protect your property from potential problems during your absence and make it turn-key ready for your visits.

Costs vary among providers depending on the types of services you want, the frequency of inspections, whether you have a swimming pool or other water features, along with the size and location of the property. 

The inspection you’ll most likely need is monthly testing of all appliances and systems in the home, including alarm system, air conditioner and plumbing to make sure they’re working properly. The property manager will also notify you of signs of wear so repairs can be made.

Concierge services can include hiring and supervising housekeepers, landscapers, pool cleaners and repair professionals. Property managers can accept deliveries for you, forward your mail and prepare your home for your arrivals with groceries, fresh flowers and ironed linens. If you rent your second home annually, including short terms and peak seasons, your property manager can advertise the property for rent, vet renters, collect payments, and clean up the home when guests depart. 

A written contract should detail exactly what the property manager is to do as well as fix the fees for the term of the contract. To find the best property manager, ask friends and neighbors who they use, or contact your Berkshire Hathaway HomeServices network professional for referrals. Interview several property managers to compare prices and services.

As mortgage interest rates rise, homebuyers like you may be wishing for easier, cheaper loans to obtain, but any loan that isn’t conventional or government-guaranteed could put you at greater financial risk. Remember the Great Recession of 2008? It was the first and only time that unsustainable mortgage loans resulted in a nationwide housing crisis.

National Association of REALTORS chief economist Lawrence Yun says that rising yields in U.S. Treasuries explain why mortgage interest rates are exceeding 7% for a 30-year fixed-rate mortgage.

In response, borrowers are returning to adjustable-rate and hybrid loans, interest-only loans, and 2-1 buydowns. The danger for borrowers is much higher mortgage interest rates and bigger mortgage payments when the loans reset. However, borrowers can save money if they choose the right loan product and correctly estimate how long they’ll occupy their homes and refinance or sell their homes - before rate adjustments get too high. 

Fixed-rate mortgages (FRMs) have the same interest rate for the life of the loan. Adjustable-rate mortgages (ARMs) adjust periodically with caps on how often the rate can change and how much higher the rate can go beyond the initial FRM rate. A hybrid loan has an initial fixed rate for a term of one, five, seven or ten years, then converts to an adjustable rate at the end of the term. Typically, homeowners stay for about 10 years before selling, so a 10-year term allows them to enjoy the benefits of a FRM at a much lower cost.

Sooner or later, all interior design trends change, and often in the opposite direction. After years of cool minimalism, homeowners are turning toward warmer, cozier colors, fabrics, and wall coverings to maximize comfort. So what’s old but new for home décor in 2023?

Greens and other warm neutrals

Colors come in two ranges – warm and cool, and warmer colors are seizing the moment away from greys and pure whites. Golds and avocado greens from the 1960s and 1970s revolutionized kitchen appliances making complementary autumn colors like oranges, tans and browns wildly popular. If you like the look of clean look of white and grey, but want trendier colors, try cream, beige and other earth tones instead. 

Texture everywhere

Texture gives neutral colors like beige, stone and greys more interest. Not since interior designers Dorothy Draper and William Haines popularized “Hollywood Regency” in the 1930s, ‘40s and ‘50s, has opulent maximalism been revived as well as it is today. Apartmenttherapy.com recommends getting the glamorous look with gold or shiny metallic accents pieces, jewel tones such as emerald green, mirrors with speckles and sparkle, a touch of Chinoiserie fabric on chairs or in wallpaper, and crystal chandeliers. Plaster, a lime-based putty, adds depth to colors and textures. You can achieve this look with special paint finishes.

Wallpaper scenes

In the 1920s, wallpaper was the ultimate status symbol, according to SouthernLiving.com. Murals and larger repeat prints give interiors unique personality, texture and color. And unlike removal in the past, today’s wallpaper is peel and stick.