Now that 2018 has wound to a close, we reflect upon another strong year for the Real Estate market in Austin & Central Texas. The market continued to be a strong Seller’s market in 2018, with inventory struggling to keep up with Buyer demand. This resulted in escalating price trends, and heavy competition (including many multiple offer situations) among Buyers for that limited supply. Interest rates for 30-year fixed mortgages rose above 5% for the first time in years, negatively affecting affordability with a double-whammy effect. Housing affordability across Central Texas continues to be a very serious concern for homeowners, economists and politicians alike.
As we look to the future, what can we expect in 2019? One bit of good news is that interest rates have drifted lower, back to the mid-to-high 4% range, although this is likely a temporary phenomenon. The Fed has continued to set expectations of multiple rates hikes in 2019 as they try to keep a lid on inflation, but inflation numbers for 2018 have been lower than anticipated, and that coupled with recent price drops in the energy sector (particularly gasoline (14%) and natural gas (28%)) are expected to affect the Fed’s strategy on rate hikes in 2019.
And speaking of inflation and home values across Central Texas, new loan limits were recently announced, with 2019 Conventional loans now being capped at $484,350 (a 6.9% increase from 2018), while the FHA loan limit was raised to $389,850.
So, it begs the question that I am continually asked: “are we in a Bubble, and if so when will it burst?” I refer you back to my Article on this last year, and stand by the same assessment for the coming years. While we can’t predict when a National economic event might occur, one thing we do know is that Central Texas has been relatively insulated from negative national economic events, and long may that continue!
Announcing our new Breakaway App! If you find yourself motivated to search Real Estate over the Holiday season, please visit our Breakaway website on your mobile device and follow the simple, one-step instructions to download our App—it’s a great way to begin planning your 2019 purchase, check out your property value, or daydream about that investment property or vacation home you put on your goals list for 2019!
Best Wishes for a prosperous 2019, and please keep us in mind for your Real Estate needs!