What's next for the Austin housing market heading to fall 2023
Mortgage rates have hit a 21-year high, and KXAN wanted to see what it could mean for Central Texans.
AUSTIN (KXAN) — Mortgage rates have hit a 21-year high, and KXAN wanted to see what it could mean for Central Texans.
KXAN Anchor Jennifer Sanders spoke with Dr. Clare Losey, a housing economist with the Austin Board of Realtors, about key housing data, such as new and existing home sales.
Read a full transcription of the discussion below or use the video player above.
JENNIFER: So as mortgage rates top 7% It's a two-decade high. What does this really mean for homebuyers as well as homeowners here in Central Texas?
CLARE: Well, the primary effect of higher mortgage rates is on homebuyers purchasing power, right? So anytime the mortgage rate increases, it reduces the maximum home price affordable to any potential buyer. So, what we anticipate to see in Austin really in any housing market is just somewhat of a moderation in home sale deals with these higher rates as homebuyers who would otherwise have been able to purchase a home are unable to with these higher rates.
JENNIFER: Okay, and according to a more the Central Texas housing market remains pretty competitive due to demand-driven transactions. What do buyers and sellers really need to keep in mind as they search for their next home?
CLARE: So, the months of inventory on the market in Austin hovers between about 3.5 and four months and generally speaking, a balanced market is a little bit closer to six months. So, in other words, we're seeing still strong demand despite these higher mortgage rates. So, as you're saying, it's still very much a competitive market. And it's really important now especially to tap into the expertise and experience of professionals like realtors and mortgage lenders who can help both potential buyers and sellers walk through the home search or the home selling process.
JENNIFER: And what about the current rates? What does that mean for refinancing in 2023?
CLARE: So, with higher rates, it's unlikely that a high proportion of current homeowners are going to be likely to refinance, right? We saw a large wave of refinancing activity, especially in the wake of the COVID-19 pandemic when mortgage rates were at historically low levels. So broadly speaking, with a higher rate environment, we would anticipate much less refinancing activity.
JENNIFER: And then lastly, some experts expect mortgage rates to really remain elevated amid the Federal Reserve's war on inflation. What are the mortgage rate predictions? I know you don't have a crystal ball, but as we head into the fall and 2024, what are we thinking that we'll see?
CLARE: Right now, over the near term, broadly speaking, we anticipate that mortgage rates will remain elevated. The longer-term prediction is largely dependent on the Federal Reserve's actions over the next couple of months.