There are years that canter into history. Some even gallop. Last year’s real estate scene felt like a wild ride into the wilderness on a strange horse. Then, in the waning days of 2021, we saw some familiar market trends in our little shire. Needless to say, we’re all a little exhausted. So pull up a seat at Jill’s New Year’s campfire and let me lay out the highlights, trends, and my predictions for the real estate market specifically in our Walnut Creek Neighborhood community.
MULTIPLE OFFERS: Austin tops the nation for toughest multiple offer market competition. The year began with a perfect storm of critically low home inventory, (both resale and new builds) combined with an increase in new Central Texas residents that lead to a once-in-a-lifetime historic battle for home ownership. I.e. we may never see this level of housing competition again in our lifetimes.
DELAYED NEW BUILDS: Supply chain obstacles and staff shortages through the pandemic continued to slow down an already lagging new residential construction market. While still recovering from the 2008 mortgage crisis, new home construction hit a critical state when buyers who lost out on their offers left the resale scene hoping for better fortunes in new construction. This strategy quickly led to another historic level of bidding wars for new build lots across the metro and suburbs. Buyers faced upwards of 1,500 bids on 1-6 lots. Builders all but auctioned off lots to the highest bidders with few (or none) options for buyers to select design options. Remember the Cabbage Patch Doll craze of the 80’s? Buyers took what they were given.
PANDEMIC: Suddenly, when it felt like we were charging full speed towards “million-dollar home values,” Memorial Day arrived. Increased access to vaccines, lifted mask mandates, and rising confidence meant many buyers simply left the market. While relaxing over the Memorial Day Weekend they had time to pause and rethink their home purchasing plans, They returned with new limits and demands on what they were (and were not) willing to do to win a home bid. Inventory still remained low but buyers didn’t make offers or even tour a home if it was priced too high. They were willing to walk away if homes needed too many repairs or if sellers were unreasonable. Buyers shifted to a long game strategy which often included moving further out to more affordable communities in Jarrell and Kyle.
APPRAISALS: Right as this summer cool-down was arriving a new player entered the scene in 2021 that slowed down the market even more. Appraisals. Many professional appraisers in the Austin area had been working non- stop though the Pandemic like our health care workers. As the summer waned, some appraisers were not picking up as many jobs and some were even price gouging for quick orders. Lenders struggled to meet standard 30-day closing timeframes.
BY YEAR’S END we started to see a noticeable increase in contract terminations due to financing, repair issues, job changes, permitting issues and more.
A NEW CHARACTER: Have you met an iBuyer? If you haven’t yet, you probably will. The “Big Three” institutional iBuyers (Zillow, Opendoor, and Offerpad) increased their presence in late Spring and by summer were aggressively buying inventory. Many homes in the Austin Metro area were bought for considerably more than market values. This over-speculation caused one of the major iBuyers, Zillow, to hurriedly shut down its home buying program in early November. Now buyers purchasing iBuyer properties are facing large appraisal shortages which in turn are affecting neighborhood resale values. These institutional buyers had a short window of capital early in the year dedicated towards purchasing market share. I am seeing a cooling off of iBuyer offer ranges with my clients (in their final net after repairs and services fees) that now fall below fair market opportunity.
LAND! Land and mixed-use space has become a target for buyers right now. So, think beyond the four walls of your home and consider improvements, maintenance, and upkeep of your yard. Think about the full space of your lot and its future use. Space is coveted in Austin city limits right now. How could a potential home buyer use yours? ADUs (accessory dwelling units) and studio space will be a next chapter of land use. Buyers want usable, ready-to-go outdoor entertainment areas. They want the garden, fire pit, workshop, deck, and patio with stringed lights ready to party! JILL’S INSIDE TIP: Invest in your yard before you invest in remodeling your bathroom.
CONDITION OF HOME: With increased price comes an increased fear of financial risk. Buyers taking on a $600,000 price tag are simply not willing to repair expensive systems like under-slab plumbing, HVAC, or new roof replacements. Repairs costing more than $10,000 is a deal breaker for them right now. I am seeing this with both new and experienced home owners. When we were under the half-million mark buyers had more confidence, but it wanes as we approach $600k. This has been, and continues to be, one of the biggest challenges right now in WCN.
CHARACTER OF HOME: Buyers will no longer pay top dollar for just anything. They want character and a story to walk into. Many incoming home buyers are from out-of-state and are discovering our city culture, lifestyle, architecture and Texas ranch style homes. More and more of our buyers are tech or executive workers who have little interest or time in creating a home space but they have the resources to buy one that’s ready to go. JILL’S INSIDE TIP: Time and time again I see homes achieve exceptionally high interest—and values—when care is taken to craft a CLEAR HOME STORY. Our Walnut Creek Neighborhood homes are quality built homes by master craftsmen of the era. I have also witnessed enormous character and creativity from homeowners over the 17 years I’ve been working with our neighborhood. There are many creative “design-on-a-dime solutions” that work in our unique homes. 2022 PREVIEW ALERT: This year, I’ll be creating a special series highlighting many of the Walnut Creek Neighborhood Friendly design tips and tricks I’ve learned!
Home Goals 2022
Step outside and lend a bit of energy to your outside living room.
—Stay on top of systems and maintenance.
—Watch for the 2022 Home Repair Fair that Walnut Creek Neighbor (and my Real Estate partner) Beth Coffey will host at her office at Trinity Title. We have everyone from landscapers to painters, contractors, plumbers and more.
Agent Jill’s 2022 Real Estate Predictions
We are going to have a very busy first two quarters of 2022. I don’t think we are going to see the same level of multiple offers this year. We increased values a little more than $100,000 in WCN in 2021 but I’m expecting closer to a 13%-15% increase in 2022. Of course, unique homes that include all of the trends that I outlined above, with great use of land, great condition and character, will exceed these increases just as they did this year. Several rare WCN homes achieved 60% above average! The reality for 2022 is that buyers and buyer agents have refined their strategy and investment skills and have adjusted their plans to engage over the long haul. I am expecting more non- traditional buyers to enter the market. We will still see institutional buyers playing in the market but I think extended relation and non-related persons will explore collaborative homeownership opportunities. I predict iBuyers are going to continue to disrupt the way buyers navigate home purchases increasing the need for home consultants and planners to help advocate and educate. Home sellers are going to have to carefully strategize how to identify their priority goals and best position their property. Walnut Creek Neighborhood is in a unique location with ideal amenities for a variety of prime buyers. Our average home values are passing the half million mark!
We are homeowners in a changing environment sitting on investments in a top market in the country. My first advice to clients navigating complex real estate decisions in our market is paint a vibrant picture of what you need in your mind, then work backwards to create it. Ask for help if you need it. You have more options this year than we’ve ever had!