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Mortgage applications are down year-over-year, but the Austin real estate market remains hot. (Benton Graham / Community Impact Newspaper)
The Austin real estate market may show signs of slowing after a period of intense competition.
Year-over-year, mortgage sales, a key real estate indicator, fell 17.8% from July 10 to July 16 and 28.5% from July 3 to July 9, according to data from the Mortgage Bankers Association.
Real estate experts are trying to find out if the market is normalizing or if it’s a slip up.
Jim Gaines, research economist at Texas A&M University’s Real Estate Center, said that while the housing market may be slowing, it is because its pace is unsustainable, especially when compared to summer 2020.
“Everyone has trouble interpreting the apartment data,” said Gaines. “You need to remember that we are all comparing year-on-year comparisons, for example June and July of this year versus June and July of last year, June and July of last year were explosive after April [and] May fall off because of the pandemic. “
However, he added that monthly data could suggest that the property market is back to normal.
“I think we’re starting to see some of this return to normal because, in all honesty, you can’t see sales increasing 25% a year or house prices increasing 20% a year,” Gaines said.
Kevin O’Toole, Central Texas area lending manager at Bank of America, said seasonality could also play a role in the market cool. While the real estate market is typically most active from April to October, July tends to be slower.
“June is usually more active than July. July is when you get vacation, it’s a little bit of a retreat, it’s a little bit of a retreat, and then there is usually a bit more activity in August, ”said O’Toole.
O’Toole added that comparing prices with last year is challenging as the pandemic has disrupted typical property trends.
“We are in a hot market. Central Texas remains a pretty hot market overall, ”said O’Toole. “I think the pandemic just threw everyone out of their normal routines and timings.”
The lack of housing stock is partly responsible for the fact that the market remains hot. O’Toole said inventory remains low, in part because potential sellers don’t know what their next step after the sale will be.
“You have to make sure that you are safe in your next step, whatever that is; if it is about the purchase of another property; when it’s rented, ”said O’Toole. “When it comes to leasing, the inventory is a bit used up there too.”
The high volume of cash purchases could also play a role in the decline in mortgage purchase requests.
“The percentage of property being bought on a barbar basis now is well above the ‘long-term norm,'” said Gaines. “It hasn’t normalized yet.”
Cash purchases are due in part to people having increased savings after the pandemic, as well as the influx of real estate investments from financial institutions.
Eric Bramlett, owner of Bramlett Residential, said the pandemic had “completely unbalanced” everything.
“Whenever people came back to the market, we’d say, ‘Hey, look, this year is going to be a strange year seasonally,'” Bramlett said. “And what happened in the end, which we really couldn’t predict, is that the demand actually increased. And demand rose because everyone was stuck at home. “
He added that the decline in mortgage purchase requests will feel like a huge slowdown for both buyers and sellers.
“It will feel like we’ve fallen off a cliff, but we’re really just getting back to the normal, resilient market that Austin has been in for at least half a decade,” Bramlett said in an email.
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