Dripping Springs continues to be top of mind and one of the most sought after Real Estate markets in the country. Looking back on 2022 and how the market saw a drastic correction, and although some may find this hard to believe, I truly believe the future’s still bright for the housing market in Dripping Springs. In order to predict where the housing market will take us this coming year in 2023, we first need to understand the past and exactly how we got to where we are today.
In our lifetime, we have never seen a housing market go from scorching hot to ice cold as quickly as ours did in 2022, however, we also never saw home prices increase 20-30% year over year as we did during COVID. Historically, the housing market in the Hill Country has always seen modest gains of 5-10% over the years, and the anomaly of COVID and the changing workforce environment completely flipped that model upside down. Some believe that the housing market is crashing and we are experiencing 2008 all over again, and in some parts of the country they might be right, but we need to remember what caused the housing market crash in 2008. It was a different market where we had banks lending out to people, many times even fraudulently, who really never should have been qualifying in the first place. Imagine getting a loan for a house with a bad credit score, terrible debt to income ratio, and quite honestly not enough income to even cover your mortgage alone. These factors are hands down the primary reasons that led to the crash in 2008.
Fast forward to 2019, the entire nation saw tremendous growth in the housing market, in fact, it saw unprecedented growth. Buyers and investors alike were driving the market by purchasing homes at a record pace and financing them at historically low interest rates . Then in 2022, in what seemed like over-night, we went from as little as 15 days worth of inventory on the market to as much as 12-15 months worth of inventory, while also seeing interest rates go from 2.75% up to as high as 7% for a 30 year conventional loan. Additionally, we were seeing a record number of first time home buyers entering the market. If you are wondering why this all matters, we need to first understand the logic. Most of these buyers who were entering the market had an average age of around 41 years old, and the majority of them had never seen interest rates above 4.5%; which understandably gave them reason to panic and pull back from the market.
Now with some context on where we’ve been and where we currently are, let’s try to predict where we’re going. Interest rates are slowly coming back down, and while we will likely never see them below 3% again, we should see them settle back to around 5.5% around June this coming year. Buyer’s are also slowly adjusting to the new normal and not experiencing the sticker shock that they had in 2022. We are also seeing large production builders slowing down on new construction, which will allow the resale market to bounce back by giving us less inventory and more pent up buyer demand. If we look at all of these factors and consider the massive amount of buyers that have been on the fence waiting to see where home prices fall and where interest rates settled back in, it gives us a good idea of where we are going, and that is right back up.
We also need to remember that when selling a home, the three biggest factors are price, condition, and as always, LOCATION, LOCATION, LOCATION! What do we have here in Dripping – AN AMAZING LOCATION! Dripping Springs and the Texas Hill Country have quickly become suburbs of Austin, and what does Austin have and continues to gain more of each and every day… Big tech and business. It is no secret that Austin and Texas in general has a booming business culture with a government that strongly supports it and its growth. We have seen businesses relocating to the area at a historic rate, and still have not seen even a fraction of those employee’s move here, and this is not going to slow down anytime soon. While most of us will not like this aforementioned comparison and will strongly try to disagree with it, I am going to throw it out there anyways, Austin has become Silicon Valley 2.0. I say this because back in 2008 while the entire state of California saw a massive housing crash with home prices dropping as much as 40% in some areas, Silicon Valley was virtually untouchable as they did not see a massive drop or a slow down, and that is more or less where we are now.
Dripping Springs is such a desirable area and has the proximity to Austin that most people relocating here need and want. The housing market for Dripping Springs will not only be coming back soon, but it will be coming back stronger than ever. So if you are a buyer, or thinking about buying, don’t think anymore, do it because your opportunity of being in the driver’s seat is almost up. If you own a home and are thinking about selling, now is the time to meet with your Realtor to start your marketing planning which should include meeting with their stager, completing any unfinished or needed repairs, sprucing up the landscaping, scheduling professional photos and video, going over the step by step marketing plan for your home and more. It’s definitely a process, but this way when you finally hit the market, you will know that you are on firm footing.