For cash buyers who have been waiting to jump into the red-hot Texas real estate market in places like Austin, Dallas and San Antonio, now may be the moment to do so.
Roxanne Taylor, an agent with Engel & Völkers Southlake Dallas, said rising interest rates continue to keep some shoppers away from shopping, but those who don't need a loan are at a rate similar to what they were in the early 2020s. It is possible to approach the market without falling into a “bait frenzy''.
“For luxury goods, most sales are cash. Those buyers can be more selective,” she said. “They're doing inspections. They're asking for repairs. And if they had second thoughts, they'd be finished.”
At the same time, net immigration to Texas continues to fuel an insatiable real estate market, meaning competition will increase as soon as mortgage rates drop.
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“If the Fed cuts rates tomorrow, the market will go wild again,” said Damon Williamson, managing partner at The Agency's Damon Williamson Group in Dallas. “Buyers who are not affected by mortgage rates are getting a lot of value.”
Ryan Rodenbeck, owner of Spyglass Realty in Austin, said cash buyers have far more options than in years past as interest rates slow sales.
“Interest rates are weeding out buyers,” he said. “There's a little more inventory, especially in upscale areas,” such as Barton Hills, Lake Austin and Old Enfield, he said.
Dallas will become the nation's largest immigrant market in 2022, adding more than 130,000 people, according to U.S. Census data. Austin's net population increased by more than 1.5% in early 2023 compared to the same period last year, and by 5% from 2020 to 2022. Between July 2021 and July 2022, San Antonio gained 28,635 new residents, with an overall growth rate of 1.4. .%. Overall, Texas gained an average of 412,958 residents per year between her 2000 and her 2022.
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“And a lot of the people who move here are wealthy,” said Williamson, who sells in upscale Dallas neighborhoods like Park City, Preston Hollow, Instreets and Lakewood. “This year, 30% of my business came from relocation. This is a big part of the luxury home sales market, which is not normal. Texas is considered one of the top relocation destinations. Dallas is one of the best places to do so.”
Engel & Felkers' Taylor said homes in Dallas' most affluent neighborhoods are still selling “above asking price.” Dallas is seeing an influx of people seeking affluent neighborhoods like West Lake, University Park, Highland Park, and Preston Hollow. “A lot of big companies are moving here,” she says.
The same goes for Austin, which has seen some of the biggest price increases in the U.S. during the pandemic. “There's still an issue of so much growth that there's so much demand for housing,” said Bridget Hager, an agent with Engel & Felkers Westlake Austin. “We have so many businesses coming, so many people from other states.”
In fact, tech site TechCrunch last year dubbed Austin the “City of Unicorns and Tech Giants” due to its business environment being such a hit.
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In contrast, San Antonio's affluent housing markets such as Olmos Park, Alamo Heights, Terrell Hills and Shavano Park are seeing an uptick in in-state migration, said Nicholas Schaus, an agent with Cooper Sotheby's International Realty in San Antonio. That's what it means. San Antonio is “much cheaper than cities like Austin, so people are moving away from those cities.”
In his area, cash buyers currently have little competition. “We don't have any in stock,” Kyosu said. “If interest rates come down, buyers who need funds will come back, but funds will become even scarcer.”
Luxury buyers also face slightly lower pricing than a year ago. The median listing price in June was down nearly 7% year over year in Austin and 3.5% in Dallas, according to Realtor.com data. San Antonio saw the steepest price reductions in the U.S. last month, with 22% of residential listings discounted.
While these numbers don't reflect San Antonio's still-strong luxury segment, sellers who insist on pricing their properties based on higher pandemic levels may need to adjust their expectations, Chos said. said. It's a similar story for Dallas sellers, said The Agency's Williamson.
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“When luxury homes don't sell, it's usually because people are pricing the market a year ago, not today,” he says. “Some sellers think we are still in a seller-based market, but that is not true. If what we experienced in 2021-2022 was a great market, we are now in a We’re in an above-average market.”
Determining price trends is more difficult than in other regions because Texas is a private state, meaning local and state governments do not make sales prices public records. So reports of a downturn on listing sites like Zillow are exaggerated, Hager said. “Zillow doesn't have access to sales prices. It’s a top destination that consistently ranks on my bucket list.”
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