Recently, Realtor.com posted an article naming the 10 cities where home prices are dropping the most right now. Austin takes the top spot on this list with a 10.3% decrease in median price from June to September from their data. They cite the reason as higher interest rates scaring away buyers. If you read on, you’ll see they mention seasonal changes, but then say this reduction reflects more than a seasonal change. This article, which you can read here, has people thinking is the Austin market tanking? Are interest rates to blame for Austin being named the top US city where prices are dropping the most?
Is the Austin Market Slowing?
Back in August, we asked, is the Austin market slowing and answered based on market data and our experience working in the market everyday. The verdict? The market IS slowing, but it is NOT tanking. That’s still the case.
Supply is up and demand is down. We are seeing price reductions, homes are taking longer to sell, sellers and builders offering incentives to buyers and more homes taken off the market. Sellers and builders are frustrated.
So, buyers should be thrilled, right? They’re back in the driver seat and don’t have to just settle for the house they win in an outrageous bidding war. Sadly, that’s not the case. Though buyers have more choices and are paying less than they were in spring, their monthly payments have increased due to rising interest rates, so they are also frustrated. Buyers who were in a position to buy when interest rates were low are having to reevaluate now. Investors who were putting minimum down payments can’t break even on rent, so they’ve taken themselves out of the market.
There’s More to the Median Price Story
Taken out of context and without any historical data for comparison, Realtor.com’s article is pretty shocking. One might think the Austin market was a bubble and it is falling dramatically due to rising interest rates. Yes, interest rates are a factor in the slowing of real estate markets all across the country. In Austin, demand was down 39% and supply was up 49% in September. That’s sizable. But, despite significantly more supply and less demand than in 2021 and interest rates at double what they were, buyers are still willing to pay 5% more than they were in 2021. Those things don’t happen in a market that’s tanking.
Real Estate is a Cyclical Market in Any Type of Year
The drop in median price is something we see every year in Austin between the June peak and the September slow down. Real estate sales data for many cities across the country will show real estate is a cyclical market centered around things that happen every year: school schedules, holidays and weather. Spring and early summer are the peak home buying seasons. We have more demand and more supply than at any other time of year. Activity dies off, usually pretty dramatically, in August as the weather heats up and summer ends. We see a small uptick in late September and October and then it gets slow again around Thanksgiving. Come the week after Christmas, we see things pick up. Happens every year. Even during the pandemic, slow years, hot years, balanced years – we see this cyclical behavior.
Not the First Time We’ve Seen a 10% Change in Median Price from June to September
Though this article will make it seem this 10% change in median price from June to September is something that was ONLY created due to rising interest rates, this isn’t the first time we’ve seen it in the last 10 years. It’s just the first time they are reporting it this way. We saw a 9.24% decrease in 2021 and a 10.43% decrease in 2017. In the past 10 years, we’ve only seen one year, 2020, where the median price was higher in September than it was in June. That was due to the frenzy Covid created and was the start of the boom that lasted until interest rates rose. 2020 was the outlier here. Not 2022.
How Does this Median Price Drop Compare to Previous Years?
Here’s a 10 year history of median price changes between June and September. If you average the yearly decrease across the last 10 years, you’ll find we see, on average, a 6.35% decrease from June to September. The lowest we’ve seen is a 1.50% increase (2020) to an 11.58% decrease (2022). We’ve included a table for you and then broken down each year and brought the median price chart from our Austin real estate price reports. You can use the arrows on the image to toggle between the June and September charts of that year. You’ll also notice we’ve included median price change in year over year numbers. Those have increased every single month for 10 years with the exception of June 2018 where we saw a 1% decrease in median price from June 2017. The rest have seen median price increases from 2%-43%.
10 Year History of Austin Median Price June vs September
|Year||June Median Price||Sept Median Price||% Change|
|Average % Change||-6.35%|
- June 2022 Median Price: $689,000
- September 2022 Median Price: $617,500
- Percentage Change from June to September: 11.58% decrease
- Year Over Year Median Price Change from June 2022 vs 2021: 6% increase
- Year Over Year Median Price Change from September 2022 vs 2021: 5% increase
- June 2021 Median Price: $650,000
- September 2021 Median Price: $595,000
- Percentage Change from June to September: 9.24% decrease
- Year Over Year Median Price Change from June 2021 vs 2020: 43% increase
- Year Over Year Median Price Change from September 2021 vs 2020: 28% increase
- June 2020 Median Price: $460,000
- September 2020 Median Price: $467,000
- Percentage Change from June to September: 1.50% increase
- Year Over Year Median Price Change from June 2020 vs 2019: 8% increase
- Year Over Year Median Price Change from September 2020 vs 2019: 14% increase
- June 2019 Median Price: $428,426
- September 2019 Median Price: $412,990
- Percentage Change from June to September: 3.74% decrease
- Year Over Year Median Price Change from June 2019 vs 2018: 7% increase
- Year Over Year Median Price Change from September 2019 vs 2018: 9% increase
- June 2018 Median Price: $375,000
- September 2018 Median Price: $365,000
- Percentage Change from June to September: 2.74% decrease
- Year Over Year Median Price Change from June 2018 vs 2017: 1% decrease
- Year Over Year Median Price Change from September 2018 vs 2017: 6% increase
- June 2017 Median Price: $381,000
- September 2017 Median Price: $345,000
- Percentage Change from June to September: 10.43% decrease
- Year Over Year Median Price Change from June 2017 vs 2016: 7% increase
- Year Over Year Median Price Change from September 2017 vs 2016: 2% increase
- June 2016 Median Price: $377,470
- September 2016 Median Price: $357,500
- Percentage Change from June to September: 5.59% decrease
- Year Over Year Median Price Change from June 2016 vs 2015: 6% increase
- Year Over Year Median Price Change from September 2016 vs 2015: 9% increase
- June 2015 Median Price: $355,000
- September 2015 Median Price: $329,200
- Percentage Change from June to September: 7.84% decrease
- Year Over Year Median Price Change from June 2015 vs 2014: 5% increase
- Year Over Year Median Price Change from September 2015 vs 2014: 6% increase
- June 2014 Median Price: $335,000
- September 2014 Median Price: $312,000
- Percentage Change from June to September: 7.37% decrease
- Year Over Year Median Price Change from June 2014 vs 2013: 10% increase
- Year Over Year Median Price Change from September 2014 vs 2013: 9% increase
- June 2013 Median Price: $305,000
- September 2013 Median Price: $286,500
- Percentage Change from June to September: 6.46% decrease
- Year Over Year Median Price Change from June 2013 vs 2012: 13% increase
- Year Over Year Median Price Change from September 2013 vs 2012: 16% increase
Did We Lose Overall Gains?
If you look at the year over year median price change, which is really the only way to accurately determine if we gained or lost as it takes out the effect of seasonality, we saw virtually the same change in median price in June versus September. In June 2022, the month they say was a peak, we saw a 6% increase in median price from June 2021. In September 2022, the month they said we lost our gains, we saw a 5% increase in median price from September 2021.
Where Are We Seeing the Effects of the Interest Rate Hike?
We are seeing the effects in the form of price reductions, fewer sales, increased supply, increased time to sell and uptick in sellers taking their homes off the market. Though it has seemed prices are going down, we haven’t seen that too much in the numbers yet. Don’t get me wrong. Interest rates ARE having an impact on the Austin real estate market. Ask any seller trying to sell now and they’ll tell you showings are down compared to what their friends who sold early in the year were experiencing. They’re not getting multiple offers within 3 hours of listing. But, the ones who were patient and met the market where it is today, have been successful. And they’ve likely sold for more than they could have last year.
Another Buyer Friendly Trend We See Yearly
Buyers who buy in December typically pay less than they would if they waited until spring when demand increases. You often hear buyers say they’ll start their search in spring. Though that may be a good strategy for someone looking for something very specific who needs more choices, that is not a good strategy if you want to pay less. If you’re looking to pay less, now is the best time to start your search. Negotiate with motivated sellers who want to sell now and can’t wait until demand picks up in spring. You’ll have less competition and be able to negotiate more favorable terms.
Is this a Good Market for Buyers?
If you look at everything besides interest rates, the answer is a definite yes. Buyers have more choices, are able to negotiate, typically aren’t paying more than list price, can take more time to make a decision and have less competition. None of those things were possible before interest rates rose. If you can take the hit on the rate until rates come back down, or if you don’t need to get a mortgage loan, now is one of the best times for buyers that we’ve seen in years. It does present some different challenges than we’ve seen in a while, but a good Realtor and mortgage lender will have strategies to minimize your costs and help you find exactly what you’re looking for.
Considering Buying a Home in Austin?
Our team of buyer’s agents can help you find the right house and pay the lease possible. We have been working with buyers in all types of markets for a combined 60+ years. We’ve seen the peaks, the valleys and everything in between. Let us help guide you through the process, reduce stress and help you find what you’ll be happy in for years to come. We can also recommend some knowledge lenders who have been through all types of markets as well and know how to save buyers money when money isn’t as cheap. Check out our Austin Home Buyers page to learn more about our team and how we work. Then email us at info@11OaksRealty, call us at (512) 827-8323 or fill out our Buyer Survey to schedule a no obligation consultation.
Curious About the Other 9 US Cities Where Prices are Dropping the Most?
We were too. Here is the rest of the top 10 from their list of top US cities where prices are dropping the most.
- Austin, TX (-10.4%)
- Phoenix, AZ (-9.9%)
- Palm Bay, FL (-8.9%)
- Charleston, SC (-8.6%)
- Ogden, UT (-8.6%)
- Denver, CO (-8.0%)
- Las Vegas, NV (-7.9%)
- Stockton, CA (-7.7%)
- Durham, NC (-7.5%)
- Spokane, WA (-7.4%)