Waiting game for promised new jobs and lower interest rates to re-energize the housing market
It seems like not a week goes by without some sort of important economic development in Williamson County. Lots of investment and thousands of jobs are pouring into the region. That combined with the fact the area has been identified as one of the 10 fastest-growing counties in the country the last two years by the U.S. Census Bureau continues to beg the question: Where is everyone going to live?
A high interest-rate environment has stabilized the too-hot housing market that persisted until mid-2022, but the promise of rates falling as inflation cools and the coming hiring binge by companies moving to Williamson County have forecasters predicting a return to higher demand and prices.
“Overall, the housing market in Williamson County is still relatively strong,” said Clare Losey, housing economist for the Austin Board of Realtors and Unlock MLS, which collects and analyzes data from the Multiple Listing Service used by real-estate professionals.
Williamson County outperformed the five-county Metropolitan Statistical Area generally with more affordable houses, she said.
Despite the lower asking prices, high interest rates made monthly mortgage payments too rich for many buyers’ budgets.
For Williamson County, the number of closed home sales in February was up 2% to 777, while the median sales price was up 1.9% to $423,000 compared to the same month last year, according to data compiled by ABoR.
The houses spent an average of 83 days on the market and available inventory in Williamson County sat at three months. Two years ago, before mortgage rates more than doubled, median sales prices were over $490,000, with houses selling in an average of only a couple of weeks and only about two weeks’ worth of inventory was on the market.
Thanks in part to steep housing prices inside the Austin city limits and Travis County, the median price for the entire five-county Metropolitan Statistical Area — Bastrop, Caldwell, Hays, Travis and Williamson — was $443,065 in February, up 1.2% from the same month last year.
Losey said pending sales for the first half of March have ticked up, which could signal a willingness of buyers to return to the market with only a little softening of the interest rates.
Much of the market performance was driven by a greater number of sales of more affordably priced homes for $300,000 or less, Losey said. Hutto had a strong showing in affordable homes, likely to firsttime homebuyers, with about 30% of sales falling in that category, she said.
Land deals and platting new communities with the county and cities can stall new housing coming onto the market, but many builders are ready to pick up the pace as demand increases, officials said.
For now, “single-family homebuilder confidence is lower” than in 2021, they add. That’s reflected in the building permit filings.
Inventory continues to enter the market through new houses built. Buildingpermit filings for single-family and small multifamily residential construction in Williamson County hit 9,400 in 2021, an average of 783 new permits each month, according to data released from the Texas Real Estate Research Center at Texas A&M University.
Despite a record 1,032 for the month in March 2022, interest-rate hikes slowed the roll of builders that year with 7,008 permits, an average of 584 a month. New permits issued in Williamson County for 2023 totaled 6,304, or 526 a month.
Much of East Wilco’s new development has been focused on the Hutto area with some developments around Taylor.
The most recent development underway is the massive Flora community on 835 acres in Hutto. The first phase of 400 houses will go on the market late this year, according to developer Empire Continental Land. When it is built out, there will be 2,800 houses, a market square for the community and numerous amenities including nature walking trails.
Aspen Heights, approved by the Hutto City Council in late 2021, will include more than 200 houses on 36 acres. Also approved in 2021 with houses now for sale in Hutto is the 25-acre Covered Bridge community with 120 residences platted.
Residential real-estate shopping website Zillow shows 141 new construction homes on the market in Hutto as of late March. There are 25 new construction listings in Taylor.
Round Rock listings of new houses came in at 265 available in the last week of March.
Real-estate agents and small investors in existing homes are eager to see a return in buyer enthusiasm.
“It was kind of like a tease at the beginning of the year,” with more sales for his business after a slow year thanks to interest rates of more than 7%, said Taylor Drolette of Sprout Realty in Austin, which handles properties in East Williamson County. January sales increases were the release of “built-up buyer tension” on the part of people holding out and then finally deciding to buy, he added.
In February and March, however, sales leads dried up, leaving more inventory sitting on the market in East Williamson County and across much of the five-county sampling area, including Austin.
“It was kind of a buzzkill,” Drolette said. A newly refurbished property in Taylor, which he was confident would sell quickly, has been on the market several months because of the economic conditions.
Like many in the real-estate business, Drolette is eager for the Federal Reserve Board to make a cut to the interest rate that banks charge other banks to borrow money. The rise and fall of that rate eventually trickles down to create lower or increased mortgage rates.
The central bank didn’t lower interest rates at its March board meeting, thanks in part to a slight increase in inflation during the first two months of the year after months of falling from all-time highs. The Federal Reserve has hinted at three interestrate cuts of a quarter percent each three times this year, but economists think that might not start until June.
“It’s so hard to see where the market’s going to go,” Drolette said. He added he has heard predictions that when interest rates fall, the price sellers will be able to get for their houses will increase 6% one year and 8% the next.
“There’s just no sense of urgency in the market right now,” Drolette said of buyers waiting for interest rates to come down and reduce their payments. If they delay, he said, then the base price will go up and competition for the property will rise again.
“I tell people, you can always refinance, but you can’t renegotiate the price,” he said.
Construction jobs are ubiquitous in East Williamson as Samsung Electronics Co. Ltd.’s huge, advanced semiconductor manufacturing foundry is erected and numerous distribution and manufacturing buildings go up.
Many are related to suppliers moving to be near Samsung Austin Semiconductor’s Taylor site. However, the area has attracted many other enterprises in the last two years, including several from South Korea where the county’s and cities’ economic-development officials have been actively courting companies.
It won’t be until the construction is done and workers come to fill more permanent positions that the market will tighten and it becomes more attractive for homebuilders to get more active and existing homeowners to sell.
“Anticipated job growth will take a while to show up in housing-market demand,” Losey said.
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