There is no question that Austin is one of the hottest cities for homeownership in the country. With a strong economy and unique Texas charm, Austin has all the ingredients to be a top spot to call home. While the booming economy supports businessowners, it is important to recognize how affordability impacts employees and their ability to purchase a home in Central Texas. Hopeful homebuyers may be feeling the whiplash of the last three years – from historically low mortgage rates to rapidly rising rates and from bidding wars to sellers pulling home listings. In fact, Austin was ranked the second fastest-growing city in 2022, making for ascending housing prices. However, there are reasons for homebuyer optimism in the year ahead. Even the experts don’t hold a crystal ball to the ins and outs of the homebuying market, but these three broader trends Austin buyers can anticipate this year:

• A steady start to the year: In the last several weeks of 2022, mortgage rates consistently dropped after reaching a peak of 7.08% in November. The biggest mistake potential homebuyers can make is trying to time the market. Instead, homebuyers should focus on their personal timeline and consider when it is financially the right time to buy.

• Buyers hold more decision-making power: At the height of the homebuying frenzy, there were stories of homebuyers overbidding by enormous sums or making numerous concessions. On average, homes in Austin sell after 73 days on the market in December 2022 compared to 26 days in December 2021 according to the Austin Board of Realtors. As the environment between buyers and sellers becomes more balanced, buyers will have more time to think and negotiate – making the shopping experience more manageable.

• Limited housing supply: Low inventory and homes selling at a faster rate have created a challenging market for the past several years. The reality is this might not change any time soon given current market dynamics. According to Relator.com, the median listing home price in Austin in December 2022 was $599K, trending up 8.9% year-over-year. Additionally, Bank of America’s latest Homebuyer Insights Report found that 70% of homeowners ages 45 to 76 plan to or have retired in the home they already own. Take this into consideration - 35.2% of the population is 45 and older in Austin. With more people staying in their homes while fewer are selling them, national active home listings saw a 53% decrease between July 2016 and December 2022, according to Realtor.com.

Homebuying Strategies for 2023

The challenges and opportunities that Austin homebuyers will navigate this year require some careful planning. Those house hunting should consider a few strategies:

• Take advantage of digital tools: For those looking for convenience and control over home financing, this online resources guide illustrates the mortgage process from start to finish and prevents any delays in the process. From checking the status of a loan to submitting required documentation electronically, this digital platform helps organize and navigate the homebuying process.

• Illustrate financial independence: Whether the buyer is getting additional down payment assistance or earning a larger income, putting down a larger down payment could lower the mortgage rate. Anytime it can be shown to the seller that the buyer is in a good financial position, it is encouraged to do so, as it will make the offer stronger.

• Pay discount points on your mortgage: Mortgage points, also known as discount points, are fees homebuyers pay a lender at closing for a reduced interest rate on a loan. While this might not be the right strategy for everyone, paying discount points on a mortgage could offer potential savings over the course of the loan. In general, the longer the homebuyer plans to own the home, the more they save using points. Also, determine whether the cash is available to buy points up front.

• Research assistance in upfront costs: Even if a monthly mortgage payment fits into the homebuyer’s larger financial picture, many homebuyers might still be struggling with saving for the down payment and closing costs. Recognizing cash reserves are often the biggest barrier to homeownership, Bank of America offers up to $17,500 in down payment and closing cost assistance when used together - no repayment necessary. Additionally, the Bank of America Down Payment Center helps homebuyers find state and local down payment and closing cost assistance programs in their area and the Bank of America Real Estate Center® identifies down payment and closing cost grant-eligible properties for sale across the country.

• Take your time: Finally, don’t rush into it. Take the time to improve credit scores, research lender options, and set expectations on the budget before jumping in.

With the influx of businesses calling Texas home, many people are moving to Austin and employees are navigating the challenging Central Texas real estate market. While buying a home in Austin may require a bit more patience and persistence, taking the time to prepare for what’s ahead, going in with the right mindset, and taking advantage of the resources available can put homebuyers well on the path to their next home!