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What in the Fed?

Kelsey Easton September 23, 2024

Is the Fed’s interest rate cut a turning point for Austin's housing market?

Could a long-awaited cut in federal borrowing rates, affecting everything from mortgages to credit cards, be the shot of adrenaline our stagnant housing market needs? Just like a pair of new Tecovas boots, it’s the kind of boost everyone’s been hoping for in the Austin housing market.

The Federal Reserve is like the unpredictable ex that always keeps you guessing. This week, they shocked everyone with a bold 50 basis point rate cut, lowering the federal funds rate to a range of 4.75% to 5%. It’s their first rate cut since the early days of Covid, and it’s a lot more than most people expected. Chair Jerome Powell confidently hinted that inflation is heading towards its 2% target and even suggested we might see another 50bps cut before the end of 2024. And if that wasn’t enough to keep us on our toes, the Fed is now projecting a full percentage point reduction by 2025 and another half-point cut in 2026. (HALLELUJAH!) Even before the recent announcement, mortgage rates were already starting to drop. This could be good news for buyers who’ve been waiting for better borrowing conditions. Should the trend continue and mortgage rates also fall, it could lower the barrier to housing for first-time homebuyers and unlock more movement in Austin's real estate market.

What's in store for the Austin real estate market?

For those of us in real estate, this likely means a longer stretch of lower mortgage rates, which should eventually get buyers off the couch and back into the market. But, like waiting for a text back after a great first date, it might take a while for these cuts to translate into actual buyer activity. So, what’s next? The key word is patience. While this rate cut is a welcome surprise and a good sign for real estate, the bigger picture is still a bit cloudy. We’ve got election drama and a sluggish job market to contend with, which means mortgage rates could keep falling, but the real rebound in the housing market will depend on how fast the job scene picks up and how the election plays out. In other words, it’s a wait-and-see game, so buckle up and stay tuned!

Is it still a good time to buy in Austin?

For the first time in years, buyers in Austin are getting some of their mojo back. With homes lingering on the market and sellers dropping prices, there’s finally room to negotiate, especially in suburban areas and new construction neighborhoods. There are some fabulous opportunities just waiting to be snagged. So, don’t hold back! Submit those offers and get a little creative with your pitches to sellers. Cash buyers are in an even better spot—they can skip the whole high mortgage rate drama and swoop in with offers that sellers can’t refuse. Austin's strong job market, thriving industries, cultural charm, and steady economic growth all point to one thing: property values will likely rise in the long run. Sure, this market correction might feel like a bit of a buzzkill, but for savvy buyers and investors, it could be the perfect chance to snag a good deal and play the long game.

Is it a good time to sell in Austin?

Thanks to the recent Fed announcement, we might see more buyers entering the market between now and the end of the year. However, with the seasonal slowdown, homes may take a bit longer to sell, so patience and preparation will be essential. This shift could give sellers more leverage, especially since they’ve been offering a lot of concessions to buyers so far this year. If you are trying to sell your home in Austin or planning to within the next few months, a focus on pricing and presentation is paramount to success. Having an experienced Realtor by your side can help you navigate the market, prepare your home for sale, and ensure you get the best deal possible.

That being said, we’re heading in a more positive direction and the housing market in Austin next year is looking bright.

Kelsey Easton is a trusted Realtor at Compass serving the Austin area. For inquiries, please contact her at [email protected].