May Housing Report - Inventory, prices, and rates are all up

Dated: June 15 2022

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The May housing data is in and as expected once again, inventory continues to be on the rise in the Highland Lakes region. Additionally, the Fed just raised the Fed Funds Rate by .75 points as well which is the largest increase in almost 30 years. So, we've got a situation in the real estate market where it seems that demand is slowing because buyers are bowing out of the market, prices are still up from the strong seller's market of the past 18 months, and people are a little less certain about the economy overall.

So, let's take this in pieces. First, overall in Llano County, inventory is at 3.9 months while in Horseshoe Bay specifically, it is even higher at 4.7 months. Horseshoe Bay has consistently had more inventory than the surrounding areas as the luxury market did not move at the same pace as homes under $500k. Burnet County has 3 months of inventory, overall. Places like Marble Falls, Burnet, and Meadowlakes still have inventory under 3 months. This level of inventory indicates that we are still very much in a seller's market, and a pretty strong one at that.

I talked to a lender yesterday after the Fed made its announcement. He told me that following the statement, the mortgage rates dropped over 1 point. He expected to wake up Thursday morning to mortgage rates below 5 again. He did say that he expects that this is temporary and would expect the rates to be back up in the short term. Historically, these are still very good rates. Over the past 30 years, the average mortgage rate has been 8%. The main cause of the increase in mortgage rates has been the increase in inflation. If the Fed can get control of inflation, then we may see some improvement in mortgage rates later in the year or in early 2023.

Lastly, what does this mean for prices? Readers of this blog may remember from an earlier post that during times of recession, the housing market tends to stay stable. It is a more stable investment when investors are less optimistic in the stick market. Additionally, in a place like Horseshoe Bay, the micro market is less elastic because of the number of second and vacation homes. We do expect prices plateau, but we don't expect to see a big price drop. That said, the economy is in an unprecedented situation as we come out of the pandemic and we cannot be too certain of any forecasts at the moment. 

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Tony Houle

Hi there! Thanks so much for stopping by. I look forward to working with you. Although I am not a native to the area, I was introduced to Horseshoe Bay in 2000 and have been visiting ever since. I lov....

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