After a lull in real estate sales during the typically peak spring selling season, the Austin real estate market is showing a rebound in full force this summer.
In the City of Austin, the median sales price rose to $423,000; this figure is up 11% compared to last July. The total number of home sales within the city limits also increased 21% from July 2019. There were 1,470 closed residential home sales in the City of Austin last month. Inventory remains critically low, and we are seeing homes spend less time on the market too. Within the city limits, homes spent an average of 29 days on the market in July.
Within the greater Austin area, we saw similar trends. The median sales price for single family homes in the Austin-Round Rock MSA increased 10% from July of 2019, and the number of total homes sales for July increased at the same year over year rate as within the city limits, 21%. Homes in the greater Austin area spent a little more time on the market last month compared to homes within the city limits. The average days on market within the Austin-Round Rock MSA was 44 days last month - still 3 days less than July of 2019.
Unprecedentedly low interest rates are fueling buyer demand, and despite Covid-19 concerns the Austin economy is still managing to create new jobs that spur an influx of new residents. Combined these factors resulted in the second strong month of consecutive home sales within the greater Austin area. Now, the real question is do we have enough housing supply to keep up with buyer demand?
Want to know what’s happening in your hyper-local Austin market? Contact me today and I’ll give you the run down!
Your monthly housing payment consists of more than just your mortgage payment. When you are looking at purchasing a new home, it’s important to consider everything that goes into your total payment so that you can identify homes that fit in your budget. Although looking at a home’s price is a good starting point, two homes that are the same price can have very different monthly payment amounts.
Principal and InteresT
The majority of your monthly housing payment will likely consist of principal and interest payments for your home loan. This will vary based on the amount you put down on the purchase of the home, and the terms of the loan. However; if you putting 20% down or less on a 30 year conventional loan, the principal and interest portion will be the bulk of your payment. Initially, you will pay more in interest than you are paying down on principal. Over time, you will gradually see more of this total payment going towards principal than interest.
If you put less than 20% down on the purchase of your home you will also have some form of mortgage insurance in your total monthly housing payment. Private Mortgage Insurance (PMI) is required for conventional loans with less than 20% down and Mortgage Insurance Premium (MIP) is an insurance policy required on Federal Housing Authority (FHA) loans. Both PMI and MIP are protection for the lender in the event of default. A borrower may request that PMI be removed when the loan to value ratio reaches 80% either through payments to the principal, appreciation of the home, or a combination of both. MIP also may be able to be removed, but it will vary based on the loan terms and could even require a re-finance.
If you’re purchasing a home, you are going to want to insure it, and a lender will require that the property is insured. Insurance rates can vary by company, policy details, and the property. An older home will likely have a higher insurance rate. If there were many claims on the property over the years, the rate may be higher. The rate will also vary based on the location. The safety of a neighborhood and the likelihood of natural disasters is also going to influence your monthly home insurance rate.
Here in Texas, it’s especially important to pay attention to property tax rates. After your principal and interest payment, this will likely be the second largest portion of your total monthly housing payment. Property tax rates in Central Texas can vary from under two percent to over four percent. On a $400,000 home with a two percent property tax rate, you will pay around $667 per month towards property taxes. For another $400,000 home with a four percent tax rate that amount doubles to $1,334 per month. It’s easy to see how even a small change in the property tax rate can have a significant impact in your monthly housing payment. Make sure to pay attention to property tax rates when looking for a new home that’s in your budget!
Although they are not traditionally included in your monthly mortgage payment, Home Owner’s Association (HOA) fees are something that should be included when thinking about your monthly housing expenses. HOA fees for some Austin area homes exceed $1,000 per month! Even though these figures are not paid in conjunction with your monthly mortgage payment, they are factored in when determining loan eligibility. Other factors to consider include utility costs. An older home may have higher utility bills compared to a newer home that has more energy efficient upgrades. A home located in a Municipal Utility District (MUD) may have a higher tax rate because of that MUD payment. Homeowners in a Public Improvement District (PID) will have to pay a fee, usually annually, to cover the costs of the infrastructure.
As you can see, your monthly hosing payment is made up of many different factors. It’s important to consider all of these items when looking for a home you can afford. Make sure to look into all of the details before you fall in love with your next home. If you have questions about the home buying process, or want a dedicated broker to help you navigate the Austin real estate market, contact me today.
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