Austin, Texas, has been one of the hottest markets for SFR real estate investing over the last few years. But, with recent economic challenges, rising interest rates, and fluctuating home prices, how does Austin real estate investing look in 2024?
While this year may not look as promising from an overall perspective as, say, 2021 or 2022, there are plenty of opportunities for investors to make significant returns with a rental property.
Market Recap
In recent years, the real estate market in Austin was nothing short of crazy. With demand in the region soaring, prices went up, then taxes went up … and then everything stopped all of a sudden because interest rates went way up as well.
The beginning of the summer is when things begin to fall off a cliff, in a sense, when it comes to quantity of volume. At 1836 Property Management, we first noticed the trend in the sales sector, and then it trickled into the Austin property management sector.
Current Market Status
Sales in the Austin region still haven’t returned to “normal” levels, and aren’t expected to until March or April.
According to Austin Board of Realtors, November’s median home price saw an 8.4% drop to $424,450, with a 5.7% decline in sales volume, and an additional 18 days on the market compared to the previous.
For the market to return to pre-2023 levels, 1836 Property Management believes that either interest rates need to decrease, prices have to come down, or there must be pent-up demand to either move or buy.
The good news is that demand is increasing, as people have put their lives on hold for the last year or so. Interest rates are moving slightly downward, and prices are coming down, too.
Major SFR Austin Real Estate Investing Opportunities Abound
One unfortunate trend that 1836 Property Management sees is that when investors should be buying — when prices are going down, as they are now — they typically sit on the sidelines. When everyone is rushing into the market, all rental property investors want in as well.
That’s counter to what savvy people in SFR real estate investing do, though.
The fact is that if you’re an investor, now is the time to pounce while everything is silent. Now is the time to take advantage of the lack of demand for attractive rental properties.
There may even be opportunities for great success in Austin real estate investing in 2024 by asking for concessions to buy down your interest rate. As 1836 Property Management says, you’re not marrying the rate, you’re just going to date it for a few years and re-finance it when need be.
The key is not waiting until everyone comes back to the Austin market, because then, you’ll be paying too much once again.
Market Projections for 2024
It’s widely expected that interest rates will move slightly downward consistently through the second half of 2024. Rates have already come down quite considerably from a high of 7.79% for the average 30-year fixed-rate mortgage at the end of October 2023 to 6.62% for the week ending January 4, 2024, according to data from the Federal Reserve Bank of St. Louis.
The continued anticipatory decline in interest rates should lead to an increase in demand around March or April, with sales picking up through the summer. However, overall sales are not expected to be as high as they were over the last few years.
Again, though, this can be seen as a prime opportunity for people who want to buy a rental property.
Investment Focus for 2024
All those in SFR real estate investing need to keep an eye on return on equity. What are you making from your investment?
This takes into account paying down your mortgage, building equity, tax deductions, appreciation, and all the other benefits of investing in a rental property.
And remember, unlike other investments, you get a tangible thing in the real work when you invest in real estate.
Sure, SFR real estate investing requires additional outlays of cash if things break or if you experience vacancies. But, over the long term, it has proven to work time and time again.
You shouldn’t be scared off by institutional investors. Remember that a vast majority of the market (83%) is made up of “mom-and-pop” operations that own between one and three properties.
It’s also important to not be swayed by short-term market fluctuations and instead, maintain a positive long-term perspective on the market.
The key is to buy when the time is right and use every tool you have to your advantage. 1836 Property Management has a preference for fixed-rate mortgages, but consumers need to make the decision that is best for them.
Work with 1836 Property Management
Owning a rental property can be extremely rewarding and indeed life-changing. Austin real estate investing in 2024 is looking up, and now is the time to jump in if you haven’t already.
Partnering with 1836 Property Management can help you become even more successful in the market. Our team of professionals has years of experience working in Austin property management, helping our clients maximize their returns by focusing on some of the key principles of successful SFR real estate investing.
Contact us today to learn more.
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