Yahoo Finance Home Prices Are Falling in Austin, San Antonio and Fort Worth: Should You Buy a Home in These Texas Hotspots?
A recent Redfin report found that three Texas metros — Austin, Fort Worth and San Antonio — have seen a year-over-year decline in home prices. Austin, Fort Worth and San Antonio saw home prices drop by 2.9%, 1.2% and 1.2%, respectively. On a national scale, meanwhile, prices rose by 4.4% during the same period.
Falling home prices could be a good sign. After all, lower prices could give buyers more negotiating power and make it easier for them to afford property. But they could also indicate that these locations are no longer a good place to buy.
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Since there’s always more than one side to every coin, GOBankingRates spoke with real estate experts to find out whether they believe now’s a good time to buy in these Texas hotspots or not. Here’s what they said.
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Lower Prices Generally Mean More Affordable Homes
The average sales price of a U.S. home is $505,700, according to the U.S. Census Bureau. For many, the barrier to homeownership is just too high, but dropping prices could be a good thing.
“Lower home prices mean increased affordability,” said Brandi Simon, real estate expert with TX Home Buying Pros. “This can be particularly advantageous for first-time buyers or those looking to upgrade to a larger home.”
Plus, those who want to buy property in areas where housing prices are dropping — like these Texas metros — could have more negotiating power when making an offer. This is especially likely if there are few buyers putting in offers on the same home as you. Less competition tends to make sellers — especially motivated ones — more likely to part with their property at a reduced price.
“Sellers may be more willing to entertain offers below asking price or provide concessions to close the deal,” Simon said. “This can result in significant savings for buyers.”
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A Drop in Real Estate Prices Isn’t Always a Bad Sign
While a sustained decline in real estate prices could be a bad thing, a short-term or temporary drop might actually be a market correction — not a downward trend.
“Once the market stabilizes, home prices may start to appreciate again,” Simon said. If this occurs, those who buy in these metros now could see long-term gains in their property.
It’s not always easy to tell whether something like declining home prices are a long-term trend — and thus a sign of something worse to come — or a temporary correction, though. Simon advised looking at the bigger picture and making your decision based on a combination of factors, including economic growth, job outlook and population growth. You’ll want to choose somewhere with a stable market, after all.
Property Investors Could Take Advantage of Lower Prices
If you’re a real estate investor looking for your next property, Austin, Fort Worth or San Antonio could be worth considering. Again, you’ll want to do your due diligence before making any major decisions, but lower prices could mean a solid investment opportunity — especially if the market as a whole is strong.
“While some might see [dropping prices] as a red flag, experienced investors like myself recognize that it could actually present a unique opportunity,” said Scott Sloan, a real estate investor with Grand Exit Property Acquisition Group.
Cheaper home prices not only make it easier to purchase investment properties but also can give you more options when it comes to the amenities, square footage, lot size and even the neighborhood.
Declining Prices Don’t Necessarily Mean Cheap Homes
As Martin Orefice, CEO of Rent To Own Labs, pointed out, homes in these Texas metros might not necessarily be cheap now. The overall decline is only 2.9% in Austin, and even less in Fort Worth and San Antonio. But the average home prices in these areas are still relatively high.
“Just because home prices have gone down in these areas doesn’t mean that they’re low. $650,000 is still a lot to pay for a home in Austin, for example, especially when you can pay less than half that price for a home in a suburb like Elgin,” Orefice said. “There’s also the factor of interest rates to consider. Until they go down, borrowing costs are going to inflate the true price of homes, even if the sticker prices keep dropping.”
The average interest rate on a 30-year fixed-rate mortgage is 6.99%, according to the Federal Reserve Bank of St. Louis. Rates on 15-year mortgages are a little lower but still above 6%. Even if you have great credit and a low debt-to-income ratio, you could still end up with a high mortgage rate.
Should You Buy Property in These Texas Metros?
Ultimately, whether you buy property in Fort Worth, San Antonio or Austin — or anywhere else — is up to you. Declining property prices could be a good thing for those with the financial means and desire to buy in those areas. But you’ll still need to do your research and evaluate the local economy as a whole to ensure you’re making the best decision for you.
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This article originally appeared on GOBankingRates.com: Home Prices Are Falling in Austin, San Antonio and Fort Worth: Should You Buy a Home in These Texas Hotspots?
