How do you approach prospective buyers in the current real estate market in the Hill Country?
People want to be here and want out of the cities, period. Right now we’re still telling anybody on the fence you should walk in and buy because they’re predicting that [interest rates] are still going to climb. The problem is we just don’t have a lot of inventory out, and prices are still kind of high. Inventory is down. I think we’ll still see some [price] climbing.
Total sales volume continues to go up but the number of homes sold is decreasing. Why?
Just to show you how crazy the interest rates are: on Tuesday, [June] 14th they were at 6.28%. Then on Friday [June 17] 6.7%, then they dropped to 6.03%. So they’re still fluctuating, but it’s going to be a steady climb. My lenders are telling me that inflation is here to stay. And that’s basically until the [Federal Reserve] get[s] a handle on it. So we’re going to keep seeing a dramatic increase in rate. If you go back to August 2021 we were at 2.78%. Hopefully we don’t get like we did in [1981-82] where it was up into the 17%-18% rates. Let’s pray we don’t go that high. I’m definitely seeing slowing down. Because if you put a house on land it would [normally sell] pretty quick. Right now, seeing it in the same market it could take an extra 30-60 days whereas before it was going to move quicker, and that’s just started in the last month.
What would you say to a prospective homebuyer who is leaning toward waiting out the current market?
Yeah, it’s like gambling to wait it out. It’s hard to say, and even finding a rental is becoming very, very difficult as well. People are asking an astronomical price for rentals because there’s not any available. I always hate to see folks spend $1,800-$2,000 a month when that can be going toward a new home, even at a higher rate. But a lot of your first-time homebuyers cannot afford up in that $450,000 range at all. They’re lucky even to afford those in the low [$300,000s]. It just depends on if people have the money, because we just don’t know if interest rates keep coming up versus the cache.
What advice would you give someone looking to sell or buy right now?
If somebody [is] buying I would definitely tell them to do it now because interest rates continue to climb and we don’t know what the Fed are going to do. We’re anticipating them to continue to climb.
With my sellers, it’s different. It’s case by case. I always ask them if they’re selling high, ‘Where are you going to go?’ because chances are you’re going to buy high, right? So if they’re trying to make the most out of where they are then obviously, you know, make sure you have a place to go. So for sellers it’s a little different.
I think it’s more difficult for your first-time homebuyers and your VA [loan applicants] because the investors are picking everything up and therefore it’s more difficult for a first time homebuyer or VA to be able to purchase an affordable home. The Texas Realtors Association went to Washington, [D.C.], and we actually talked to some of the politicians about that problem with the first-time homebuyers and the investors. Hopefully next we will come up with some kind of incentive for sellers [to favor first-time buyers over investors] to help, but there’s nothing there yet.
You mentioned an issue of more homes being purchased for short-term rentals locally?
Any of your big tourist towns are having big issues on that and changing some of their policies. As far as their short-term rental policy, yes, it is an issue because that takes away from the locals. I think that’s what we were talking about. The short-term rentals and these investors are taking away the affordable homes for your teachers, your policemen—for first-time homebuyers. There’s nothing left for them, and they need to be in that town.
What are the pros and cons when considering a new build or older home?
Try to compare the new builds to the existing home and sometimes you can get more home on one of the older ones. A lot of my clients can do a lot of repairs themselves. And if they can find an older home with everything ... a lot of older homes, too, might have a little bit more land. Some of these [newer] subdivisions are on just under a half acre, under a third acre. They’re small, little lots. So that’s what some people can afford.
It’s case by case. Some of those that I sold, one that was a total remodel, but it came with an acre and a half. There’s so many things that you have to take into consideration if you want an older home and more land. Are you willing to pay a decent price, but you got to put $100,000 in it. If you’re buying something for [$350,000] and you put $100,000 in it and you get an extra acre for [$450,000 total] well then that’s not such a bad deal compared to a new house on those tiny lots. So it’s based on their tastes and what they’re capable and willing to do.
