The data, compiled by the Four Rivers Association of Realtors, points to homes selling for slightly less than the asking price and staying on the market longer. Meanwhile, elevated prices combined with higher interest rates are preventing some potential buyers from making moves in the market.
“We’re not seeing clients moving up to the next step in home that much anymore just because of the interest rates and higher prices,” FRAoR 2024 President Chelsea Roberts said.
What you need to know
The market for single-family homes in New Braunfels is showing flexibility for some buyers, as homes stay on the market for three-to-four months and sellers are once again offering some concessions to buyers, Roberts said.
But several factors including high interest rates and inflation are keeping prices high. Months of inventory on the market—an indicator determined by counting the number of active listings and pending sales in a market, according to the National Association of Realtors—would traditionally indicate a more “balanced” market, but price inflation and interest rates are curbing some activity as potential buyers wait it out, Roberts said. According to the NAR, if inventory is rising there is usually less pressure for prices to go up.
“In 2020-2021, people would pay $10,000 over the asking price. In 2023 and now in 2024 we’re seeing that it’s more negotiable. People are able to put in at times lower offers than asking,” Roberts said. “But there’s not as many buyers. We’re not yet in a buyer’s market.”
New Braunfels remains one of the fastest-growing areas in the nation, yet some first time home buyers who might want to trade up are staying longer in their “starter homes” due to the increased interest rates, said David Macpherson, economics professor at San Antonio’s Trinity University.
“A big driver of keeping the supply of housing down is the high market rates. People don’t want to give up those 3% mortgages,” Macpherson said. “The effect of that really reduces the supply, and that also has an impact on new homes, too, since it’s more expensive for builders to borrow money to build homes, because typically they borrow money to pay for the construction.”
Put in perspective
The current state of the housing market relates to factors dating back nearly 20 years, said Jose Trinidad, finance and economics professor at Texas State University.
“We had a short supply of housing during the entire Great Recession for over 10 years. Not that many new builds were being built, so that led to the short supply by the time the pandemic hit,” Trinidad said. “The pandemic may have been a trigger for a lot of millennials as they were also at the age of household formation, so that put upward pressure on the demand for houses.”
Getting that supply moving is compelling sellers to be more flexible than during the pandemic years. Out of the 1,424 homes sold in the San Antonio area last month, 841 of them were sold under the asking price, and 373 were sold at the asking price, said Erica Gillen Quintero with EXP Realty.
How we got here
Trinidad said looking to the baby boomer generation is one example of how the elevated interest rates and home prices change behavior in the market. Many baby boomer homeowners attained gains in their home values, but they cannot opt to size down due to higher prices compounded with higher interest rates, he said.
Interest rates are currently around 7%, but the market still hasn’t slowed down for buyers. The reason for that is because of other incentives that come along with buying a home right now, such as closing cost credits, Gillen Quintero said.
The bottom line
Trinidad, Macpherson and Roberts all said they expect at least a quarter of a percent of the current Federal Reserve interest rate to be cut this year, but do not expect more before 2025.
Much of the fluctuation in prices locally is also simply a matter of supply and demand working within all of the current circumstances, Macpherson said.
“[Home prices are] going to increase because more people want to live there. We talk about supply and the high mortgage rates, that’s going to decrease the supply of housing because people are not willing to give up their homes,” Macpherson said. “When you have a lot of people wanting to move to New Braunfels, that’s going to increase the price.”
