Prices have settled, but higher taxes, insurance, and interest rates are hitting the monthly payment. Here's why now may still be the moment to buy.

If you've been looking at homes lately, something probably feels off. The market has technically shifted more toward buyers, pricing has settled back from the peak, yet buying still doesn't feel affordable. 

Right now, we're sitting right at the edge between a buyer's market and a seller's market in most of the Austin area. Some pockets have tipped further toward buyers, while a handful of sought-after neighborhoods stay competitive no matter what, because they're always going to be what they are. But in general, it's leaning more toward a buyer's market, making it a good time to buy. 

It just doesn't feel that way to a lot of buyers, and here's why.

Three costs went up at the same time. In 2021 and 2022, prices escalated significantly. It took a couple of years for the taxing authorities to catch up and bring property values up to match those sales, so those higher assessments are landing now. 

At the same time, homeowners' insurance went through big changes because of natural disasters and rising costs. Something that was $1,500 a year can now run $2,500, and that goes straight onto the monthly payment. So you've got property taxes that climbed and insurance that climbed together, right when prices actually settled back from the peak. 

Stack today's interest rates on top of that, and even though the price is in a better spot, all of those factors are what drive the mortgage payment. That's what turns this into an affordability problem instead of a pricing problem.

The lag in property taxes is part of the opening. It's common to see homes close for less than the taxing authority has them valued at, because assessments trail the market on the way up and trail it again as prices level off and correct. 

Property tax valuations lag the market, so when prices come down, the assessments take time to reset lower, and that reset is where affordability starts to open up. Add even a small dip in interest rates, and it opens up further. That's the window. From a pricing standpoint, you may be able to grab the right home at the right price while there's a good amount of inventory to choose from.

“It's not a pricing problem right now. It's an affordability problem.”

Buy at the price now, fix the payment later. This is your forward-thinking play. Buy while pricing is in your favor, even if you pay a little on the interest rate, insurance, and taxes at first. The next year, once those property taxes reset to where they should be, your mortgage payment comes down. Not dramatically, but it comes down. You work on getting your insurance in line. Then a dip in interest rates gives you a chance to refinance, and now you're sitting in a sweet spot on a purchase price you locked in early. You just have to suck it up on affordability a little at the start to take advantage of the pricing.

Because those dynamics will correct themselves, and when they do, all the buyers who've been sitting on the fence come back into the market. It gets competitive again, and the house you could have bought for $500,000 is suddenly $550,000. That's the trade-off worth thinking right now.

My advice is simple: take a serious look, really analyze the real numbers from a tax, insurance, and interest rate perspective, and build a plan, even if it's a long-term one. I've been doing this for 25 years, and I've watched the market do all kinds of things, so talk to someone who can help you understand what those numbers actually are before you decide.

If you're thinking about buying this summer or this fall, I'd love to help you build that game plan. Call or text me at 512-587-4050, email me at [email protected], or visit savvyreg.com.