According to a recent article in the Austin American Statesman regarding the local real estate market, it looks like 2022 will rock along very nicely and continue to be a good place to hold real estate…if you can find it!
The five county region which is from Georgetown to San Marcos are expected to continue to see growth from states having higher housing costs which makes moving here a very nice move. Think about it. Move here from say California (as I did several years ago), sell your home for a wad of cash, move here and buy a nicer home for less money having a lower mortgage payment, and not have to pay any state income tax, and presto you just got a 10% – 15% raise. And by the way, that raise isn’t taxable by Uncle Sam.
Now the gurus interviewed in the article did say that they expect real estate prices to slow a bit as they anticipate a raise in mortgage rates to 3.5% – 3.75% (which is still pretty darn low). However, Mark Sprague a local real estate guru was quoted as saying that he expects homes next year to appreciate in the mid-teens. That’s a lot! Further, the Austin Board of REALTORS reports that last year to November, the average price of home sold was $450,000 representing a whopping 32.4% price increase. And Eldon Rude, another local real estate guru, was quoted as saying that he expects local rental rates to continue to rise.
Okay so what does this mean for us holders of residential rental real estate for 2022? For starters it means that you made a brilliant decision to buy local real estate last year or earlier. Who doesn’t like a 32% increased value of their investment! And based upon the information in the article it means that a lot of people will need rent housing, and that is our product, residential rentals. Why should we continue to hold or acquire local residential rentals?
1) The price of homes in 2022 are predicted to increase.
2) The increased price of a home makes it harder to save for the down payment for a house.
3) The anticipated continued rental increases makes it harder to save for the down payment too.
4) The anticipated increase in mortgage rates will make home ownership less affordable.
This means that there should be plenty of potential renters for rentals, and that means fewer marketing days which in turn increases our profit.
So, if the average price of a home is $450,000 where do I start? Look on the outlying areas near the major cities. There are good values there and the rents are decent.
Make a New Year’s resolution to buy Austin area residential real estate. Again, 32% price increase in real estate over last year. Just think on that.
So, you can’t spend the increased value you say – and I say why not. Instead of selling the real estate why not refinance it and take out the profit, tax free (loans are not taxed), and take that luxury vacation.
Of course, always consult with your financial advisors and legal experts before making any investment decision because everyone’s situation is different.
Best Wishes for a grand New Year!