There was an article in the Austin American Statesman today predicting that home prices will rise after this buying season.  The article cited sources who talked about rising construction costs, rising transportation costs for material, less new inventory and fewer available lots over the next several years. 

The other thing to think about is what builders are doing right now with speculative homes they started 6 months ago.  Nobody saw the incredible slow-down coming and even those who did didn't expect it to be as slow as it is.  Home sales in Austin are down around 20% over a year ago.  Builders are practically dumping inventory in places just to get homes off the books.

I was showing in Steiner Ranch yesterday and found two homes with the exact same floor plan about 10 homes away from each other.  One was a resale and was listed for over $300,000.  The other was under construction with an expected completion date of August 15.  The new house was originally listed at around $305,000 and then dropped to around $271,000.  I think the builder is motivated to let it go for less than that.

So what builders are doing is almost frantically trying to get inventory off their hands.  What they list next are likely to be to-be-built homes.  Over time, that will shrink the inventory of new homes.  With rising costs, the price of new construction will go up.  With fewer new homes available, resale home prices are likely to go up.

Another thing for existing buyers to consider is that the cost to borrow money has already risen and will probably continue to go up.  That combination tells me that buyers need to get motivated before the end of this year to make a purchase.

Want more information?  Click here to read the Statesman story.

If you are interested in the Steiner Ranch home I was talking about or about other Austin homes, call me at 512-293-2422.