Austin is on Sale! Why is nobody buying?

Question

We sell a lot of real estate in the Austin, TX and Minneapolis - Saint Paul, MN areas and we now have the most listings we've ever had up.

I know interest rates are high but they're not higher than they have been in the last few years and we're starting to see the coveted 1% deals pop up again and people don't seem to be interested. With DSCR rates under 7% a lot of these deals make sense too and I'm just confused why people aren't jumping on them!

We're busy buying Mobile Home Parks and if I was in the residential investment space right now I like to assume I would be buying but I'm really curious as to what's stopping people?

Everyone said they were waiting for prices to come down before they bought. They're DOWN a lot. What's keeping you on the sidelines?

Chris Seveney · Answer

People are afraid to catch a falling knife right now in Austin. We are seeing this in many places. We have 3 borrowers right now all with $10M in assets going under because over leveraged, now negative cash flow and some equity (15-20%) but are stuck and going through foreclosures and handing keys back.
starting to get ugly out there

Ryan Kelly · Answer

@Chris Seveney I know several infill developers here in Austin that also had to hand the keys back to the bank. If they financed and purchased the land/tear down near the peak of the market, the numbers were doomed once the rates went up. We've also got a few infill lots now for sale at comparably better prices, but interest is extremely low as developers continue to lick their wounds.

Tony Savage · Answer

People/investors are holding on to their cash right now due to the unknowns with the economy, among other worries.

I'm in San Diego and like other markets some sellers are finally reducing their price. These reductions are not motivating buyers to get back into the market.

I believe a number of buyers are sitting on the sideline waiting for 5% rates to come back

I don't think we will see those rates for some time. I bought my home in 2022 and got a 5.5% rate. I mentioned in another post that this is the strangest market that I've experienced. It's like this market is stuck in mud! It's at a stand still there is not a lot a movement.

Jordan Moorhead · Answer

@Tony Savage we're certainly stuck in the mud here in Austin and have been fighting it for 3 years. Personally I think we have so much inventory that it will take a while to work through it even when rates come down to something that's acceptable to buyers.

Austin is on Sale! Why is nobody buying?

Austin is on Sale! Why is nobody buying?

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