How Mortgage Rates and Home Prices Are Improving  Affordability in Austin

September 19, 2024 : The housing market in the Austin area has seen some relief for homebuyers in 2024, thanks to a combination of decreasing home prices and improved mortgage rates. According to the latest data from Team Price Real Estate, the Monthly Mortgage Payment (PITI) — which includes principal, interest, taxes, and insurance — has dropped to $3,161 in September 2024. This figure is calculated using the median sold price for that month with a 20% down payment and the 30-year mortgage rate. This is a significant improvement compared to the previous years, offering more affordability for potential buyers in the region.

The Austin real estate market has been turbulent over the last few years, with 2022 marking a particularly challenging time for homebuyers. During that year, monthly mortgage payments peaked in May at $3,767, and the average payment for the entire year was $3,476. This surge was driven by a combination of high property prices and rising mortgage rates, which made it increasingly difficult for buyers to afford homes in the area.

In 2023, there were some fluctuations in the monthly mortgage payments, ranging from $3,207 in February to $3,617 in June. The average mortgage payment for that year was $3,443, which still reflected elevated prices, but with some signs of stabilization in the market. By the beginning of 2024, the data shows a further improvement. In January 2024, the monthly mortgage payment stood at $3,244, and by September 2024, it had declined to $3,161. This decline represents the ongoing efforts to balance out the supply and demand in the Austin real estate market, with home prices dropping and mortgage rates slightly easing.

In particular, the improved mortgage rates in 2024 have played a major role in helping homebuyers. While interest rates remain higher than the historic lows seen in 2020 and early 2021, they have dropped from the peak levels of 2022. This means that buyers are now able to secure slightly better mortgage rates, which directly impacts their monthly payments. Coupled with lower home prices, this has provided significant relief, making homeownership more achievable for a wider range of buyers.

Looking back, the trends in the Austin housing market highlight the dramatic shifts in affordability. For example, in 2021, the monthly mortgage payment started at $2,087 in January and rose throughout the year, peaking at $2,782 in December. This upward trend continued in 2022, with the monthly payment reaching an all-time high of $3,767 in May before gradually easing toward the end of the year. In 2023, the market saw more stable conditions, though the monthly payments still remained above $3,200 for most of the year.

The improvements in 2024 have been more pronounced, offering a break for potential buyers who may have been priced out of the market in the previous years. The September 2024 figure of $3,161 is not only lower than the peak levels of 2022 but also lower than many months in 2023. This trend of decreasing monthly payments is a welcome development for the Austin real estate market, which has been one of the most competitive in the country.

Despite the improvements, it's important to note that the Austin housing market remains expensive compared to pre-pandemic levels. For context, in 2019, the average monthly mortgage payment was $1,954, significantly lower than what buyers face today. However, the recent improvements in both home prices and mortgage rates have made a noticeable difference, offering a better financial picture for buyers in 2024.

As the market continues to evolve, it’s clear that buyers are benefiting from the current trends. Lower home prices and improved mortgage rates have combined to reduce the monthly financial burden on buyers, making homeownership more accessible. While prices are still high compared to historical averages, the downward trend is a positive sign for those looking to enter the Austin housing market.