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Local housing prices have stabilized after skyrocketing for months on end, but future developments and steady growth may lead to new challenges, experts warn.
Like many towns in the greater-Austin area, the Elgin housing market experienced surging costs, minimal days on market and ultra-competitive bidding.
However, Elgin has pivoted to become more of a buyers market over the last six months as prices and overall demand have decreased.
“We were in a seller’s market six months ago,” said Elgin real-estate agent Jeanette Shelby. “Six months ago, we had 10 listings in Elgin. Right now, we have 144 houses on the market. 80 out of those are new homes or to be built.”
Shelby added many builders are even offering commissions due to concerns over how long these new properties are sitting on the market.
Lexy Graham-Gonzales of Rainey Real Estate echoed Shelby’s sentiment, saying Elgin is in a transition period after dealing with unprecedented demand the last several years.
“It’s not the insane sellers market that it was a few months ago,” Graham-Gonzales said. “We’re in this shift, this period of time of what I call kind of like a limbo… We don’t have the same biddings wars, we don’t have the multiple offers, we don’t have the appraisal waivers. But the sales prices, they’re still fair.”
Graham-Gonzales said Elgin homes are typically on the market for 55-60 days. Several months ago, listings closed within about three days. Shelby shared similar statistics while adding that homes were previously being sold $20,000 to $40,000 above the original listing price.
Although the Elgin housing market has calmed down, future subdivisions could affect local real estate considerably down the road.
According to Alejandra Lopez of Lanzola Communities – a property-development company with a focus on affordable housing – two projects, one north and one south of Elgin, are in the pre-development stages.
“It makes the housing market go down,” said Shelby, “because if people can buy a brand new house for a comparable price to an existing home, then the existing home starts to sit on the market.”
Shelby said the heavy influx of new homes could result in an increase of foreclosures due to builders qualifying buyers based solely on the lot value rather than the home value. This leads to much smaller escrow payments initially, but after several years, when the property is reevaluated, tax and insurance rates increase drastically and homeowners suddenly can’t meet their mortgage payments.
However, Shelby said large corporations such as Samsung Austin Semiconductor coming to the area could ease the issue because these homes will be less likely to sit on the market for prolonged periods. Thus, qualifying buyers on a skewed scale won’t be necessary.
Prices may have tapered off, but Graham-Gonzales said potential homebuyers are being affected by increased property taxes and other monthly payments.
Some of these factors are affected by an MIP, or mortgage insurance premium, which is an insurance payment required for Federal Housing Association loans. Generally, FHA loans are more common among first-time or lower-income buyers because they require smaller down payments and lower minimum credit scores.
“You have MIPs (if you have an FHA mortgage), you have a higher tax assessment rate, then you have your higher interest rate if you’re buying now,” Graham-Gonzales said. “All that together makes for a super-high monthly payment, which will knock a first-time home buyer’s typical price range down from what they’re shopping to totally into another bracket.”
Shelby said about 75 percent of her clients are people moving from Austin in hopes of greater affordability or more land.
“Austin is so expensive, they can’t afford to live there,” Shelby said. “They can’t afford to rent there and they can’t afford to buy anything. In many cases, they’re living in apartments now and they want a little more property.”
Shelby said many people fleeing Austin are moving east of the city because towns to the West are also expensive, and it’s easier to build on farmland in Elgin or Taylor than it is in the hill country.
Graham-Gonzales also said she works with a handful of folks who have chosen to leave Austin for similar reasons. However, she said this trend has created a domino-effect where Elgin residents are now wanting to move further outside the city.
“We have a big influx of people who are coming to Austin,” Graham-Gonzales said. “That’s one of the reasons that’s pushing the residents out of Austin towards Elgin. In some ways, it’s causing some Elginites to do the same thing, to push further out, because they like that hometown feel.”
Graham-Gonzales and Shelby spoke about the ways in which they’ll continue to help buyers and sellers work through challenges as inevitable change ensues.
“I opened the brokerage in 2017, and one of my reasons for that was to bring the newer age of real estate to a small town,” Graham-Gonzales said, “because you have to adapt to the changes… To me, the No. 1 thing that I like to offer my clients is the relationship first.”
She also encouraged potential buyers and sellers to hire an agent who knows the area well.
Shelby likewise values relationship-building, adaptability and knowledge of the community. In addition, she prides herself on easing her clients’ stress and uncertainty, which is common when dealing with a large transaction such as buying or selling a home.
“The first thing that buyers do, as soon as they sign that contract, they think, ‘I’ve made a big mistake,’” Shelby said. “So, it’s important to make buyers realize it’s going to be OK. The same thing on the seller's side is to be responsive to the seller, to answer their calls… to be there and walk them through the process.”
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