Even With High Interest Rates, Here’s Why Now is the Time to Buy (and How to Refinance in the Future)

Even With High Interest Rates, Here’s Why Now is the Time to Buy (and How to Refinance in the Future)

  • Katie Jackson

If you’re intrigued by all the excitement and amenities Austin has to offer, you might be looking into the housing scene and wondering whether now is the right time to make moves. Although the housing landscape has experienced a red-hot seller’s market over the past couple of years, the current market is evolving in buyers’ favor! 

Read on to learn how to navigate the current Austin real estate landscape, even when faced with increasing interest rates. With the proper preparation and an expert agent by your side, you can make your move with confidence and competence.

A closer look at the Austin housing market

Photo courtesy of Katie Jackson

Austin, Texas, has seen cooling market conditions consistent with most of the rest of the country. Much of the data is encouraging for buyers who have been awaiting their chance to enter the real estate game.

According to the Austin Board of Realtors’ latest stats, the median sales price of homes in the Austin-Round Rock MSA is $436,419, which is 12% lower than the previous year. In addition to a year-over-year overview, zooming in on monthly trends is essential for getting the complete picture. Pending sales continue to grow in Austin’s most appealing neighborhoods, such as Zilker and Tarrytown real estate, indicating a consistent level of allure and prestige in the luxury market.

The recent market trends are good news for buyers who have been waiting on the sidelines, hoping for improved market conditions. For one, homes are spending longer on the market, up to 84 days, compared to 55 days a year ago. In addition, with 17% fewer closed sales, the number of active listings is up by a staggering 499% compared to last year. Furthermore, the amount of inventory has also risen from 2.3 to 2.6 months. Buyers will now have more homes to choose from, less pressure to make a split-second decision, and more negotiating power when communicating with homeowners who are hoping to sell more quickly.

In essence, we are observing a market correction. After the market was repressed during the pandemic, the proverbial pendulum swung to a red-hot sellers’ market as soon as businesses and people began to move again. However, the pendulum is moving back in the opposite direction now, and this time, it’s favoring buyers. 

So, if you are looking for an Austin home, an ample supply of inventory and leveling-out prices make it an excellent time to be a home buyer.

Interest rates and their impact

Interest rates are currently hovering near 6% for a 30-year home mortgage. This is higher than we have seen in recent history and approximately double what rates were a year ago, but in terms of historic trends, 6% is merely average.

While higher interest rates may feel discouraging, they level out the playing field by reducing the amount of competition among buyers. The house hunt is now much less frustrating; gone are the days of back-and-forth bidding wars in which the winners acquired houses at soaring prices. Instead, the real estate atmosphere has been one of greater caution, as many have adopted a “wait-and-see” attitude about home purchases.

With competition decreasing and homes spending longer on the market, many sellers are willing to negotiate, offering slightly lower prices and extended efforts to ensure their properties are in top condition. You, as a buyer, are in the driver’s seat now, and you can take your time as you peruse listings, hold out for more features on your dream wishlist, and come to the negotiation table with real bargaining power.

Though no one holds a crystal ball to see precisely how the interest rates landscape will unfold as we move through 2023, Forbes Advisor collected insight from analysts across the economic spectrum. Their predictions for interest rates in 2023 land between 5 and 7%.

The pivot point for interest rates continues to be inflation. Healthy inflation is considered 2%, and after a peak at 9% in the summer of 2022, inflation has been persistently stubborn in refusing to respond to the four interest rate hikes the Fed has imposed so far. However, movement is coming, as inflation has eased to 5%. With that said, the shift is still slow, and it may take additional interest rate increases for inflation to subside.  

More options for buyers: the 2/1 buydown

Photo courtesy of Katie Jackson

If you’re concerned by the interest rates and hesitant to purchase, a 2/1 buydown may be the solution. In this arrangement, the buyer pays an extra fee for a temporary decrease in the interest rate during their first two years of homeownership.

In this scenario, the interest rate will begin 2% lower in year one and 1% lower in the second year. The rate will then reach the full interest rate by year three. This set-up enables the buyer to save money on their monthly mortgage payments within the first two years and get a solid financial head start on their homeownership journey.

When and how to refinance

If you’re interested in Austin, whether Tarrytown, Bouldin Creek, or Zilker real estate, you will ultimately face the interest rates we are currently seeing (unless you’re paying with cash, of course). However, this does not mean you are trapped at this rate for the full 15 or 30 years of the loan’s duration. Hope is on the horizon! Refinancing at some point down the road, when interest rates are more favorable, can prove to be a wise move.

So, how do you know when it’s the right time to refinance? Consider these questions:

  • Have interest rates fallen at least 0.5 to 1% below what you are currently paying?
  • How much have you invested in your property at your current rate?
  • How much equity is in your house?
  • How long do you plan on owning this property? Relocating within less than five years after the refinance will likely result in a net loss.
  • What costs will be entailed in refinancing? 
  • Has your credit score improved significantly since you first applied for a loan?
Refinancing your mortgage can provide you with many advantages. First, it will increase the amount of your payment applied to the principal instead of the interest. Second, you will have the option to take money out of the equity of your home, which can be tremendously helpful if you are hoping to make renovations, like adding a backyard swimming pool or entertainment space. Depending on the rate you can secure, it might be worthwhile to refinance with a shorter-term loan than your original, as this will enable you to be freed of mortgage debt years sooner.

For every unique loan situation, number crunching is required. Credit scores, debt-to-income ratios, equity, local markets, and more — all must be considered. Mortgage lenders may also have varying fees for their services, so it’s essential to investigate lenders carefully and compare all the options. Local expert Realtor® Katie Jackson is your go-to guide to finding a mortgage lender who meets your goals. Katie has many connections in the mortgage industry, and she can provide recommendations for a trusted professional who will guide you toward wise financial decisions. 

Find your dream home, no matter the interest rates

If you’re ready to enter the home-buying game, Realtor® Katie Jackson promises a true dedication to your goals and a solution-focused approach to tackling any roadblocks, no matter how the Austin housing market is shifting. Whether you’re seeking Tarrytown, Bouldin Creek, or Zilker real estate, reach out to Katie today for guidance you can trust at every turn.

*Header photo courtesy of Katie Jackson


Katie’s knowledge of the Austin real estate market is unparalleled. Fluent in Spanish and well-traveled, Katie espouses all the traits of a successful real estate agent. She provides a unique and very local perspective on all areas of Real Estate.

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