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Is luxury real estate in Austin about to CRASH? We asked Wade Giles with The Giles Group at Moreland Properties about what’s happening in the Austin real estate market. He gives us the market trends and tells us if Austin is in a real estate bubble. We also talk about the time on the market for luxury property and what’s in store for luxury homes in the future.
Is Austin’s luxury real estate about to crash? In this episode of the #RealtyHack podcast, we asked Wade Giles with The Giles Group at Moreland Properties about what’s happening in the Austin real estate market. Find out more about the market trends, if Austin’s in a real estate bubble, and what’s in store for Austin’s luxury homes in the future.
TABLE OF CONTENTS
- Austin Luxury Homes Update
- The Giles Group Austin
- Selling Austin, Building in South Africa
- Austin Luxury Real Estate Update 2022
- Austin Luxury Real Estate Forecast
- Pricing Luxury Real Estate in Austin
- Best Practices for Agents
- What’s New in Austin’s Luxury Real Estate?
- What’s Next for The Giles Group?
About Wade Giles
Team Lead and licensed REALTOR® for the Giles Group, Wade Giles says that it’s been like a whirlwind for the Austin real estate market. He had a record year of around 65% – 70% of what the homes they sold in 2021 and he’s having a great first start of the year and it continues to be busy. He has moved into a new home and bought a rental property, but now, he’s seeing a little bit of a slowdown in the real estate market, a much-needed time to recharge their batteries after a busy year.
The Giles Group Austin
In our last episode with Wade about Selling Luxury Real Estate in Austin in 2020, he didn’t have a team. It was just him, his assistant, and a buyer’s agent. It was just the three of them and Matt, his right arm, who has been with him for three years.
When Wade got to a point where he couldn’t do it all on his own and needed extra help, he rebranded WadeATX to GilesGroupAustin.com and brought in members to his team. He brought in Vanessa, a buyer’s agent, Crystal, her assistant, and Christine, his Operations Manager who has been with him for three years.
Selling Austin, Building in South Africa
Wade had a friend through the equestrian world that had started a foundation called The Heart That Gives. His friend build a couple of schools and some orphanages in South Africa for the Zulu Tribe and she told Wade about this young boy who was aging out of the orphanage system that still didn’t have any family and anywhere to go in the village.
Now, his friend is raising money to build him a home. With that said, Wade pledged that for every 10 homes they sell in Austin, they will build one home in South Africa. Wade has been involved in designing the home, from light switches to communal huts and front porches.
Austin Luxury Real Estate Update 2022
There are different factors affecting the economy right now including inflation, a shaky stock market, a war in Ukraine, and interest rates rising. These are some of the different external factors that are directly affecting the market, says Wade. The Fed has been doing its job to raise interest rates and balance out the market and now it’s doing so.
On top of that from a timing standpoint, we’re going into summer, and families and those that can afford it go out of town during summer. They’re going out of Austin because it’s too hot here.
We don’t know what’s going to happen in the next few months. Based on a housing report given by Chris Jacobs, there are 1,000-1,079 active listings over 1 million, 641 pending sales over 1,000,001 and there are over 300 that have gone pending in the last 30 days. These statistics show two and a half months’ worth of inventory which is the three to six months that they call normal which is in a very long time.
Last month, Wade has 14 listings go live. For perspective, Wade was a listing agent on 16 properties for the entire year and in April, his phone didn’t stop ringing. People were in the need to get out before cashing out on the great market before it flattens out.
Every single one of Wade’s listings from last month went over asking. Last week alone he had three million dollar pending listings. With the new inventory, there are still not enough luxury homes because people and executives are moving here such as Tesla, Facebook, and TikTok.
Austin Luxury Real Estate Forecast
Wade thinks that at least until the end of August, the market is going to be quiet. Instead of agents going in and thinking of panicking about not being able to sell another house again, it’s about learning how to accept those times and use them truly as an opportunity to recharge your batteries because we know it’s going to be busy again, says Wade. Wait for a couple of months and see what happens like what we saw in 2021.
During the summer of 2020, everyone was incredibly busy because everyone was here and no one was traveling. People were buying and selling real estate in 2021 and travel went up 40% over 2019 which is pre-pandemic. When travel significantly increased in 2021, the media took that as a sign that the market was starting to crumble. The bubble had to burst but that was not the case.
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However, by the end of August, September, and October, the market became pretty slow people were hearing these media headlines over and over again, so when they got back to Austin, what a pretty busy market in the fall was a little bit quieter.
The market’s seasonality has been thrown out of the whack in the last two years, it started to somewhat turn normal last year but now, we can expect the seasonality we’ve had in the last 10 years to be pretty predictable. The first couple of months of summer are fairly slow compared to spring and we’ll have a small pop around August and September and December dips because there’s less inventory.
Pricing Luxury Real Estate in Austin
Wade has always been conservative in general. He didn’t want to be known as that listing agent that when you see their new listing come across your email or Instagram, you’ll already know is way overpriced. He encourages his clients to be realistic and tries to educate them.
Sometimes under 5% or 10% under market from what he thinks it should actually sell for will yield you a 6% or 7% over the market in motion. But if you start at that number, you might get a sale and it would also depend on the areas that you’re in but we’re talking about Central Austin.
He’s not seeing full appraisal waivers on everything like he did. Wade is seeing financing contingencies like he hasn’t seen in a while. Things are starting to shift, buyers are starting to regain a little bit of control over the terms and they are being much more selective.
With all this inventory coming in, a year ago you could sell a piece of junk and people would talk about it and there were no renegotiation repairs. Today, we can’t even get buyers to go into properties unless they’re dialed in ready, especially in the luxury space.
Best Practices for Agents
It’s time for training and for agents to invest in themselves. Right now, it’s going to be a little harder. There are so many agents in the Austin real estate market and we’re going to see quite a few of those agents taper off thinking that they might have got in late or that real estate is a lot harder than what they’ve thought it was.
People see real estate agents that are just cashing checks and driving fancy cars and that’s not what it’s all about. Wade mentions that he’s at his desk at 5:30 in the morning and working until 10 o’clock at night replying to emails and getting things done before he’ll be out showing property. It’s a hard job.
What’s New in Austin’s Luxury Real Estate?
The Agency launched a new franchise in Austin with Leslie Gossett and Noa Levy as well as Douglas Elliman.
We wonder what these brokerages are going to do because Austin is a local town. People here go to local restaurants and we do a better job of cultivating. Compass has done well but they’ve been a force of nature with the money that they spent. Wade is with Moreland which is also a local brand. Local brands do better in Austin than in most cities.
Wade had several clients say that they’ve moved over and worked with an agent from an agency when they were in LA and now they’re moving to Austin where there is no agency. A lot of these big national brokerages have great referral networks.
What’s important is to be able to differentiate yourself even if you’re not within any of those. Wade still gets a lot of referrals from all of those brokerages and has opted to select him as their referral partner instead of someone who’s under the same brokerage as them.
What’s Next for The Giles Group?
The Giles Group is still building its team and it has been an incredible journey. Wade may have fallen on his face forward so many times, but at least he’s falling in the right direction. Learning how to build a company culture, corporate culture, or whatever you want to call it is important to him.
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