Is it possible to predict the future? If you’re in the market to buy property, it just might be. Property owners know how much research needs to be done when evaluating a new property to buy. For first-time buyers, there are multiple factors to consider, starting with which state they want to live in. While this may be an emotional decision—as buying a home often is—you must do your due diligence and make sure you’re financially benefiting from your decision.
So what are some of the things to remember when investing in property? Of course, the first thing to keep in mind is property value. Depending on the value of a property—mostly the assessed value—you will need to budget for annual property taxes. Now, is the assessed value of a property the amount you pay when buying it? No, that is the fair market value or simply the market value of a property. The assessed value of a property is determined by the tax office and is a yearly value assigned to every property based on various factors.
The reason why it’s important to understand the applicable property tax scenario before investing is because taxation laws are different in each state in the USA. In Texas, for example, the state doesn’t impose any property tax on residents; they assign this responsibility to the local county governments. Each state has unique laws associated with property ownership, but by studying consumer behavior trends and their influence on property value, we can get a good idea of the housing market in each state.
In Texas, for instance, the number of homes sold as of October 2023 was 23,049 – 8.5% fewer than last year. The strength of the housing market, i.e., how many people are investing in real estate, is indicated by these numbers. Thus, the Texas housing market is slightly weaker than it was last year.
In 2023, only 14.8% of homes sold above their listing price. When the sale-to-list price is above 100%, buyers are paying a price higher than the selling price, indicating a larger supply of buyers than sellers in the market. Even though Texas’ rate was 14.8%, it dropped by 3.2 points, year-on-year. Even the percentage of homes with a price drop is indicative of this. In 2023, 34.4% of homes had a price drop, but this rate was down by 3.1 points from 37.0% in 2022.
What all of this means is that the year 2024 is likely to see buyers return to the real estate market as mortgage interest rates stabilize. In fact, mortgage rates showed promise in November 2023 with a drop to 7.35% from 7.79% in October. This trend may continue into 2024, with mortgage interest rates predicted to stay around 6%. Home prices in Texas will most likely continue to rise well into 2024, with more buyers flooding that market and not enough sellers. This skew of high demand with low supply is likely to make the market value of homes in Texas higher than before.
Basically, if you’re planning on buying a house in Texas, make sure you do your research and understand how consumer behavior trends are likely to influence property value in the coming year.
Better still, talk to real estate experts like the team at Bezit before investing!