Calm Amidst the “Boomtown” Chaos
Hill Country Real Estate Trends
If you’ve spent five minutes in the real-estate market over the last couple years, which is probably about all the time you will spend in reflecting on anything, considering how fast paced this market has been moving, the best way to describe it is simply: “crazy” – and even that may be an understatement.
Across the country, the housing market has created boomtowns in many places. And Fredericksburg, Texas, and the entire Texas Hill Country for that matter, are no different.
While the word itself may sound concerning at first, this country was built on boomtowns, so to be considered one, or an up and coming one, is often a success in itself. We get it, things that go “BOOM!” aren’t usually a good thing.
But that’s the riveting thing about a boomtown, you want it to explode! Why you ask? Because with this boom, you will awaken to rapid growth.
Just imagine – more people, more resources, more job opportunities, higher wages, the ability to focus on the truly important matters that make a town great (education, healthcare, etc.) because you now have the resources to sustain the new growth.
That’s what a boomtown is. It’s an opportunity to foster the community you’ve been working so hard to create, because you can actively breathe economic life into the town that you love so dearly. Many hear the term “boomtown” and think the worst, the beginning of the end, some may say. They confuse explode with implode. But swapping these two words makes all the difference.
It’s important to understand the phases of a boomtown though. You have the initial boom, then sometimes there may be a bust phase, followed by the recovery stage.
The “Boomtown” Lifecycle
Jonathan Majors once said, "Growth is uncomfortable; you have to embrace the discomfort if you want to expand.” This could not be more true for a boomtown. While getting a front row seat to your town exploding into fortune can be thrilling, it also may bring about some nerve wracking circumstances.
So much so, that some may even be content with the size of our town, asking, “Why do we need to grow? Can’t we just remain the size we are? Do we really need new businesses? More families? More housing options?” Maybe the idea of our town growing scares you, ignites an anxiousness about how the culture may evolve with this newfound growth.
The reality is though, we are going to grow. Nothing, and no one, can prevent Fredericksburg, or the entire Hill Country for that matter, from experiencing growth of some kind. People are going to move here. Businesses are going to have positions to fill. Houses are going to need to be bought. The question is really, will you stand by and watch as our town turns growing pains into a battle, or will you agree to taking it step by step, with an eye toward helping cultivate the culture we all love so deeply here Fredericksburg? As Chris B. said, “Growth is inevitable. Healthy growth is preferred.” It’s something we each have the ability to shape in some small way.
That said, one of the biggest challenges a boomtown may face is having a surplus of jobs due to an excess amount of a resource or skill, but not quite the abundance of people to fill the opportunity those jobs provide. This is the “boom” stage. Due to this, employers may struggle to find employees, and good ones at that, or they may need time to start the process of bringing in individuals and their families from out of town to fill this gap of job opportunity. Because the need to fill these jobs is so great, there may be a period of high labor turnover and businesses may struggle to provide the quality of service they aspire to give.
Shortly after, the excitement may begin to wear off as the town enters into the “bust stage.” Maybe there isn’t sufficient housing to house all of the newly brought in workers and their families, in addition to the town’s current population. Maybe the newly created jobs aren’t bringing in the revenue they had expected. The newfound excitement you felt quickly turns to panic and uncertainty, leaving you wondering if your town will live to see another day.
But just as the blossoming, new growth of spring can’t arrive until the end of the harsh, bitter winter, neither can a boomtown arrive to its full potential until it has experienced some growing pains from its own “winter season.” This leads the town to the “recovery stage” – or what we like to call the adaptation stage. As the community begins to take notice of the opposition they’ve been faced with, the town’s citizens, political leaders, and business owners will begin to see the beauty in the making. And they will then come together to pivot and adjust to the challenges they have been presented with due to this exponential economic and population growth they have endured.
And while not all boomtowns make it out of the bust stage, many do, reaching their full potential and arriving at the point of economic and social success that every town hopes and dreams of. Just take a look a few miles over at the ever growing Austin, one of the biggest boomtowns in the country.
So, if you fear these Hill Country towns are on their way to being put on life support, barely hanging on by a thread, don’t do anything too hasty just yet. Simply, take a step back and wait. This may be the exact opportunity needed to revive a place like Fredericksburg back into recovery, just around the corner.
Macro Trends: 2020 to Now
The average price of a home in the U.S. increased by 30% just from 2020 to 2022. From the pandemic, to inflation, to unexpected baby formula shortages, these past couple years have felt like chaos for many.
After mortgage rates fell in 2020, homebuyers saw it as the perfect opportunity to become a homeowner. However, many homeowners were hesitant to list their homes, and those that chose to, were asking well above a reasonable price. Here in our little slice of heaven, we have seen firsthand an uptick in people purchasing properties primarily for Airbnb or other short term rental use, fueling the “madness” of this real-estate market. With fewer homes on the table, and higher asking prices, we’re stuck with limited options for homebuyers everywhere across the USA.
For Fredericksburg specifically, an estimated 80% of the market-buyers are from out-of-town, shopping for their second, and even third homes. Of these, many are looking for short-term rental properties as investment-driven reasons to own a house here.
This type of market does not fare well (near term) for small towns like our treasured Fredericksburg. With a steep increase in home prices, the lack of affordable housing poses a problem for potential homeowners from settling down here long-term, which then prevents our local businesses from thriving due to labor shortages. There are groups like Haus Verein who have convened to tackle the issue, but the issue is present right now!
Go back to the previous section about Boomtown Cycles. These are merely the growing pains that we must endure if we hope to make it through the ”bitter winter”. Don’t forget, this is just a season, and every season comes to an end and transitions into something new.
Supply and demand – homes equal jobs and when we don’t have the homes to meet the needs of those jobs, you can quickly watch your beloved town become a ghost town. For this reason, Chris B. simply puts it, “This is not a healthy market.”
Light at the End of the Tunnel
But just as the sun rises each day, a new dawn is coming, and this unpredictable market will eventually stabilize. In fact, since the beginning of 2022, the competition has already slowed down, but that’s partially due to the fact that housing prices are still up.
Between the uncertainty of the economy and people simply deciding to put their home buying dreams on hold for a moment due to the lack of affordable options, the team at Select Title is happy to see that this slight “slow-down” brings with it the hope of a healthier housing market on the horizon.
Though it may feel like we have been in a drought when it comes to affordable housing these past couple years, here at Select Title, we’ve observed some rain clouds moving in, so to speak, and we anticipate that we will be experiencing that refreshing rain soon in the months to come. In addition to the current homes in Fredericksburg hopefully becoming more affordable, if you look around, you’ll notice there is new construction taking place. Among the additions, restorations and new builds, there are a few affordable housing projects being built, a huge need is being met in some small way for our community. These are optimistic signs that we aren’t going to “bust” after our boom, but rather thrive and “recover”.
Like a rubber band being pulled way too far in one direction, then stretched the complete opposite way, eventually the band is going to give, and so will this wild market. But which is going to give first, us or the market? This back and forth pull is exhausting on all parties. Between 2020 to 2021, over 150,000 people in the US became real-estate agents, almost 60% more than the prior two years. Because of the high demand for houses, jumping into the real-estate game was an opportunity people were seizing left and right. But this past summer, after home sales began to slow down and high interest rates began to emerge, many bigger name real-estate firms were forced to lay off hundreds of their agents.
Could this be a hint from brokerages that this slow down we are seeing is just the beginning? Are record low mortgage rates and high prices on the downhill slope? Maybe the cut-throat bidding wars will be no more, or at the very least, not an every day show.
If you’re like us, you welcome this new dawn, ready to see an end to the spikey market we’ve come to know these past couple of years. Despite the cards we were dealt, we keep on keepin’ on, because there are still houses to be sold, title to be examined, and memories to be made by those looking to become a Texas hill country homeowner, regardless if it’s their first, second or third home, and these properties won’t just list themselves. We think the steady pace sounds more sustainable than the ride we’ve all been on.
Enjoy some Title Company Calm
Meanwhile, handling real estate may still feel chaotic right now, we truly believe calm is the answer. Isn’t that what we all crave? Calm isn’t just what we desire, but it’s what we all need.
Houses that are being listed are selling quicker than you can say “Sold!” And this was the very environment that inspired us to start a company that relied on modern systems to meet the pace of demand.
There’s no time to waste in this market, but don’t let a relationship slip away because you were “waiting in line” for an antiquated title examination. That’s a frustrating feeling, and we get it, we don’t need more frustration on top of the chaos.
We might not be able to control the chaos of the real-estate market, but we can control ourselves and our process, and that’s what we do to “bring the calm” as we like to say.
The technology-based systems we use may be quiet, but they are powerful. In a season of incomparable real-estate activity, managing transactional throughput is everyone’s ultimate priority.
As we like to say, “Keep Calm, Select Title On!”