Buying a Beach Home In 2023
Look at the bigger picture when considering a luxury real estate purchase.
For those dreaming of buying a beach home or investing in more coastal real estate, you’ll have more options in 2023. In fact, realtor.com forecasts a 22.8% increase in available inventory, giving homebuyers more to choose from. More options are certainly on the horizon at Cinnamon Shore, with builders completing some gorgeous projects in 2023 and more properties becoming available.
And while mortgage interest rates have crept up, there’s more to the story to consider.
The Reality on Mortgage Rates
The elephant in the real estate investor’s room is the perception about higher mortgage interest rates. Yes, average mortgage rates have risen from historic lows of 3 percent in 2021, and realtor.com forecasts an average mortgage rate in 2023 of 7.4 percent, falling to 7.1 percent by year’s end. But according to Gregory Heym, chief economist at Brown Harris Stevens in New York, such rates are not actually considered that high. “The average 30-year conforming rate in the last half-century is closer to 8 percent. Some people can remember 18 percent mortgages,” he says in a recent Luxury Portfolio International article.
For those reserving a homesite or buying a home that’s under construction, there’s the possibility that rates may shift. “If you reserve a homesite now or commit to buying a home that’s under construction at Cinnamon Shore, you may not close on the transaction until the end of 2023,” says Jodi Peters, managing broker at Cinnamon Shore Realty. “Things may look different by year’s end.”
Don’t Let Fear Drive You
Jenni Gill of Bancorp South in Austin encourages buyers to shake off the specter of higher rates for financing a luxury vacation home by focusing on the intangibles. “Buying a beach home is a great way to create lifelong memories,” she says. “Don’t let the rates deter.” When it comes to your financing options, she recommends looking at an Adjustable-Rate Mortgage (ARM) for the initial transaction, then refinancing to a fixed mortgage when rates recede in the future.
Katie Kuykendall of American Bank in Port Aransas agrees. “The rate is not forever,” says Kuykendall. “Rates will go back down, and it’s important to remember we can refinance the loan when that happens.” She adds that sellers may be willing to make some concessions or throw in extras to help off-set the cost of higher interest rates.
For real estate investors, there’s some good news forecast by personal finance site The Motley Fool, which has a December 2022 headline proclaiming that “2023 Could be an Explosive Year for Real Estate Investing.”
“The key is to focus on cash flow and risk mitigation as you’re buying,” writes Liz Brumer-Smith for the Motley Fool piece. “Those who purchased the property with the long term in mind have been rewarded handsomely over a 10- to 20-year period, and it's likely 2023 could bring similar opportunities,”
The longer term is what buying at Cinnamon Shore is all about. Our buyers are often families who come here with their kids and grandkids. They watch them grow up year after year, returning to a gorgeous home on the same beach. Memories like those are one of the best places to put investment dollars.
3 Ways to Buy into Cinnamon Shore
- Existing Homes. Occasionally, long-time Cinnamon Shore homeowners do decide to sell. Maybe they’re moving away from Texas, or they’re getting older and grandkids have grown. Look for those rare opportunities to buy into the existing village at Cinnamon Shore North or Cinnamon Shore South. When they do come, they don’t last long.
- New Construction. As Cinnamon Shore South develops, you’ll have more and more opportunities to purchase move-in ready homes our select group of expert coastal builders.
- Homesites for a Custom Build. Some homesites front a lake, others a park. Some line up along palm-lined streets in phases that are still under construction. If you’ve dreamed of building a beach house from the ground up, this is your opportunity—and these blank coastal properties will not always be available.
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Published by Jennifer Chappell Smith
Monday, April 10, 2023