Austin Texas Real Estate Blog

Another one bites the dust!

November 13th, 2007 9:05 AM

Condos, Condos, Everywhere. The snippet below from the Austin Business Journal is another sign of the over development of downtown Austin. With thousands of condo units already developed or in progress, this won’t be the last development to abort or change use.

Several developments that we have worked with personally are seeing extremely slow going right now. As a buyer, now might be the time to get out there and see what kind of deal can be struck. The sellers are waiting and willing. If you’d like excellent representation give us a call. We’ll negotiate a great deal for you.

Austin Metro Prices!

November 4th, 2007 11:17 PM

I must admit that since becoming a realtor and working in Austin, I’ve been jealous of the folks that moved on the California and Florida markets in 2002 and made a killing. That said, I’m sure glad that I’m not one of the last condos going to be going up in Miami or one of the developers who just broke ground last year in California. Banking on a crazy year over year appreciation, while exhilirating if all goes well, is more of a gamble than I like to take. In retrospect I’m excited to own in the Austin metro area where we experience moderate year over year sustainable growth.

The excerpt below from The Neal Spelce Austin Letter(www.AustinLetter.com) gives guidance that Austin metro area home values continue climbing steadily – in direct contrast to many other US cities, where home values are nose-diving and predicted to continue that freefall.

For the past seven years, Standard & Poor’s S&P/Case-Shiller Home Price Indices have tracked home prices in 20 US cities. Austin is not included in the Index, but it is informative to see what is happening elsewhere. Prices were down 4.4% in the past year in those 20 cities – the steepest decline since the Index began. Check out these year-over-year declines:

Tampa, down 10.1% … Detroit, down 9.3% … San Diego, down 8.3% … Phoenix, down 8% … Miami, down 7.8% … Las Vegas, down 7.6% …Washington, DC, down 7.2% … Los Angeles, down 5.7% … San Francisco, down 4.2% … Cleveland, down 4.1% … Minneapolis, down 4%…, New York City, down 3.8% … Boston, down 3.6% … Chicago, down 1.3% and Denver, down 0.4%. The home prices in the remaining 20 city list – Dallas, Atlanta, Portland, Charlotte and Seattle – were all up.

A separate report indicates this freefall will continue in California. Goldman Sachs, using a formula that involves historical home prices and income growth, figures homes are overvalued statewide in California by between 35% and 40%. This is astounding. What does this amount to in dollars? Goldman pointed out the median sales price of a California home in August was $589,000 – but that it should be around $375,000.

This California collapse has at least two effects in the Austin area: 1) Californians, taking money from the sale of their homes, will not have as much moolah as they have had in the past to buy homes in Central Texas, and 2) when Thanksgiving rolls around in three weeks, you can add to your “thankful” list that you live/work/play/invest in Austin.

Can’t beat a great local economy, a wonderful place to live, and predictable appreciation and valuation of one of your largest investments!

Happy belated Halloween! Can you believe that it’s already time to start preparing for Thanksgiving? Gobble Gobble

October 31st, 2007 7:31 PM

Here’s some interesting data that I put together from the ACTRIS MLS system and thought that I’d share.

The areas correlate to the MLS areas for Austin. I’ve selected only the areas that I work in so my apologies in advance if you are interested in another area.

Then you’ll see the # of newly listed properties in that area. The properties include single family homes, condominiums, townhomes, lofts, and garden homes.

The average list price(LP) is pretty self explanatory, but for the sake of completeness it’s the average prices that sellers want to get for their homes.

The #Pending column shows the number of homes that have received and accepted an offer. These homes are not guaranteed to close and usually about 7% will fall out and start the sale process over. Note that under certain circumstances, such as the recent sub-prime correction in lending standards, as many as 40% of the contracts may fall off.

The second average list price (LP) column shows the average list price of homes that were put under contract.

# Sold represents the number of homes that have closed escrow and are now owned by a new person or entity.

The Average sale price (SP) column shows the average price of homes that were closed and transferred to a new owner.

The %SP/LP column depicts the ratio of sale price to list price. This column shows on average how close to list price sellers and buyers are able to agree on a purchase price. You should NOT use this to determine how much or little you should offer! Your real estate agent can help you with determining the market value of a subject property and help you factor in any other considerations, such as non-realty items, seller paid closing costs, duress on the part of either party, etc. Look for another blog post to go over all the ways that you should not attempt to value property and the ONLY ways that really matter for most residential purchases.

Average days on market (often referred to DOM by real estate agents) are how long the properties were on the market before they sold. It does not include the days that the property is in escrow, but instead is from the first date the property was listed until an offer was accepted and the property was listed as sale pending status.

October 30th, 2007 10:54 AM

As a Realtor in Austin’s ever changing market, I often get questions about the bubble. Sometimes, I even get the uninitiate investor’s summary of a plan that involves waiting for the bubble to break and then swooping in and offering seller’s pennies on the dollar for their real estate. I RUN, not walk away from these investors.

As far as I can tell, there is no bubble in the Austin/Central Texas real estate market. We tend to see regular, steady appreciation in our market. We have a reasonable amount of inventory, property taxes high enough to keep rampant speculators at bay, and a strong economy and work force that is supporting our growth. That said, the Austin Texas real estate market does fluctuate from a buyer’s market to a seller’s market to a balanced market. Like most markets a broad generalization such as “Austin is a buyer’s market” is usually wrong. The market can be segmented various ways and those segments are whatreally shoudl be commented on. As an example, ACTRIS (the Austin Central Texas Realty Information System - our MLS), shows over 15 months of inventory for homes over $1MM and only 4 months of inventry for homes up to $100k. Clearly both market segments are different for the buyers and sellers playing in those markets.

The excerpt below from The Neal Spelce Austin Letter (www.AustinLetter.com) supports the idea that we’re not facing a dwnturn in the market.

Austin area home values, as reflected by sale prices, continue to rise. This is in sharp contrast to the housing downturn in the former go-go states along the east and west coasts. For years we’ve been telling you of the insane skyrocketing of home prices on the two coasts. Others likened it to an ever-increasing bubble that was sure to burst when it was stretched beyond reality. In some cases, home prices soared 20%-30% per year in the first part of this decade. Well, no surprise, the bubble did burst and this was a trigger to the current housing crisis in those cities and states.

The Austin metro was different. New home prices have steadily increased over the past three years, not skyrocketed.Mark Sprague, the Austin area partner for Residential Strategies Inc. (RSI), points out the median home price in the 3rd Qtr 2005 was $181,108, in the 3rd Qtr 2006 was $197,103 and in the 3rd Qtr 2007, it was $208, 583. “The area median new home price is up 5.8% for the past 12 months,” he noted. Bottom line: there is no bubble to burst in the Austin area.

Another factor to consider is the number of vacant, developable, lots. Currently, Sprague estimates there are 26,058 lots and at the current absorption rate, this represents a 22.3 month supply. RSI, a market research and consulting firm, considers a 24-month supply to represent equilibrium. As Sprague put it: “The fact of the matter is that, although the housing market has slowed over the past year, Austin doesn’t have the problematic excesses of lot and housing inventories that are prevalent in most other major markets of the United States.”