Housing Starts Down in Austin
November 9th, 2007 8:55 AM
In the last two weeks, I’ve seen a slowdown in the amount of traffic visiting my listings and the listings of my officemates. It is getting to be holiday season so part of the slowdown is to be expected seasonal decline in activity. When the buyer pool and activity declines you can imagine what most seller’s do. Price reductions are more common, seller concessions are often offered, and best of all buyer’s can get a good deal on the home of their choice. This is not to say right now you can make a 30% off offer on a home and expect the seller to thank you for your efforts, but with less competition, as a buyer, you’ve got a better chance of being the only person offering on the home and of having a reasonable seller.
If you’re a seller, you can make this market work for you. First you must realize that if you are moving within the Austin area, you’ll get less for your home, but you’ll pay less for your new home. Oftentimes seller’s and buyers see the market only from the position that they are in at any given time. It’s important to look at the market from all positions that you will be in as you calculate your bottom line and prepare to start negotiating to both buy and sell your home.
Below is a great summary of what the Austin market looks like and will look like in th enear future.
The excerpt below from
The Neal Spelce Austin Letter (
www.AustinLetter.com)
One of the reasons the Austin housing market is better than most other metros is the vibrant job market. But because new home construction is slowing, the number of construction jobs is diminishing. It’s a dichotomy that will impact the remainder of this year.
Large homebuilders, especially those with corporate offices elsewhere, are feeling the pinch of sliding sales in other states and are re-trenching here as well. It’s part of the corporate cut-your-losses-system-wide philosophy. Builders are reducing starts of single-family homes, townhomes and condominiums. How much has homebuilding dropped? Consider:
According to Eldon Rude, director of Metrostudy’s Austin Division, builders continued to reduce starts in the 3rd quarter. Metrostudy recorded 3,700 starts during the 3rd quarter of 2007. This is down 27% (1,361 units) from the 3rd quarter 2006. The annual starts rate was 14,436. This is down 23% (4,235 units) from the 3rd quarter 2006.
New home prices range from around $100,000 to the multi-millions. Are all price points impacted the same? Those that are, are not necessarily for the same reasons. The tighter mortgage loan policies are having an impact on the low end. Rude said: “a sharp reduction in starts priced below $200,000, especially in starts priced under $150,000, indicates where tighter credit policies have had the most impact.”
But this is not all. Within the Austin metro “move-up market,” (homes priced between $250,000 and $500,000) demand has also slowed and builders have reduced production in recent quarters. Rude observed that “buyers in this price range have become increasingly cautious about making purchase decisions.”
What does the future hold? “The Austin area will experience less demand for new homes in upcoming quarters,” Rude predicts. Rude’s reasons: “A sharp decline in relocation buyers, a competitive resale market and more hesitant home buyers are factors leading to the slowdown – as are decisions by corporate offices by the region’s largest builders.” He says “these decisions play a role in land acquisition, pace of starts, marketing and staffing.”
The good news? Rude echoes what we have reported previously: “Austin experienced only moderate appreciation in new home pricing in recent years, and this will, to a large extent, insulate the area from large price reductions that will plague the new home and resale markets in other parts of the country.”
