South Austin Area 10 Prices Rising, Finally
Austin Area 10 (South Austin) is finally starting to see price increases after 3 flat years.
Today one of my investors closed on a home in South Austin. The sales price was exactly the same price the sellers paid when they purchased the home in 2002. This made me wonder if South Austin real estate prices were still flat across the board, as this sale would suggest, or if there were signs that the market may be starting to improve. I suspected this sale was not an anomaly, but wanted to look at some actual Austin MLS sales stats to confirm. Read further to find out what I learned.
The particular home I am referencing is a ‘bread and butter’ South Austin 9 year old brick 3 bedroom, 2 baths, 2-car garage approximately 1500+ square feet in a desirable, clean neighborhood. So I decided to see what other similarly sized homes are currently selling for compared to recent years past.
3 Bedroom, 2 Bath, 2-car Garage
1500 to 2000 Square Feet
Sales closed from Jan 1, 2002 to present 8/8/2005
I could have narrowed the search down by year built and neighborhoods, but I wanted a complete overview of South Austin Area 10 sales activity in this sized home since it represents the type of property most commonly sought by investors and first time buyers. Let’s look at the chart below.
Remember, this is just a snapshot of a certain segment of South Austin Area 10 homes. What does it show us?
We see that average sales prices of these homes was $146K in 2002, rose to $148K in 2003, fell to $145K in 2004, and, as of Aug 8, 2005, have risen to $150K. The Median Sales price has stayed a bit more level at $146K in 2002 and 2003, dropping to $142K in 2004 but up again so far this year to $148K.
This essentially confirms what I have observed and experienced in the Austin real estate market over the past few years. Sure, many individual homes in our sample segment have undoubtedly gone up in value, but many others have stayed flat or even fallen in value. Across the board, it looks like we actually had declining sales values in South Austin from 2002 to 2004, and now 2005 is showing promise of a rebound. Homeowners and investors, who purchased in 2002 with low down payments, are just now starting to climb out of the hole in terms of their property value.
This also explains why so many of our new Property Management clients from late 2001 through 2004 in Austin were ‘involuntary landlords’, folks who had made too small of a down payment to be able to sell their home without bringing money to the closing table, and who instead were forced into renting the home for a monthly loss that was easier to handle than the lump of money required to sell. I use to ask owners faced with this dilemma whether they preferred to bleed from a vein or an artery. Would you rather cough of $10,000 to sell, or would you rather have a $300 to $500 per month negative cash flow and wait for the market to improve and sell later? Most would choose to rent out the home and wait for the market to return to a better sales climate. Maybe that time is now approaching.
This current year’s ‘updraft’ in pricing is, I believe, very strong and will continue. The rental market is improving as well. I think as the Austin real estate market moves forward, we will see fewer and fewer sales where the buyer is paying essentially the same price for the home that the seller paid a few years earlier. I seriously doubt that buyers purchasing today will be looking at flat or negative appreciation three years from now.
If you would like to see an analysis of the Austin area and size range in which your home or rental property is located, contact me and I’ll be happy to do that for you.