Month: December 2006

Zillow.com, the website that provides “Zestimates” of home values for properties in the U.S. has now enabled new features that allow homes to be listed for sale. This is the next logical step for Zillow as they try to gain a foothold as the place to go for home information. More on that later.

For Sale listings can be entered both by home owners and also by Listing Agents. Oddly, there is also something called “Make Me Move”, where owners can “tell others the price you’d be willing to sell your home for, without actually putting it on the market. It’s that magical number you just can’t refuse.” Zillow says, “Once you set your Make Me Move price, potential buyers can contact you anonymously via e-mail. Then it’s up to you whether or not to sell your home.”

I predict the “Make Me Move” feature won’t last long. Every kook in the Country will be placing a MMM price of triple the value of the home and it will eventually turn out that nobody will take it seriously. Also, once Owners realize that 9 out of 10 emails they receive are from people saying “please provide your absolute bottom dollar price and email more pictures”, owners will pull their MMM listings pretty fast. Zillow should just stick to posting homes either for sale or not, and leave out this weird “Make Me Move” category.

But with regard to the For Sale part of it, I decide to enter a listing to see how it works. Here’s how it went.

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I decided to see what the actual appreciation has been in East Austin over the past 7 years, as reflected in average sales prices for some of the areas we call East Austin. The blue line at the top of the graph below represents the entire Austin housing market for houses only, and the other lines are the average sales prices for East Austin zip codes. I left the actual dollar amounts off the chart because they caused too much clutter and made the chart to hard to read. I have the actual numbers posted below the chart

So what does this show us?

One way to measure the strength of a particular neighborhood or area of Austin is to look at its performance relative to the larger Metro area overall. In other words, looking at the slope of the lines above, if a particular area is performing about the same as the city overall, the lines would run parallel. This is in fact what we see with zip code 78721 and 78723 (the red and purple lines). Those East Austin zip code areas more or less maintain their relative positions to the citywide averages (and to each other) from 1999 through Dec 3, 2006 (when I ran the stats). So, a home owner in those areas of East Austin did not enjoy appreciation in home values any better or worse than the overall Austin average over the past 7 years.

East Austin zip codes 78702 and 78722 reveal something much different though. The relative position of those areas enjoyed much greater appreciation than the average of Austin. Let’s look at the chart below.

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This article posted below is in today’s Austin Statesman. It makes reference to the late 1980’s and early 1990’s when Austin’s real estate market was in the tank, and compares what happened in Austin back then to what some are now experiencing in California. Namely, owning real estate that is worth less that the amount owed – being upside down in their properties.

Those of us who were in Austin in the mid 1980’s remember that a perfect storm of the Texas Oil Bust, 1986 tax law changes, and the S&L (Savings and Loan) fraud/crisis wiped out the Austin real estate market. The legend holds that large numbers of Austinites simply left the keys on the kitchen counter and left in droves (I don’t know anyone who actually did that). Real estate fortunes evaporated almost overnight and the US Government became the biggest real estate owner in Austin, selling homes through HUD and RTC (Resolution Trust Corporation)

The tech industry took hold in Austin the early 1990’s and everything was great for the next decade, until the stock market slide and the high-tech bust, and thus our recent 5 year skid that ended about a year ago.

It’s funny, whatever you want to believe about the severity, or lack thereof, of the current real estate market in “bubble” areas such as California, Arizona and Nevada, can be confirmed or contradicted by any number of news articles and stories. I don’t know which ones to believe, but I do know that it’s not a good idea to be upside down in real estate. The article below takes a less than optimistic view of the California market.

SANTA ROSA, Calif. — In a laid-back kind of way, the Flamingo Resort Hotel and Spa, where I am staying, is centrally located. Drive in one direction and you’re less than a mile from downtown. Drive in another and you’re at a casual shopping center. Drive in still another and you’re on your way to Glen Ellen and wine country.

My son Ollie, who lives in Santa Rosa, told me that real estate values are down.

A day later, the Santa Rosa Press Democrat had an article observing that the median price is down 4.2 percent — to $565,000. This means the median home price here is now only 10 times the $55,000 median household income in the area.

Worse, prices have fallen for four consecutive months. This means that many of those who bought at the top — which the Press Democrat identifies as August 2005, when the median home price in the area peaked at $619,000 — are now upside down. With virtually no down payment and creative financing, recent buyers now owe more than their house or condo is worth.

This may be a good time for Californians to talk to Texans who went through the Texas real estate crash in the late 1980s and early 1990s.

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