Austin Real Estate Market and News Journalists

The article below is from today’s Austin Statesman. I’m still amazed at the choice of words and phrasing used by newspaper journalists when writing about the Austin real estate market, and how they often focus myopically on “number of sales” when interpreting ups and downs of markets. Let’s look at a few examples.

First, the headline of the article:
“Central Texas home market rebounds in April”

Rebounds? The word “rebound” implies that there was a sudden or unexpected drop, or fallback in the strength of the market, which in fact there was not. The number of sales for Jan-Mar 2007 over Jan-Mar 2006 decreased by a total of 0.5%, while average sales prices rose 3.7% and median sales prices rose 5.3%. The breather in growth of number of sales was expected and predicted based on the torrid pace of home sales in Austin throughout 2006, as our market woke up again in 2006 and pent up activity was unleashed.

In fact, we already know, or should know, that the total number of home sales in Austin for 2007 is likely to be less than it was in 2006. So, next January 2008, even if Austin enjoys 9% overall value appreciation in 2007 as we did in 2006, we’ll probably see a newspaper headline that says “Austin Home Sales Down for 2007”, which will be an inaccurate and lazy headline assessment of the true strength and vitality of the Austin real estate market.

Next, the sub-headline:
Six percent increase comes after 3 straight months of drops, bucks national trend

A more accurate statement would be “Market Continues to be Strong and Steady as Predicted”.

Next, the lead sentence in the article:
After several months of flat or declining sales, Central Texas’ existing housing market rallied in April, regaining the momentum that led to a record 2006.

Wow, only a journalist could lead off a real estate article in Austin Texas, one of the most vibrant and exciting real estate markets in the country, with so much bi-polar manicism, as if we nearly slipped off a cliff but have miraculously “rallied” our way back suddenly. One would think from reading this type of reporting, that the Austin real estate market is on a roller coaster ride. It’s not. We are steady and strong, doing well and avoiding the hyper-appreciation that happened in other parts of the country that are now truly in a real estate slump.

Finally, to finish off the article, more bad news:
The Austin area hasn’t been immune to the national subprime woes….From January through April, existing home sales in Central Texas declined in all price categories below $130,000, and mostly by sharp double-digit declines, the board’s figures show.

Texas in general and Austin specifically had far fewer subprime loans than the parts of the country that generate the subprime loan trouble headlines. A more accurate statement would have been “Austin not as hard hit by nationwide subprime lending problems”.

The reason home sales are down in the lowest starter home price ranges is that so many renters have already purchased homes in the past few years – yes, in part due to easier loan requirements, but not nearly to the degree seen elsewhere. Demand in that segment of the market has largely been filled, and the starter home price range will start moving up into the $130,000+ range, natuarally leaving fewer sales below $130K. New people moving into Austin are not starter home buyers, but are coming here for better jobs and lifestyle reasons. Also, as land values and construction costs have risen in Austin, it’s not easy to build new homes priced below $130K anymore, so of course there are fewer sales in that range. Many of the builders who downshifted into lower priced homes during our 5 year slowdown, have shifted back now to higher price range homes as the demand for those homes is increasing.

My message is, as we read newspaper articles, which I do love to read, we must do so knowing that the journalists insert their own nuances and twists into the data and often paint a less than accurate picture with the way they word and phrase the facts. Rarely do they offer any real analysis or deeper digging into the numbers and what they mean.

Central Texas home market rebounds in April
Six percent increase comes after 3 straight months of drops, bucks national trend
AMERICAN-STATESMAN STAFF
Saturday, May 19, 2007

After several months of flat or declining sales, Central Texas’ existing housing market rallied in April, regaining the momentum that led to a record 2006.

Existing home sales rose 6 percent and the median price also climbed 6 percent, to $185,000, according to the Austin Board of Realtors.

“We are still kind of bucking that national trend,” that has many other markets faltering, said Mark Sprague, a partner in the Austin office of Residential Strategies, which tracks the housing market. “It’s still very much a seller’s market” in Austin.

For the first four months this year, however, sales still were down 1 percent compared with the first four months of 2006, reflecting a year that started with three consecutive months of drops.

Sprague said the area’s housing affordability relative to much pricier markets, its quality of life and appreciating home prices remain big draws.

The region is rated in various surveys as one of the most desirable relocation markets in the nation.

The influx of newcomers is helping to propel sales in the upper price ranges, where Central Texas’ market continues to show strength, particularly in homes priced in the $250,00 to $600,000 range and $1 million or more, Sprague said.

For example, sales are up 26 percent through April in the $500,000 to $599,000 price range and 17 percent for houses priced between $800,000 to $899,999, according to the Austin Board of Realtors.

And even though there were a record number of homes on the market in 2006, Sprague said, Central Texas also enjoyed a record number of sales and closings last year.

In contrast, sales of existing homes nationwide plummeted 8.4 percent in March, the largest drop in 18 years. The sharp decline partly reflected mounting problems in the subprime mortgage market that are leading to rising mortgage delinquencies and foreclosures, with first-time buyers among the hardest hit.

The Austin area hasn’t been immune to the national subprime woes.

As lenders tighten requirements, more first-time buyers are being pushed out of the market, and local experts predict the region will see a further slowing of home sales in lower price ranges.

From January through April, existing home sales in Central Texas declined in all price categories below $130,000, and mostly by sharp double-digit declines, the board’s figures show.

Posted by Steve
9 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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Lenny Schwartz - 9 years ago

When i read this same article all i could think of was the recent 60 minutes segment about real estate agents.
What makes me sad is that there are many people that don’t know any better. Sad for them. Sad for everyone.

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Ray - 9 years ago

you are right to point out the truely pathetic state of ‘news’ media in Austin. It is to be fair a symptom of a much larger problem where most outlets across the nation, natonal TV and radio included seem to be lazily (and cheaply) hooked up to RSS or ‘wire’ feeds from AP or similar bureaus which in many cases are no more than fronts for special interest groups getting their word out via a press release (again cheap). Over the past years I’ve increasingly found ridiculously bipolar story combos with such shock value headlines even within the same publication on the same day, each story presumably sourced from a differently biased feed.

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