I just finished entering the last listing we’ll take this year (that I know of) into the Austin MLS. I know, it’s Christmas Eve, but I’m all done shopping and don’t have anything better to do before we have a house full of relatives later tonight.
Anyway, we signed the listing agreement earlier this month, but had to wait for the tenants to move out, then get the home cleaned and touchup painted, then get our stager in and then the virtual tour people. Now that it’s in “model home” showing condition and ready to sell, I’ve entered it into the MLS. It’s really not a good idea to enter a listing before it’s 100% ready for the market, and we try never to do so.
After I enter a new listing, I always do an MLS search for the subdivision and take a look at how our listing sits among the competition with regard to price and presentation – to see it as other agents will see it in a search result. Let’s take a look at how we stand up against the competition on this one.
The sales volume in Austin fell of a cliff for November, with only 914 sales of single family homes. That represents a 43% decline in the number of homes sold. The number of “Not Solds” (expired or withdrawn) took a big jump also, to 62% of all listings that departed the Austin MLS in November. If you remember last month’s market update, I predicted the Not Solds will hit 70% in December 2008. November stats haven’t changed my mind.
Let’s look at the breakdown of Austin single family home sales for November 2008:
• Number of homes sold is down 43% (was down 28% last month) from 1,594 Nov 2007 to 914 Nov 2008.
• Average list prices in Austin were down 5.29% over the same month last year to $250,609. This means sellers/agent are doing a better job of pricing the home correctly out of the gate.
• Average sold prices in Austin were down 6.17% over the same month last year to $238,072 from $253,718 a year ago. So, list prices are down 5% but sold prices are down 6%, which tells me sellers are still chasing the market down.
• Median sold price was down 1.87% to $185,000. Last year in Nov it was $188,527. Median prices had been holding their own each month this year, so the downturn in this particular metric is something new.
• Average List to Sold price ratio is 95.00%, down from 95.89% the same month last year, again demonstrating that sellers are still chasing the market down.
• Avg sold price per square foot is down 7.41% to $109 compared to $118 a year ago in November. This is a huge drop.
• Avg days on market is up 12 days (18.75%) from 64 last year to 76 this November.
• Median days on market is up 11 days (24%) from 45 days last year to 56 this year.
• Number of “Not Sold” (exp or withdrawn) is up 43% over the same month last year, to 63% of all removed listings compared to 46% for the same month last year.
None of this is favorable if what we want is a normal, rising market, but in the context of elswhere in the country, it’s actually pretty good.
The stats outlined above are shown in the chart below.
|Austin Real Estate Sales Market Update – Nov 2008 Sales|
|Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data|
|Oct 2008||Nov 2008||Nov 2007||Yr % Change|
|Avg $ SQFT||$114.53||$109.21||$117.95||-7.41%|
|Not Sold %||58.14%||62.06%||46.19%||34.37%|
So, are these grim numbers cause for alarm? Not at all, and here’s why.
Texas AM economist Mark Doutzer Dotzour has a new video outlining his 4 stage plan to fix America’s housing problems. Regular readers know Dotzour is my favorite economist on these issues, not to mention a funny speaker if you ever get to see him in person.
He breaks it down like this; at its essence, the housing crisis at present is a supply and demand problem. There are too many empty homes and not enough demand. He proposes:
1) Curtail the supply, especially new home construction.
2) Slow foreclosures.
3) Increase demand, particularly by incintivizing qualified investors.
4) Lower interest rates (this has already started to happen)
You can watch the video at this link. It’s about 7 minutes long. Or you can read the transcript below.
Bold Government Can Solve America’s Housing Crisis
by Mark Dotzour, Chief Economist, Director of Research
Real Estate Center at Texas A&M University
America’s housing market problem is fairly simple. Somewhere between one and two million vacant
homes need tenants.
In some communities, vacant homes are not being cared for, deteriorating the quality of the
surrounding neighborhoods. This is causing further price declines, which lead to more foreclosures. The
fact is supply is running far ahead of demand. What has to happen for the national housing market to
We need to decrease supply and increase demand. This can be done in four stages.
First, we must curtail the supply of new homes in the market. Virtually everyone agrees that falling
home prices are at the center of the current economic and financial crisis in our country. Why are new
homes still being built in cities where prices are collapsing and foreclosures are skyrocketing? Even in
places like Detroit and Sacramento where foreclosures are at the highest levels, thousands of new
homes are still being built.
I stopped in Sam’s BBQ on East 12th street today for a late lunch. Sam’s is a gritty Austin BBQ joint in the heart of East Austin. I still had an hour to kill before picking my daughter up from Kid’s Acting on E. MLK and I was hungry, so I stopped in. I ate some great BBQ, drank some iced tea, read the newspaper, and watched some of the Longhorn’s basketball game while there.
As I departed, just before 3PM, a large group of about 8 or 10 Hispanic men were eating on the outside patio. As I started across 12th Street to my truck, a late model BMW with a mountain bike mounted on top, and being driven by a young Anglo man, turned into Sam’s BBQ driveway.
At that moment, one of the men barked, in a voice that could have been Cheech Marin’s, “there goes the neighborhood”. This was followed by boisterous laughter, me included. I gave the guy a lookback and a big grin with one of those “dude nods” of acknowledgment, that silently says “good one, man”.
Today is the deadline for Austin Realtors to pay annual board dues. It cost $347 to remain in business as an Austin Realtor for 2009. That may not sound like much, but many agents don’t have the money, and they don’t have any listings or active buyers. For some, it’s a very depressing decision to make – stick with it or give up. Many of course do give up, which is probably the best decision.
Looking at the dues I’ve paid into the Austin Board of Realtor and the MLS for 2008, the total is $1,133.50 in ongoing dues and fees. So agents who do pay the $347 due today, will have to cough up another $393.25 in Feb, and that amount again 6 months later.
The thinning out of agents is healthy for our industry. Those who monkey around doing a deal or two a year part time really shouldn’t be practicing real estate, in my opinion. I don’t see how anyone can maintain an appropriate level of expertise and knowledge if they are not in the mix day in and day out, closing sales, dealing with problems, helping people and learning. And that means that the people they do help are not receiving a level of perspective and knowledge that busy, experienced agents can provide.
So, while I don’t wish ill will for anyone, a lot of Austin Realtors won’t pay their dues today, and good riddance to them. They need to go find something they can approach with more passion and success. This business isn’t for everyone. In fact, given the failure rate of Realtors nationwide, year after year, good markets and bad, it’s a business for very few.
Why do so many fail?
An article in the Dec 6th NY Times (page B1 of the New York edition) does a good job of outlining why the present, not the future, may be the best time for new home owners to get off the sidelines and buy a house.
Here are a few quotes from the article:
Five or 10 years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers. Then, everyone who sat on their down payment savings accounts for a few years too long will kick themselves for not taking advantage of what may turn out to be the buying opportunity of a lifetime for those who can qualify for a mortgage.
Unfortunately, we do not know when this golden age will begin, because we will be able to identify a bottom to the housing market only with the benefit of hindsight. But as it does with the stock market, the moment will probably arrive when everyone is feeling the most pessimistic.
This is how Sylvia and I feel about the late 1980’s and early 1990s in Austin. Back then, when there was still carnage in the streets from the combination of the Texas Oil Bust, the 1986 Reagan tax law changes and the collapse of the Savings and Loan Industry, RTC and HUD homes could be picked up for $30K all over Austin. I looked at a home on a cherry lot next to Stacy Park in Travis Heights that sold for $50K in 1989. I still remember the seller’s ad in the paper, which started with “Blind or Stupid?”. I was the latter. Seller was offering owner financing at 7%. That lot alone is worth $500K today. We didn’t buy anything back then because we didn’t know any better. We were not forward looking.