Austin Real Estate Market – May 2008 Update

The average sales price for houses in Austin increased 5.14% in May from $259,958 in May 2007 to $275,711 May 2008. Sales prices had been flat or falling since Feb 2008, but May has us heading the other way again. We continue to have a large number of “failed sales” listings though, and days on market continues to creep upward. In short, there are a lot of mixed signals in the sales data. Here is a brief summary followed by charts below.

• Number of homes sold is down 24% from 2,630 May 2007 to 2,006 May 2008.
• Average sold prices in Austin were up 5.14% over the same month last year to $275,711.
• Median sold price was up 7.01% over the same month last year to $199,925.
• Avg sold price per square foot is up 4.02% over May 2007 to $124 per sqft.
• Avg days on market is up 11 days (22%) from 50 last year to 61 this May.
• Median days on market is unavailable because our $1M/yr MLS software, MLXChange, won’t produce it this month. I’ll leave it at that before I go off on another “MLXChange Sucks” rant.
• Number of “Not Sold” (exp or withdrawn) is up a whopping 56% over the same month last year.

Austin Real Estate Market Update for May 2008
All Austin / Central TX MLS Areas – Houses Only

Apr 2008
May 2008
May 2007
Yr % Change
# Sold
1826
2006
2630
-23.73%
Avg List
$254,318
$275,711
$259,958
6.06%
Med List
$194,935
$203,037
$189,900
6.92%
Avg Sold
$245,483
$267,231
$254,169
5.14%
Med Sold
$189,000
$199,925
$186,832
7.01%
List/Sold %
96.52%
96.92%
97.77%
-0.87%
Avg SQFT
2117
2155
2132
1.08%
Med SQFT
1924
1941
1928
0.67%
Avg $ SQFT
$116
$124
$119
4.02%
Avg DOM
63
61
50
22.00%
Median DOM
39
*
*
not avail MLS
# Expired
519
509
306
66.34%
# Withdrawn
586
599
473
26.64%
Not Sold
1105
1108
779
42.23%
Not Sold %
38%
36%
23%
55.71%
On the Market (houses) as of June 23, 2008:
12,466 = Active Res Listings in Austin MLS (12,066 last month)
10,335 = Total Single Family Homes listed (9942 last month)
1870 = Condo/Townhome/Loft/Garden Homes listed (2026 last mo.)
97 = Mobile/Manufactured Homes (97 last month)

For the Year-to-Date numbers, the sales prices for Homes in Austin are about even for Jan-May 2008 over Jan-May 2007.

Austin Real Estate Market Update for May 2008
All MLS Areas – YTD Apr 08

Jan-May 08
Jan-May 07
Yr % Change
# Sold
8419
10239
-17.78%
Avg List
$258,694
$256,014
1.05%
Med List
*
*
*
Avg Sold
$250,372
$249,225
0.46%
Med Sold
*
*
*
Sold/List %
96.78%
97.35%
-0.58%
Avg SQFT
2131
2110
1.00%
Med SQFT
*
*
*
Avg $ SQFT
$117
$118
-0.53%
Avg DOM
66
58
13.79%
Median DOM
*
*
*
# Expired
2657
1628
63.21%
# Withdrawn
2791
2094
33.29%
Not Sold
5448
3722
46.37%
Not Sold %
39.29%
26.66%
47.37%
* Our $1M/yr MLS software won't provide Median for over 5,000 results

This month I decided to also do a breakout by price range to see if anything interesting is revealed. See the chart below.

Austin MLS Sales Jan-May 2008 by Price Range
Price Range
#Sold
2008
#Sold
2007
%
Change
DOM
2008
DOM
2007
%
Change
$0-80,000
155
227
-31.72%
65
54
20.37%
$80,001 - $100,000
215
337
-36.20%
52
51
1.96%
$100,001 - $150,000
1887
2754
-31.48%
49
48
2.08%
$150,001 - $200,000
2182
2392
-8.78%
59
53
11.32%
$200,001 - $250,000
1222
1265
-3.40%
68
57
19.30%
$250,001 - $300,000
833
924
-9.85%
78
59
32.20%
$300,001 - $350,000
487
589
-17.32%
79
65
21.54%
$350,001 - $400,000
414
462
-10.39%
88
65
35.38%
$400,001 - $500,000
445
503
-11.53%
76
81
-6.17%
$500,001 - $600,000
195
269
-27.51%
95
75
26.67%
$600,001 - $700,000
124
154
-19.48%
97
82
18.29%
$700,001 - $800,000
83
83
0.00%
103
97
6.19%
$800,001 - $900,000
49
64
-23.44%
89
95
-6.32%
$900,001 - $1,000,000
30
48
-37.50%
111
135
-17.78%
$1,000,001 +
100
132
-24.24%
134
115
16.52%

What does the chart above tell us?

There is no price range in which number of sales in Austin increased. The $700K to $800K range was even, probably because some sales that would have been in a higher range last year fell into the lower range.

The largest drop in number of sales occurs at the bottom end of the market in Austin. Home ranges priced at $150K and below all fell more than 30% in number of sales, probably because more move-up buyers are staying put, fewer renters are able to buy, and starter home product provided by builders in that range has dried up. Investors have also slowed down and this was a favorite price range for investors looking for cheap rental stock. That said, the days on market in the $80K to $150K ranges are the lowest of any other. So these homes are selling fast, there just are not as many of them.

The price ranges with the smallest drop in number of sales is the bread-and-butter ranges between $150K and $300K. Interestingly, the days on market are up substantially in those ranges, especially the $250K to $300K range. There are still a lot of over-priced homes near the $300K price point and just above. So those homes are taking longer to sell and more of them ultimately expire or are withdrawn.

Austin is looking pretty good all things considered. Selling still requires more effort in preperation and a more sober approach to pricing than a year ago. But the market isn’t as bad as many buyers think, and interest rates are rising. Those who could have purchased the past few months but have been sitting on the fence waiting for the sky to fall will most likely be punished by the market as they come in late and end up paying more and with a higher interest rate.

Posted by Steve
8 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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shireen - 8 years ago

everything seems to have slowed! I saw this coming but couldn’t get my central Austin house on the market any faster — it is cleaned out and professionally staged and is getting showings. We are looking in NW Austin (inside 360) and a house we are very interested in, is getting dozens of showings — but it is still on the market, everyone loves it but the sellers won’t take a contingent and everyone who is interested has a house to sell. It feels like a slow-motion car crash, interest rates are risings, prices are sticky but I fear that a brick wall is near!

Reply
Brett - 8 years ago

Hi Steve,

As you clearly mentioned, starter homes are not available in the market anymore. There are not enough to support that market, which translates into middle-class families not being able to upgrade and to buy a first home, and having to rent.

I can only talk about my area (Tarrytown), and the value of homes has skyrocketed over the past couple of years because of investors pushing the prices up. For example, an older home was destroyed near my home, and a new ‘townhome’ community is being developed with 2 and 3 story units of 1200 – 1400 sqft with prices starting at 520k, which to me is ridiculous taking into account what the prices of homes was a couple of years ago. A lot of investors are doing similar things in this area with older apartment complexes being turned into ‘condos’ with prices in the 250-300 USD/sq ft range.

I am either living in another world, but I don’t see how there can be so many people being able to afford properties that are worth so much with Texas salaries.

Reply
seen this before - 8 years ago

well this is the same old story in a different location… the lower end gets killed while the middle market hangs in and you get a bump in average prices for a couple / few months. In other areas of the country this exact occurrence is what signaled that there was more trouble ahead.

Speaking of Tarrytown; and really all of west central Austin; prices have gone though the roof here in 3 short years. I’m not sure who is buying 1500 square feet on 0.15 acres for $500K but it surely isn’t sustainable. On top of that rents are , from what I can tell, basically flat over the same period, as is wage growth. ( Austin median family income in 2007 is down from 2000 per the A&M real estate center, but still the best paying city in the state)

So according to austinhomesearch.com there are 136 “homes” for sale in “central Austin” priced above $750,000 and only 11 are currently “pending” . The fall and winter should be interesting.

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Barry - 8 years ago

….And the fed is going to start raising interest rates to stem inflation before the end of the year which will mean mortgages in the 7s and 8s.

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brett - 8 years ago

i definitely agree about the whole central austin housing boom. i do not understand who is buying all these properties; when i walk along enfield with my dog, i usually pay attention to all the homes for sale, and the prices sorta scare me. for example, another older home was destroyed, and an investor is finishing two units within the same lot (only one unit faces the street, the second unit faces the back of the first home)…each home is being sold for nearly 1 million dollars..i smell future problems for this area..i wonder if any realtors agree

Reply
Jay - 8 years ago

So is the Austin area market down 24% as a whole?

Reply
Steve - 8 years ago

Jay: Number of sales is down 24%. Prices are still rising. So it depends on what you mean by a market being “down”.

Brett: I’m with you. Some of these newer style duplex/condo structures going up as infill seem uninviting to me as a home owner. Especially what you describe where the front yard is the back yard of someone elses house.

Barry: Interest rates in the 7s’ or 8’s would be normal, historically. We’re all spoiled with the low interest rates of recent years. It use to be anything under 8% was great.

Shireen: good luck on your listing. Monitor the traffic well and seek feedback (your agent should) from every showing. Also, for some reason, we have been getting more people through our listings with open houses than MLS showings. Two of our listings sold in the past few months to open house attendees. That’s not normal, but we do whatever works to get people through the door. When I sold our own home in December, we dropped the price $25K, twice, had 2 MLS showings in 30 days but 7 to 12 people each week for open houses. That one sold to an open house attendee also.

Steve

Reply
lindsey - 8 years ago

My house has gone down in value over the last two years, but my taxes have gone up substantially. I would not be paying this much in state income tax (the old rebuttal I really don’t buy), I’m single and I don’t have children. One year I was ill and couldn’t work, and my house taxes kept going up. I think that Austin’s citizens would be albe to get much more ahead, buy, fix and sell, much more agilely, if it wasn’t for these taxes. These taxes (even though the bill passed to supposedly lower them) are supposed to go for our schools, but our teaches are paid obscenely lower than most other states and the schools are in trouble. I don’t believe the taxes are accountably going to the stated end point. This system seems to penalize the citizens of Austin, especially as they approach retirerment, and then, it doesn’t seem to truly serve the school system. It appears very disappointing and rather abusive.
I think if folks stood up, with the real estate community, and helped provide a solution (I like to think of solutions not just criticisms), that would truly ram up the local market more than any of the economic global woes. Austonians, realtors, and the city would all benefit.
I am just a regular schmoe, but that’s my now less than it used to be, two cents.

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brett - 8 years ago

hi steve,
the average prices of sold homes is going up because the lower end of the market is the weakest as u can see in your numbers… we are definitely seeing a larger impact among first-time homeowners and families with average incomes..the higher end homes are the ones that are pulling the average prices up…fewer cheap homes are being sold, while homes in higher brackets are seeing smaller drops

plus, i belive the numbers are sort of misleading because the market in the city of austin is much different than in kyle, round rock or manor…it’d be interesting to see breakdown of the different cities and see how they behave individually because the cheaper homes are in the suburbs…i would think the prices in the city of austin are much higher and stable

thankS

Reply
scott - 8 years ago

I think that the Austin metro has problems supplying first-time homebuyers as much per its lack of condo developments in the outlying areas. As the area grew massively in the outskirts, the developers favored mega-apartment complexes over condos.
TH’s and condos, and I’m speaking of the affordable ones for the masses, not the handful of upscale DT developments, have been a major sepping point for first-time homehowners…Austin simply is greatly lacking in a large mass of starter condos/TH’s, and seems to have preferred the massive upscale aprt complexes
to the same. During the same time, land got scarce, much as bought up, and little was left for starter homes……that left the suburban outposts to carry that weight…with the price of gas, it will be difficult, doubly so, for young couples and singles to find a reasonable perch to grab onto per home/condo/TH ownership, and may be stuck for a long time in the luxury aprt. guilded ghettos……

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Michael @ The Stage Coach - 8 years ago

Hey, Steve:
You have the best grasp of local stats (butter), and I have been meaning to ask: when calculating the Days on Market, is it from Listing Date to Contract Date? Listing Date to closing Date? Or some thing else entirely?
And then how does the number track into the next month if the deal falls through, say the first week of the next month? Does it just go back to houses for sale?
Michael

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