The Austin Business Journal reports that home construction and closings of recently completed homes in Austin remain depressed, but that’s unlikely to bring prices down any time soon.
Home builders started 37% fewer homes in Austin during the 3rd quarter 2008 than they did a year ago in 3rd quarter 2007. They closed 33% fewer homes. Bottom line is builders are working through inventory and being very careful about what they start. Mainly, they are not over-building.
Mark Sprague, from market research firm Residential Strategies, is quoted in the article:
“The Austin market has now experienced about a year of more restrictive mortgage qualification standards in the wake of the collapse of the subprime mortgage market,” says Mark Sprague, Austin partner for Residential Strategies. While tightening in lending continues, “we do see a stabilizing trend of sales activity at the current moderate pace.”
From an andectodal standpoint, we are not seeing nearly as many builder flyers stuffed in our mailbox at Keller Williams with the “$30,000 off!” or the “8% Commission” promotions that we were seeing a lot of mid-summer.
But this week has been interesting. Have you ever been camping in October, and just before sunset you feel a gusty breeze of cold air, and you say “wow, the temperature just dropped 10 degrees”? Sylvia and I just felt that breeze this week as several of our active buyers have decided to put their search on hold and wait to see what happens with all of this financial stuff, the election, and the economy in general.
Some are suddenly worried about their jobs, other just feeling “spooked” by the current economic conditions. We had one contract fall off on one of our listings because the agent said the “buyers just got scared”. Same thing happened this week to a custom builder I know. And we’re hearing these stories around the office as well.
Meanwhile, several of our listings recently have sold in less than a week at or near full price. The market is all over the place.
The full Austin Business Journal article is here.