A “drop in price” is an irrelevant number. You need to determine what you think a downtown Austin condo is worth (get a downtown Realtor to help you – it’s a niche market – let me know if you need a referal), then decide what you’re willing to pay.

The asking price isn’t even a number that factors into the offer equation, at all. Therefore, the amount of reduction from the asking price is really not a useful number to think about. It doesn’t mean anything. Instead, start with market value, and go from there.

Good luck.

Steve

I don’t have a method of knowing exactly how many MLS sales are foreclosures or short sales, but it’s not a high number in Austin. I can search the agent comments for words/phrases, such as “foreclosure” and “short sale”. Doing that, only 42 of the 770 are matches, which is about 5%. The number is probably higher than that because not all will have that wording.

Steve

Of the 770 homes that sold in January, is there any way you can tell us how many of those were foreclosures? I believe the national stats are something around 40% of homes being sold are due to foreclosures. What is the situation here in Austin?

As I have been commenting, be patient. Steve’s stats shows that the real estate market has all but dried up. I think we can all agree that 40% drop in sales is a market that is frozen.

Sellers are holding on because they still have jobs, but that’s about the change and employment picture is just starting to rollover. Wait for unemployment to really start kicking in and that will force them to capitulate and sell at much lower prices. Most people will exhaust their savings around 6 months after losing their jobs and you can either buy from them or the bank after foreclosure. The banks that own these homes aren’t in any position.

There’s no reason to buy until the employment picture turns around…

Normally, a three year time horizon is about the cutoff between rent vs. buy. In this uncertain economic environment, I’d probably wait unless you know you’ll hold the property at least 5 years. The exception would if you can find a purchase substantially below market or if you’d be in a position to keep the property as an investment after you move in three years.

Steve.

“Figures for the condominium market in downtown Austin are very encouraging. Of the 800 units delivered in 2008, over 90% have already closed. Furthermore, several planned projects have been put on indefinite hold due to a lack of financing which will reduce the amount of future supply for years to come.”

Steve

I just have one question.
Your number for houses sold in Jan/2009 is 770. ABoR published that the Single Family Homes sold was 834 for the same month.
I am sure both numbers are correct. I just want to know what is the search criteria for each one.
Thanks.

But your assumption is correct. The closer in area did not have falling values last year. Neither some of the further areas with better schools.

Steve

> A home will sell if it is priced right, but the only way to know if a home is priced right is if it sells.

There are a lot of ways to price a home correctly even in a downward moving market, including adjusted CMA, absorption rate, Active/Pending ratios, showing activity and feedback obtained from other agents, and looking at the immediate competition.

It is in fact a lot more difficult to peg the price though, and many sellers and agents, us included, sometimes find ourselves “chasing the market” in a down shift.

What happens in a soft market is simply that fewer homes sell. But homes do sell.
If you’ve never read the Tale of Two Markets, check it out here:
http://crosslandteam.com/blog/2007/11/27/a-tale-of-two-real-estate-markets/
Steve

I was hoping you could provide some insight to a notion I have seen tossed around frequently, “Homes will sell if they are priced right.”

I see the logic behind the statement, that a home will sell in almost any market if it is priced appropriately. The problem, and what I do not quite get, is that it seems to be circular logic. A home will sell if it is priced right, but the only way to know if a home is priced right is if it sells.

In a volatile, downward market, such as we seem to have now, CMAs become less useful, so they can not resolve my dilemma. From a buyer’s standpoint, if the market is stalling, as you suggest, then that indicates that the market (on average) is not priced appropriately and should go down more. How much is needs to go down becomes the big question.

Since it is hard for a buyer to know whether an individual house is priced right in an overall market that is not priced right, why (and how) should they avoid the safe assumption that this house follows the general rules of the market?