Austin Real Estate Market – March 2009 Update

The average and median sold prices in Austin are down for March 2009, which extends a streak of 7 months in a row during which average home sales prices in Austin have been up, then down, then up, from the month before. The market does seem to be establishing a slight down trend, because the bottoms keep inching lower each time, but is still bouncing up and down so much that it’s hard to know for sure where things are headed.

What’s interesting is that the swings have been so wild the past 4 months in particular, bouncing from the $230K to the $250s and back again. I’ve started keeping a chart to graph the movement.

Austin real estate sales market history

For March, average sold price is down 3.82% from Mar a year ago and median sold price is down 3.54% from last year. Volume of sales dropped 27% for Mar compared to Mar 2008. The number of “Not Solds” (expired or withdrawn) is at 44% for March, meaning 44% of the listings that departed the MLS in March were failed sales efforts. Let’s look at the breakdown of the rest of the Austin single family home sales for Mar 2009:

• Number of homes sold is down 27% (was down 25% last month) from 1,782 Mar 2008 to 1301 Mar 2009. Note the Feb 2009 had fewer than 1,000 sold homes.
• Average list prices in Austin were down 3% over the same month last year to $247,014.
• Average sold prices in Austin were down 3.82% over the same month last year to $234,869 from $244,807 a year ago.
• Median sold price was down 3.54% to $184,000. Last year in March it was $190,745.
• Average List to Sold price ratio is 95.08%, down slightly from 95.94% the same month last year. Note that this reports the sold price compared to the last list price, not the original list price. I have run that stat lately but it’s probably in the low 90% range.
• Avg sold price per square foot is down 5.38% to $108 compared to $114 a year ago in Mar.
• Avg days on market is up 14 days (20%) from 70 last year to 84 this March.
• Median days on market is up 14 days (31%) from 45 days last year to 59 Mar this year.
• Number of “Not Sold” (exp or withdrawn) is up 20% over the same month last year, to 44% of all removed listings compared to 37% for the same month last year.

The chart below show the figures for March 2009 compared to March 2008 and Feb 2009.

Austin Real Estate Sales Market Update March 2009
Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data

Feb 2009 Mar 2009 Mar 2008 Yr % Change
# Sold 989 1301 1782 -26.99%
Avg List $264,044 $247,014 $254,545 -2.96%
Med List $199,900 $189,900 $197,900 -4.04%
Avg Sold $252,132 $234,869 $244,207 -3.82%
Med Sold $194,000 $184,000 $190,745 -3.54%
Sold/List % 95.49% 95.08% 95.94% -0.89%
Avg SQFT 2211 2168 2133 1.64%
Med SQFT 2043 1965 1947 0.92%
Avg $ SQFT $114.04 $108.33 $114.49 -5.38%
Avg DOM 83 84 70 20.00%
Median DOM 64 59 45 31.11%
# Expired 400 418 550 -24.00%
# Withdrawn 589 599 482 24.27%
Not Sold 989 1017 1032 -1.45%
Not Sold % 50.00% 43.87% 36.67% 19.63%

The year-to-date figures are below, along with the quarterly breakdown by MLS area. If you follow my blog, you know I think we might see an overall slip in prices of 3% to 5% this year in Austin. So far we’re 1.50% down on average sold price YTD, and down 0.80% on median sold prices in Austin. Despite general sluggishness, the Austin market remains stubborn and is still holding on. Of course this varies from area to area and in different price ranges. More on the below.

Austin Sales Market YTD Update – March 2009
Homes only (no condos, duplexes, etc) – Data from Austin MLS

Jan-Mar 09 Jan-Mar 08 Yr % Change
# Sold 3160 4581 -31.02%
Avg List $252,162 $253,903 -0.69%
Med List $192,944 $194,900 -1.00%
Avg Sold $239,672 $243,315 -1.50%
Med Sold $186,000 $187,500 -0.80%
Sold/List % 95.05% 95.83% -0.82%
Avg SQFT 2181 2127 2.54%
Med SQFT 1976 1936 2.07%
Avg $ SQFT $109.89 $114.39 -3.94%
Avg DOM 84 71 18.31%
Median DOM 63 50 26.00%
# Expired 1376 1630 -15.58%
# Withdrawn 1900 1626 16.85%
Not Sold 4536 3256 39.31%
Not Sold % 59% 42% 41.86%

 

Below is a graphical depiction of Austin’s sales market since 1999 through March 2009.
austin-sales-market-1999-200903

Next is the breakdown by price range of homes sold in Austin Jan-Mar 2009.  You’ll see that lower priced homes, below $200,000,  in Austin are selling relatively fast and we actually have balanced levels of inventory. Then in the price ranges above $250K, the MOI (months of inventory) get’s up in the double digits, which is a buyers market.

Price Range Sold DOM Active MOI
$149,999 or under 979 62 1570 4.81
$150,000 – $199,999 774 75 1517 5.88
$200,000 – $249,999 435 93 1143 7.88
$250,000 – $299,999 297 97 1032 10.42
$300,000 – $349,999 204 105 655 9.63
$350,000 – $399,999 141 102 670 14.26
$400,000 – $449,999 95 109 366 11.56
$450,000 – $499,999 56 108 399 21.38
$500,000 – $549,999 40 115 259 19.43
$550,000 – $599,999 24 118 258 32.25
$600,000 – $699,999 43 139 358 24.98
$700,000 – $799,999 25 131 245 29.40
$800,000 – $899,999 13 98 183 42.23
$900,000 – $999,999 5 105 111 66.60
$1,000,000 or over 32 164 599 56.16

Finally, we have the MLS area breakdown, which shows us how different areas of Austin are doing first quarter compared to the same time period a year ago. If you are not familiar with Austin MLS areas, a MLS map is below the breakdown chart. 

 

MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
All Areas 2009 3160 $239,672 $186,000 2,181 $109.89 84 63

2008 4581 $243,315 $187,500 2,127 $114.39 71 50

Change -31.02% -1.50% -0.80% 2.54% -3.94% 18.31% 26.00%









MLS Area YTD-Apr # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
1A 2009 23 $487,896 $410,000 2,819 $173.07 88 64

2008 40 $513,255 $442,000 2,840 $180.72 71 54

Change -42.50% -4.94% -7.24% -0.74% -4.23% 23.94% 18.52%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
1B 2009 44 $581,360 $469,000 2,423 $239.93 124 107

2008 52 $687,493 $542,500 2,433 $282.57 61 41

Change -15.38% -15.44% -13.55% -0.41% -15.09% 103.28% 160.98%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
1N 2009 80 $265,730 $225,700 2,027 $131.10 60 42

2008 89 $269,701 $237,000 2,004 $134.58 56 33

Change -10.11% -1.47% -4.77% 1.15% -2.59% 7.14% 27.27%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
2 2009 54 $252,010 $249,950 1,423 $177.10 62 41

2008 80 $252,972 $246,500 1,397 $181.08 63 49

Change -32.50% -0.38% 1.40% 1.86% -2.20% -1.59% -16.33%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
2N 2009 43 $157,257 $148,000 1,604 $98.04 70 55

2008 69 $139,576 $143,000 1,440 $96.93 58 42

Change -37.68% 12.67% 3.50% 11.39% 1.15% 20.69% 30.95%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
3 2009 58 $243,501 $242,500 1,765 $137.96 86 80

2008 62 $206,228 $200,995 1,392 $148.15 57 33

Change -6.45% 18.07% 20.65% 26.80% -6.88% 50.88% 142.42%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
3E 2009 24 $146,782 $125,000 1,571 $93.43 83 63

2008 40 $183,711 $158,846 1,682 $109.22 72 51

Change -40.00% -20.10% -21.31% -6.60% -14.46% 15.28% 23.53%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
4 2009 37 $340,541 $297,500 1,516 $224.63 86 77

2008 71 $368,021 $340,000 1,540 $238.97 58 44

Change -47.89% -7.47% -12.50% -1.56% -6.00% 48.28% 75.00%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
5 2009 41 $196,877 $152,375 1,347 $146.16 79 65

2008 67 $203,261 $175,000 1,288 $157.81 77 60

Change -38.81% -3.14% -12.93% 4.58% -7.38% 2.60% 8.33%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
5E 2009 18 $103,432 $105,750 1,524 $67.87 52 38

2008 18 $113,782 $108,450 1,737 $65.50 53 42

Change 0.00% -9.10% -2.49% -12.26% 3.61% -1.89% -9.52%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
6 2009 30 $384,064 $323,000 1,705 $225.26 106 87

2008 30 $329,648 $304,500 1,423 $231.66 44 33

Change 0.00% 16.51% 6.08% 19.82% -2.76% 140.91% 163.64%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
7 2009 13 $426,222 $377,900 1,634 $260.85 88 88

2008 22 $401,060 $389,000 1,724 $232.63 56 38

Change -40.91% 6.27% -2.85% -5.22% 12.13% 57.14% 132%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
8E 2009 22 $709,582 $537,500 3,223 $220.16 103 83

2008 42 $853,070 $642,500 3,095 $275.63 84 50

Change -47.62% -16.82% -16.34% 4.14% -20.12% 22.62% 66%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
8W 2009 38 $679,860 $495,950 3,388 $200.67 95 84

2008 35 $535,059 $452,000 2,950 $181.38 98 83

Change 8.57% 27.06% 9.72% 14.85% 10.64% -3.06% 1%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
9 2009 9 $167,170 $178,990 1,461 $114.42 92 38

2008 10 $212,370 $211,500 1,751 $121.28 64 56

Change -10.00% -21.28% -15.37% -16.56% -5.66% 43.75% -32%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
10N 2009 44 $176,624 $158,000 1,422 $124.21 70 64

2008 63 $202,672 $167,000 1,470 $137.87 45 27

Change -30.16% -12.85% -5.39% -3.27% -9.91% 55.56% 137%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
10S 2009 82 $175,330 $173,550 1,662 $105.49 61 48

2008 134 $175,493 $169,450 1,637 $107.20 51 36

Change -38.81% -0.09% 2.42% 1.53% -1.60% 19.61% 33%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
11 2009 33 $107,199 $109,000 1,407 $76.19 66 55

2008 47 $121,535 $118,000 1,440 $84.40 62 60

Change -29.79% -11.80% -7.63% -2.29% -9.73% 6.45% -8%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
CLN 2009 172 $188,539 $155,495 2,125 $88.72 75 49

2008 257 $176,626 $154,290 2,013 $87.74 63 43

Change -33.07% 6.74% 0.78% 5.56% 1.12% 19.05% 14%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
CLS 2009 161 $227,271 $213,000 2,387 $95.21 84 67

2008 226 $244,409 $215,250 2,395 $102.05 69 51

Change -28.76% -7.01% -1.05% -0.33% -6.70% 21.74% 31%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
EL 2009 36 $119,344 $98,425 1,907 $62.58 55 42

2008 69 $127,055 $125,000 1,814 $70.04 69 51

Change -47.83% -6.07% -21.26% 5.13% -10.65% -20.29% -18%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
GTE 2009 26 $136,442 $123,500 1,822 $74.89 70 40

2008 61 $164,523 $156,511 1,790 $91.91 80 65

Change -57.38% -17.07% -21.09% 1.79% -18.52% -12.50% -38%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
GTW 2009 109 $243,014 $212,000 2,355 $103.19 121 103

2008 164 $253,405 $211,581 2,241 $113.08 98 76

Change -33.54% -4.10% 0.20% 5.09% -8.74% 23.47% 36%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
HD 2009 68 $342,071 $316,706 2,901 $117.91 120 92

2008 96 $345,094 $328,750 2,781 $124.09 118 107

Change -29.17% -0.88% -3.66% 4.31% -4.98% 1.69% -14%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
HH 2009 157 $158,871 $149,900 2,049 $77.54 74 54

2008 221 $177,827 $157,000 2,101 $84.64 65 48

Change -28.96% -10.66% -4.52% -2.48% -8.39% 13.85% 13%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
HU 2009 26 $154,261 $134,000 1,739 $88.71 104 78

2008 103 $156,187 $146,000 2,079 $75.13 64 43

Change -74.76% -1.23% -8.22% -16.35% 18.08% 62.50% 81%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
LN 2009 28 $284,461 $237,000 2,234 $127.33 141 110

2008 49 $289,092 $214,000 2,117 $136.56 81 57

Change -42.86% -1.60% 10.75% 5.53% -6.76% 74.07% 93%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
LS 2009 121 $396,119 $338,000 2,810 $140.97 130 88

2008 147 $449,064 $335,000 2,745 $163.59 114 98

Change -17.69% -11.79% 0.90% 2.37% -13.83% 14.04% -10%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
MA 2009 54 $119,483 $101,500 1,704 $70.12 71 49

2008 61 $153,525 $144,900 2,028 $75.70 71 46

Change -11.48% -22.17% -29.95% -15.98% -7.38% 0.00% 7%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
N 2009 61 $188,720 $184,885 2,055 $91.83 48 30

2008 90 $191,798 $183,500 1,874 $102.35 41 26

Change -32.22% -1.60% 0.75% 9.66% -10.27% 17.07% 15%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
NE 2009 57 $151,229 $153,700 1,862 $81.22 61 48

2008 71 $156,199 $156,000 1,828 $85.45 50 33

Change -19.72% -3.18% -1.47% 1.86% -4.95% 22.00% 45%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
NW 2009 101 $218,158 $192,500 2,148 $101.56 66 34

2008 132 $241,905 $204,000 2,212 $109.36 44 26

Change -23.48% -9.82% -5.64% -2.89% -7.13% 50.00% 31%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
PF 2009 203 $165,637 $156,000 2,142 $77.33 77 57

2008 311 $168,263 $160,000 2,022 $83.22 64 44

Change -34.73% -1.56% -2.50% 5.93% -7.08% 20.31% 30%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
RN 2009 64 $528,139 $455,000 3,705 $142.55 116 89

2008 90 $525,526 $397,500 3,292 $159.64 112 83

Change -28.89% 0.50% 14.47% 12.55% -10.71% 3.57% 7%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
RRE 2009 200 $188,274 $168,950 2,378 $79.17 82 60

2008 329 $191,934 $167,000 2,248 $85.38 71 56

Change -39.21% -1.91% 1.17% 5.78% -7.27% 15.49% 7%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
RRW 2009 157 $245,974 $230,000 2,705 $90.93 90 72

2008 266 $242,500 $229,450 2,564 $94.58 77 64

Change -40.98% 1.43% 0.24% 5.50% -3.85% 16.88% 13%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
SC 2009 27 $177,924 $148,387 2,040 $87.22 63 53

2008 52 $180,740 $156,951 2,160 $83.68 57 35

Change -48.08% -1.56% -5.46% -5.56% 4.23% 10.53% 51%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
SE 2009 24 $115,814 $115,000 1,959 $59.12 54 32

2008 41 $130,289 $130,000 1,808 $72.06 56 38

Change -41.46% -11.11% -11.54% 8.35% -17.96% -3.57% -16%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
SWE 2009 110 $216,045 $184,490 2,130 $101.43 74 59

2008 154 $219,284 $208,750 2,065 $106.19 60 48

Change -28.57% -1.48% -11.62% 3.15% -4.48% 23.33% 23%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
SWW 2009 81 $296,736 $279,400 2,554 $116.18 71 49

2008 127 $317,102 $295,500 2,546 $124.55 68 60

Change -36.22% -6.42% -5.45% 0.31% -6.72% 4.41% -18%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
UT 2009 4 $424,000 $375,000 1,829 $231.82 132 114

2008 7 $400,136 $386,200 1,440 $277.87 63 51

Change -42.86% 5.96% -2.90% 27.01% -16.57% 109.52% 124%









MLS Area Year # Sold Avg Sold Med Sold Avg SQFT Avg PSF Avg Days Med Days
W 2009 50 $573,304 $342,750 3,186 $179.94 90 62

2008 53 $486,744 $364,500 3,155 $154.28 83 49

Change -5.66% 17.78% -5.97% 0.98% 16.64% 8.43% 27%

 

Posted by Steve
7 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.

Click Here to Leave a Comment Below

New Austinite - 7 years ago

Thanks for your hard work. I do appreciate it.

The data points from 1B and 8E really do confirm my observations. Think 1B has a little further to go as I just started seeing some bank/short sales from all the high end spec homes.

Reply
Richard Stabile Bergen County Real Estate - 7 years ago

Austin seems to have a similar market to Bergen County New Jersey as far as the technicals. Your sales volume in off and you prices. However, you have not declined like other more speculative parts of the country. Such as, Southern California, Florida, Nevada, Arizona. Those areas declined as much as 60%, and are having strong volume now. Lets hope we can see more bids in the market.

Reply
M1EK - 7 years ago

“Homes only (condos, duplexes, etc. not included)”

Just a nit, but those are homes too. Perhaps you could change it to “houses only (…)”?

Reply
Aaron - 7 years ago

I suspect that 1B and 8E are both being hit hard because of the (now very tight) banks not handing out jumbo loans. Anything over $450 ($412 + 10% down) is now pretty much relegated to people upgrading houses. Since these people, in turn, are having trouble selling their house for as much as they wanted, fewer are upgrading. The 1st time buyers are not buying in that market anymore. Most of the houses in these areas are $500k and up, so it is a tough market.

Reply
Steve - 7 years ago

> Most of the houses in these areas are $500k and up, so it is a tough market.

We have a listing in 1B listed at $475K in Tarrytown. We had open houses on Sat and Sun and traffic was good, but we haven’t seen any offers, not even lowballs. Seller is not going to drop the price so we’ll prbably be renting that one in a month or two if nothing happens before then.

I had another on in TT around the corner from the first, and advised that seller to not list it right now. We’re waiting to see if things pick up around there. They are in the same boat – have a price bottom and just won’t sell for less, and don’t have to.

Steve

Reply
New Austinite - 7 years ago

Yeah, some people CAN’T sell right now because market value is more than their mortgage balance, selling costs, etc. Lots of people just sitting tight.

Reply
Leon Fu - 7 years ago

Steve,

Thanks for the info. It’s good to see that the market in Austin is holding, but I fear what may lie ahead of us.

The next few months will be a crucial test for the market. For the past 6 months or so, there has been a moratorium on foreclosures as the banks wanted to see the details of Obama’s plan. It may be why the markets seemed to have stabilized a bit over the past few months. The moratoriums have come to an end and banks have resumed foreclosing properties that will not qualify for government assistance.

We may see a surge in foreclosures coming months. Combined with the 650K jobs that are being destroyed every month, we may see the next leg down in the real estate market by the end of the summer.

Reply
Leon Fu - 7 years ago

Citing my sources here about the foreclosures that are in the pipeline…

http://zerohedge.blogspot.com/2009/04/california-foreclosures-about-to-soar.html

Reply
Eileen - 7 years ago

Leon- Thanks for the link. That is a great article and blog. I’ll have to follow that one!

Reply
Ray - 7 years ago

Actual owners are just getting on with their lives in one of the best economies and places to live in the US sitting tight and easily just refusing to sell for less than they want to or need to despite low ball valuations from realtors trying to make a market for a quick commission, and thus quietly waiting out the minor siege that’s been going on here in central TX for a few months on the basis of irrelevant doom and gloom media reports covering entirely other areas and economic situations. Reluctant and vulcher investor buyer’s will soon enough find themselves having to chase the train leaving the station yet again as the local realtors find they can make a much better market by flipping to use their influence on buyers to call it as one of the best sellers markets in the US rather than fishing for quick commissions from almost non existent desperate sellers. in any case the (corrupt) mortgage banks appear to be forcing and fast tracking the few local foreclosure bargains for their own possession, probably using TARP funds to buy them with full knowledge that central TX property will appreciate in the fairly short term.

Reply
Leon Fu - 7 years ago

Ray,

Pretty soon, the only “vulture” investors out there are the ones with cold hard cash because nation’s banks are already bankrupt. There are very few people out there that can buy real estate without credit.

http://turnerradionetwork.blogspot.com/2009/04/leaked-bank-stress-test-reults.html

The reason the government is debating whether or not to release the results of the “stress test” is because ALL of the banks have failed. 16 out of the 19 biggest banks are already bankrupt. There is not one of them that could survive if the economy further deteriorates.

Note No 7 on the list. It’s not only the big banks that are in trouble. There are 1,800 regional and local banks also in trouble. The scale of this problem is so massive, its hard to fathom.

If you add up all the debt at all levels of government, the debt of all corporations, and the debt of individuals, it comes up to be something on the order of $200K for every man, woman, and child. As a nation, we collectively owe all of this.

Now do you think on average a person (including children, retired, and disabled people) can support this amount of debt? The number is so huge, it’s very unlikely we can “grow” our way out, esp. since the economy is shrinking, not growing at the moment. The only option is to default on this debt. Any monies we earn now will be going towards repaying our debts; not economic growth.

Reply
steve - 7 years ago

Leon, you should do better than just quote some rumors/nonsense somewhere.

Do you know that in addition to liability, there are assets/cash on the book? Even money machine Microsoft have 2B debt,. So what?

Reply
Leon Fu - 7 years ago

Steve,

Yes, most big tech companies like MSFT have plenty of hard cash. But that is not true at the nation’s financial institutions. They will be suffering losses in the TRILLIONS of dollars because of these “toxic” or “legacy” assets. The sum that is being lost is so huge it boggles the mind. The government will bankrupt themselves and this country trying to save them.

http://finance.yahoo.com/news/IMF-Losses-from-global-credit-apf-14983577.html;_ylt=AlKcBY_.r6cFYJ0U8dHEWPS7YWsA?.v=9?sec=topStories&pos=2&asset=&ccode=

This isn’t “irrelevant doom and gloom” as Ray puts it. What I am describing has ALREADY happened and what is going on right now.

Now I agree that Austin will fare better than just about anywhere else in the US. Texas is in much better shape than the rest of the country. But this is against a backdrop of a global collapse that is happening as we speak. If you look at what is going on in other places such as California, Michigan, Rhode Island, South Carolina, etc. it’s just ugly…

Reply
New Austinite - 7 years ago

While I don’t believe the banks are all going broke, I do think Ray is smoking something. 😉

Reply
Bob - 7 years ago

Steve:

Thanks for the straightforward presentation of the market statistics and commentary. The rhetoric on both sides can be a bit much. Ray, for example, is right about this being one of the best economies in the country, but he is overly dismissive of the threats Austin faces. Lil’ ‘ol Austin is NOT immune to what is going on in the rest of the country. In the last housing bust in the early 1990s, Austin took a huge hit. I would put myself in the bearish camp for home prices and sales over the next year for a number of reasons, some of which you highlighted. The one area no one seems to talk about much ( though you have a chart showing half the story – sales 1999 – March 2009) is the amount of home price appreciation relative to median income over the last 10 years. Prices were up in the aggregate approximately 40 to 50%, while median incomes were essentially flat. You’re probably familiar with these and other statistics published by Texas A&M’s Real Estate Center. Even though we did not experience home price appreciation on the scale of the states with the bulk of the problems, we’re no doubt due for a correction now that easy credit has left the scene. The longer the national/international economy remains depressed, the more likely it is we incur a sharper home price shock in Austin, in my opinion. The jumbo category is clearly the most vulnerable, as you point out. Property taxes, the growth in assessed values, the growth in government budgets, and lower tax receipts are also a huge problem in the state, but particularly here. Something has to give, and government budgets do so with great reluctance. 2010 is likely to be a very contentious year in Austin.

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