Austin Real Estate Market Update – July 2009 Stats

It’s getting real hard to write about the Austin real estate market when month after month it just keeps doing what is expected, treading water overall, doing well under $200K, especially close in, and still soft in the $400K+ price ranges. That really sums it up, month after month. At the beginning of the year I predicted Austin would be down 3% to 5% overall this year, and we’re still on track for that.

For July, the average sold price compared to July 2008 is down about 4%, a bit more than the 3% average we’ve been seeing each month, but not a surprise. Median sold price is down 1.5%. Average price per square foot is down 5% from a year ago. Days on market is up to 71 average and 44 median, which are not bad numbers, but still worse than a year ago, which was worse than the year before. See the chart below for the previous month and pevious year comparisons for July.

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

Jun 2009 Jul 2009 Jul 2008 Yr % Change
# Sold 2031 1950 2017 -3.32%
Avg List $264,959 $259,167 $269,724 -3.91%
Med List $206,000 $199,900 $203,000 -1.53%
Avg Sold $254,059 $249,560 $260,832 -4.32%
Med Sold $200,000 $195,000 $198,000 -1.52%
Sold/List % 95.89% 96.29% 96.70% -0.42%
Avg SQFT 2221 2188 2166 1.02%
Med SQFT 2012 1985 1962 1.17%
Avg $ SQFT $114.39 $114.06 $120.42 -5.28%
Avg DOM 77 71 61 16.39%
Median DOM 48 44 39 12.82%
# Expired 392 476 537 -11.36%
# Withdrawn 679 825 881 -6.36%
Not Sold 1071 1301 1418 -8.25%
Not Sold % 34.53% 40.02% 41.28% -3.06%


The year-to-date chart is below. For the year Austin Average Sold price for houses is down 2.96%, median is down is dead even at 0% change, and average price per square foot is down about 5%. Our “not sold” are holding at 42%. See below for the details

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

Jan-Jul 09 Jan-Jul 08 Yr % Change
# Sold 10436 12738 -18.07%
Avg List $257,043 $262,727 -2.16%
Med List $199,750 $199,613 0.07%
Avg Sold $245,643 $253,131 -2.96%
Med Sold $193,000 $193,000 0.00%
Sold/List % 95.56% 96.35% -0.81%
Avg SQFT 2188 2137 2.39%
Med SQFT 1987 1944 2.21%
Avg $ SQFT $112.27 $118.45 -5.22%
Avg DOM 77 65 18.46%
Median DOM 49 42 16.67%
# Expired 3028 3743 -19.10%
# Withdrawn 4637 4380 5.87%
Not Sold 7665 8123 -5.64%
Not Sold % 42% 39% 8.75%


The next graph shows what the Austin real estate market looks like over the past 17 months.I like this graph because it’s easy to see that despite some ups and downs month to month, there seems to be no general trend toward the dire predictions that some feared for Austin. Matter of fact, if the last 17 months represents Austin’s “bubble burst”, then the stats show that we had no bubble to begin with, which is what I believe.

austin-last-17-graph-updated


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

Jan-Jul 09 Jan-Jul 08 Yr % Change
# Sold 10436 12738 -18.07%
Avg List $257,043 $262,727 -2.16%
Med List $199,750 $199,613 0.07%
Avg Sold $245,643 $253,131 -2.96%
Med Sold $193,000 $193,000 0.00%
Sold/List % 95.56% 96.35% -0.81%
Avg SQFT 2188 2137 2.39%
Med SQFT 1987 1944 2.21%
Avg $ SQFT $112.27 $118.45 -5.22%
Avg DOM 77 65 18.46%
Median DOM 49 42 16.67%
# Expired 3028 3743 -19.10%
# Withdrawn 4637 4380 5.87%
Not Sold 7665 8123 -5.64%
Not Sold % 42% 39% 8.75%


Below is the Austin market from 1999 through July 2009 Year-to-Date.

austin-sales-market-1999-200907

About the chart above, remember that the 2009 numbers are year to date while the other years are complete year stats. Thus, 2009 does not yet suffer or get dragged down by what is normally a slowdown in the fall and winter. However, I think this year we are going to see a spike in October and November sales as buyers rush to beat the Nov 30th closing deadline to receive the $8,000 government giveaway for buyers who haven’t owned a home in the past three years. That combined with the fact that a year ago in September it looked like the world financial system was on the brink of collapse and the market took a nosedive, I think the trend we’re seeing above will continue and perhaps even improve.

Sidebar: The incompetence and inability to close on time by most Mortgage Lenders is going to become prime time news headlines near the end of November if a 1 day delay from Nov 30th to Dec 1st will cost buyers that $8,000 tax rebate. I doubt government officials are foreseeing or preparing for this, but it’s going to get ugly when deals start cratering and lenders and underwriters are held accountable for their lax attitudes toward meeting closing deadlines. Stay tuned for that carnage! My advice, write your deal to close at least a week before Nov 30th so you have some flex room.

Back to the stats. Below is the price range breakdown for July sales. This is a topic that I think is really interesting, and Sylvia and I have some first hand anecdotal experience to share about how different market segments are behaving. First, let’s look at the chart.

Austin House Sales and Inventory Report July 2009 by Price Range
Price Range Number Sold Avg Days on Mkt Active Aug 2009 Months inventory
$149,999 or under 512 61 1602 3.31
$150,000 – $199,999 496 63 1738 3.71
$200,000 – $249,999 270 64 1183 4.27
$250,000 – $299,999 221 84 1015 4.83
$300,000 – $349,999 121 75 692 6.05
$350,000 – $399,999 103 91 625 6.74
$400,000 – $449,999 56 82 443 8.01
$450,000 – $499,999 31 81 416 10.58
$500,000 – $549,999 29 74 241 8.03
$550,000 – $599,999 25 92 263 14.61
$600,000 – $699,999 37 109 341 9.93
$700,000 – $799,999 15 78 223 15.56
$800,000 – $899,999 10 108 182 17.61
$900,000 – $999,999 5 67 132 22.00
$1,000,000 or over 19 169 625 29.30



The sales market under $200K has turned into a undeniable seller’s market. In fact, the month’s inventory has moved down in the price ranges that were previously buyer markets. $300K to $400K is tightening up to a balanced market. (6 months inventory represents the balance point between buyer/seller markets)

What does a seller’s market under $200K look like? Sylvia and I listed a house in South Austin last Friday and had two offers in less than 24 hours. It went under contract for over the list price. We expected strong demand, but it’s an older 1970’s home in Cherry Creek and it needs some work, so we priced it accordingly. It had 5 showings the first afternoon on the market.

When I ran a Active/Pending ratio analysis for South Austin, 78745 zip code, houses at least 3/2/2 under $200K, the results explained the high demand. There are at present 25 Active homes matching that search and there are 34 Pendings. That’s an inverted demand ratio. Normally, in a hot market, we’ll have 1 Pending for every 2 or 3 Active listings. In 2006/2007 we were often seeing Active/Pendings running about equal. But even in 2006/2007 when California investors were running our market up, I rarely saw a ratio such as 25/34, and never across and entire zip code. It would normally be limited to narrow searches in South and SW Austin in specific subdivisions, such as 8 Active and 11 Pending in Legend Oaks or a section of Circle C.

So, bottom line, South Austin is HOT, Super HOT, under $200K. This must be the early surge of the tax break buyers, getting out there and looking for something affordable and close in. I know it sounds like Realtor Hype, but anyone ready and able to buy who isn’t getting out there right now is a dummy. Waiting is stupid. I don’t know how more plainly I can state it. Houses in that first time buyer range that are well located, such as South Austin, are not going to get cheaper and interest rates are not going to go lower. It’s just amazing to me that people thought a year ago they could wait for 10% price drop on houses like this. That was never going to happen.

OK, off my soap box. As usually, questions, comments and observations are welcome.

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.

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M1EK - 7 years ago

Your table shows July median and average prices below June, but the graph seems to indicate the opposite. Am I reading wrong?

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Steve - 7 years ago

Thanks for pointing that out Mike. I’m looking into it …

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TH - 7 years ago

Steve,

How much do you think this tax incentive is “pushing forward” demand for the sub-$200k, tax-rebate qualified buyers? The cash for clunkers program did the same thing in auto sales. It gave a great short-term boost in sales, but there is still a looming question (for cars and homes) as to whether these incentives created new demand, or simply encouraged people to buy now instead of next quarter, year, etc.

I wonder what will happen to inventory and sales levels on these same homes (South Austin, sub $200k) after Dec. 1st, if the rebate is not extended? You would think that anyone contemplating a home purchase in the next 6 to 12 months would take advantage of the factors that you outlined. The post-rebate buyer pool will be much smaller than it is now: primarily investors and relos, and maybe a small number of people that were existing owners and therefore would not qualify for the tax rebate (although there are not a lot of move-ups buyers looking for under $200k existing homes).

As an investor looking for another rental home or two in the South Austin area, I’m sitting on the sidelines until after some of this artificial demand is removed from the market after December 1, and think other investors should probably consider doing the same.

Thanks,
Tim

Reply
Mike Johnson - 7 years ago

I’ve got to agree with TH. I fully expect sellers to have to lower their prices by at least 8k (the government incentive), after the incentive drops off in December to make sales happen.

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Todd - 7 years ago

There seems to be a growing consensus about the impact of the expiration of the $8K tax credit and softer pricing on the low end of housing come December. However, there are several dynamic factors in play that may play a significant, if not larger role. First is the employment situation and public confidence, if the economy shows continued improvement from cyclical factors such as inventory cycles. Second is the impact of interest rates, which may be higher, lower or the same in 4-6 month’s time. Third is the expiration of the credit. I am not so sure this one does not get extended, replaced or modified by Congress. Housing price stability is much more important systematically to banks than auto sales, so I look for at least a healthy debate about the removal of housing incentives come late fall. That said, our fiscal dilemna is a real factor here as well. The soft winter sales season is certainly not the best time for this program to expire for pricing, that is for sure. How about tight inventory at lower prices, how about foreclosure activity . . . the list goes on. Bottom line is that this program is just one piece of a very dynamic system. I sure would like some advantageous pricing over the winter on median and below homes in Austin, should be interesting to watch the forces at play.

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Steve - 7 years ago

> Your table shows July median and average prices below June, but the graph seems to indicate the opposite. Am I reading wrong?

M1EK,

Yes, this was wrong aon the 17 month lookback graph. I transposed some numbers. I’ve corrected it (you may have to refresh your browser if the old graph still shows.

Interestingly, I went back to every month in the graph to double-check the nbumbers, just in case, some past months remained exactly the same and some change by very small amounts. The more recent the stats, the more likely they change. This is because of errors and corrections made to the data after I run the stats monthly. Also, some agents simply forget to enter their closed sales and do it a month later.

But what you pointed out was not caused by that, but by me. As a result though, every month has been double-checked and it changed the shape of the chart.

> How much do you think this tax incentive is “pushing forward” demand for the sub-$200k, tax-rebate qualified buyers?

TH,

Well, I’m closing one at noon today with an apartment dweller buyer for whom the $8,000 incentive was enough to get him seriously thinking about buying. The serious thinking lead to an awareness of interest rates and more general knowledge after talking with Sylvia. I’ll have to ask him point blank after closing today if he thinks we would have NOT bought at this time without the incentive, but I suspect he may not have based on earlier discussions.

> I fully expect sellers to have to lower their prices by at least 8k (the government incentive)

Mike, $8,000 represents 4% on a $200K sale. I think we might in fact see a slowdown after the incentive, but sellers have been stubborn about dropping prices for the past two years now and so I doubt we’re going to see big price drops. Instead, we might see the number of Expired/Withdrawn creep back up as sellers give up and pull off the market. Right now the “not solds” are at about 40%. They had climbed over 60% in the fall 2008. I don’t think we’ll see that again though.

Todd, I appreciate your good comments.

Steve

Steve

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