Sales volume continues to drop year over year in Austin while prices continue to rise. Let’s have a look at the chart below.
|Austin Real Estate Sales Monthly Update – Oct 2010|
|Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data|
|Sep 2010||Oct 2010||Oct 2009||Yr % Change|
|Avg $ SQFT||$113.12||$116.53||$114.18||2.05%|
|Not Sold %||58.63%||59.98%||42.14%||42.34%|
The number of homes sold dropped 36% from Oct a year ago, but remember, a year ago in Oct we all thought the government tax credit for new buyers was going to end in Nov 2009, so we had artificially increased demand for the fall/winter selling season. Nonetheless, it’s a 36% drop, which is huge. We’re going to see similar year over year drops in the March-Jun stats in 2011 too. In fact, it will be more than two years from now before I can run stats that don’t include the caveat “remember a year ago the government was meddling in the real estate market, or we were in the tax credit hangover, and thus …”
Let’s talk about the color coded right column. This is the first time ever that the spreadsheet I pasted into a blog article maintained the color coding that I have programmed in. Essentially, green indicates a metric that moved in a positive direction, and red is a metric moving in the negative direction. We could have a long debate about whether and why higher prices are “good”, because for buyers maybe lower prices are better. But for the economy in general, jobs and growth, the real estate market needs to be appreciating and growing, so for the purposes of my stats, “good” means it’s good for the owners and sellers of real estate because values are rising.
Don’t give too much credence to the high upward swings in the green rows. Those are distortions. The typical 4 bedroom 2,000 sqft 10 year old home in Austin is not worth 11% more than it was a year ago. We’re simply seeing more expensive properties sell while last year it was the lower priced homes driving the market because of the tax credit.
Let’s have a look at the year to date stats.
I was unfortunately in eviction court a couple of weeks ago because one of my tenants decided to stop paying rent. Evictions in Texas are handled by County JP Courts (Justice of the Peace). These courts are similar to the entertainment “Judge” shows you see on TV, minus the (intended) entertainment element. But it is similar in that the Judge listens to two sides, tries to figure out what’s going on, and makes a decision.
In the case of evictions, two things are being decided. The first is possession of the property. The Judge will determine who has the legal right to possess the property – the landlord who filed the suit, or the tenant who wants to stay. The second issue is whether any back rents will be awarded to the landlord, creating a judgment against the tenant which can eventually appear on the tenant’s credit report.
Since landlords almost always seek possession because of unpaid rent, the outcome is almost always going to be that the landlord is awarded possession of the property plus rents owed up through the day of judgment.
That’s what happened in my case, but before my turn came, I had to sit through a bunch of other cases. These can get pretty interesting. I’ll provide a brief summary below.
A lawyer for a bank is evicting the occupants of a 4plex because the 4plex has been foreclosed and is now owned by the bank. Before the judge heard the case, the tenants, who had taken over paying the gas bill for the entire building after the former owner quit paying the bill, and had been paying their rent payment on time to the owner each month, not knowing that he wasn’t making the loan payments, went outside and worked out a deal.
They came back and informed the judge that the tenant would remain in the property for 50 more days, rent free, giving them time to find another place and move out.
Straight eviction, like mine. Tenant argued that he was trying to come up with the money but needed more time. Landlord says he’s heard that before and wants the tenant out. Judge ruled in favor of landlord, tenant must vacate the property.
Foreclosed owner being evicted by the new owner who purchased the home at auction. Foreclosed owner argues that she thought she had 30 days to move out after a foreclosure sale. This is not correct, as pointed out by the new owner. Judge agrees and finds in favor of the owner.
My Case – This is for a property I own. Tenant stopped paying rent, stopped responding to phone calls or emails. I filed eviction and he and his wife show up ready to inform the judge of what a bad person I am, and how they are “good Christians”. Judge found in my favor, tenant became irate and started yelling at me and the judge, narrowly missing a contempt charge before storming out and yelling at me some more in the parking lot.
I’ve done about 80 evictions in 20 years. I don’t mind tenants letting off some steam. It’s probably better that way. I’ve learned not to argue back but just to remain calm and agree with whatever they say.
Evicted Tenant: Your the worst landlord we’ve ever had.
Me: I’m sure that’s true and I’m sorry about that.
Evicted Tenant: I’m going to appeal and sue your a** for fraud.
Me: I’ll accept whatever verdict the judge hands down.
You get the point. Just go along and don’t argue. Make it to the truck and drive away politely.
Both sides really lose when an eviction is the final result of a lease. The tenant is forced out and the landlord incurs a turnover and lost rent. It’s not a good outcome for anyone, but it’s even a worse outcome for landlords who don’t move quickly to start the eviction process when rent is not paid.
For an overview of the steps to follow to evict a tenant for nonpayment of rent in Texas, click below for an article I wrote in March 2008. Steps for Tenant Eviction in Texas.
I’ve been showing and previewing lots of homes in central Austin neighborhoods lately, and taking note of some of the horrendously dumb things people do to their house. Often, these are do-it-yourself remodel projects or (apparently) paid projects that fall into one of 2 main categories.
Category 1: What in the world were you thinking?
Category 2: Cart before the horse and/or, blind designer?
In the first category, I saw an added bath with a tub and a commode. Anything missing from that list? Yep, a sink. Someone added a half bath to the house that has a tub, commode and NO SINK! There is no space to add one either.
Still in the “what were you thinking?” category, someone cut out a door directly from a bedroom into the kitchen. This took me and my buyer a while to figure out because we first walked into the kitchen and noted that there was a bedroom door located in an odd place. It just didn’t seem like the right placement. Upon entering the room, a second door to that room led to a hallway. Standing in the hallway, all the rooms seemed like normal hallway rooms and we surmised that, for some reason, someone just wanted a quicker way from that particular bedroom into the kitchen. Luckily, as weird as that was, it would be an easy fix to restore the flow of the home back to the original layout by returning the wall to a wall in both the kitchen and bedroom.
Finally, in the first category, the add-on with the 6′ 8″ ceiling. I know it was 6′ 8″ because the standard-sized door frame allowed the door about a half inch of clearance. I’d need to check with City of Austin code, but I’m petty sure the minimum ceiling height for residential dwelling space is 7″2″, so that room addition is totally out of code and would have to officially be considered a closet or “storage”. This one’s a head scratcher because someone would have had to cut the 2×4 wall studs down to the shorter size on purpose when constructing the add-on. I checked the exterior and there was no roof-line issue that would have forced the shorter ceiling height. Someone just built it that way as a short add-on. That entire room is worthless from a price-per-square-foot price standpoint. Not only that, if I was doing a market analysis for a buyer, I’d subtract out the demolition costs of that add-on and/or a rebuild/fix. But for most buyers, why bother. Just move on to the next house.
On to Category 2: Cart before the horse and/or, blind designer?
Below is the breakdown of YTD home sales in Austin (Jan-Sep 2010) by MLS area. Of the 48 Austin MLS areas reported below, 18 are up from a year ago, 14 are down, and 16 are mixed. By “up” I mean all three metrics of average sold price, median sold price, and avergage price per square foot increased. By “down”, all 3 decrease. Mixed means there was at least 1 metric moving in a different direction from the other two.
Of the 18 Areas that are “up”, only 8 are up more than the 4.16% MLS-wide increase. This means that the average sold price increase of 4.16% was caused by only 8 individual MLS areas in Austin (areas 1N, 8W, BA, CC, EL, LN, N, and SWE). The rest of the MLS areas were either up less than 4.16% or were down.
It’s a pretty big chart covering the first three quarters of 2010. If you’re not sure where all the MLS areas are, and Austin MLS map is at the bottom, below the chart.
As usual, observations, comments and opinions are welcome.
The number of residential home sales in Austin continued to fall off for September. Even record low interest rates are not enough to motivate buyers. Most buyers who really need to buy already did so earlier this year. Looks like everyone else is hunkering down and waiting.
Let’s start with the year to date stats.
|Austin Real Estate Market Year to Date Jan-Sep 2010|
|Homes only (no condos, duplexes, etc) – Data from Austin MLS|
|Jan-Sep 10||Jan-Sep 09||Yr % Change|
|Avg $ SQFT||$115.67||$112.38||2.93%|
|Not Sold %||44.91%||42.58%||5.47%|
I start with the YTD stats because it’s easier to put the September stats into context if we first look at the first 3 quarters compared to the same 9 months a year ago. What we see above is that the number of sales for 2010 overall is just slightly below the same period a year ago. Hidden in the figures is the fact that much of 2010 was front loaded to the earlier part of the year due to the tax credit that drew first time buyers into the market earlier than they would have otherwise entered.
We see that the average and median sold prices are up year to date, but so is the number of failed sales listings (expired and withdrawn). Days on market is down to 69 average from 75 a year ago. This is counter-intuitive when viewed with the higher “not solds”, but is a reflection of a bifurcated market in which some homes sell quickly to waiting buyers and other languish, often without more than a few scattered showings. This is frustrating for sellers and agents as our margin of error in setting list prices is higher than normal because of the unpredictability of the market.
Let’s see what happened in Sept 2010 compared to Sept 2009.
As we’re all bombarded for one last night on radio, TV and our mailboxes with the offensive and intellectually insulting ads produced by maggot politicians seeking our votes, I thought it would be interesting to see what the world would be like if these scumbags had to follow the same Standards of Practice and Code of Ethics that we do as Realtors.
When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client.
This means instead of seeking power and wealth for yourself, Mr. and Mrs. Politician, you work toward the best interests of your “clients”, those being the constituants whom you are suppose to serve and represent.
REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction.
Stop telling lies about your opponent, about yourself and about the issues. You’re all worse than a bunch of 5 year olds. It’s embarrassing to watch your ads on TV. You all should be ashamed.
REALTORS® shall cooperate with other brokers except when cooperation is not in the client’s best interest.
Work together to solve common problems, not to feed your ego, your personal aspirations, and your pet projects.
Read more …