Austin Real Estate Market Update – Oct 2010 Sales

by Steve Crossland, REALTOR in Austin TX on November 17, 2010 · 9 comments

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
# Sold 1229 1125 1759 -36.04%
Avg List $265,206 $280,552 $250,276 12.10%
Med List $202,645 $209,900 $189,875 10.55%
Avg Sold $253,053 $266,034 $239,897 10.90%
Med Sold $195,900 $200,000 $183,000 9.29%
Sold/List % 95.42% 94.83% 95.85% -1.07%
Avg SQFT 2237 2283 2101 8.66%
Med SQFT 2008 2062 1888 9.22%
Avg $ SQFT $113.12 $116.53 $114.18 2.05%
Avg DOM 77 86 70 22.86%
Median DOM 55 66 47 40.43%
# Expired 691 701 528 32.77%
# Withdrawn 1051 985 753 30.81%
Not Sold 1742 1686 1281 31.62%
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.

Austin Real Estate Sales Stats – YTD Oct 2010
Homes only (no condos, duplexes, etc) – Data from Austin MLS

Jan-Oct 10 Jan-Oct 09 Yr % Change
# Sold 14,978 15,761 -4.97%
Avg List $267,253 $255,845 4.46%
Med List $199,900 $198,258 0.83%
Avg Sold $256,324 $244,811 4.70%
Med Sold $195,187 $190,200 2.62%
Sold/List % 95.91% 95.69% 0.23%
Avg SQFT 2215 2174 1.89%
Med SQFT 2020 1968 2.64%
Avg $ SQFT $115.72 $112.61 2.76%
Avg DOM 70 75 -6.67%
Median DOM 45 47 -4.26%
# Expired 4822 4594 4.96%
# Withdrawn 8140 7071 15.12%
Not Sold 12962 11665 11.12%
Not Sold % 46.39% 42.53% 9.07%


Year to date the market is showing a more reasonable level of improvement. That said, if you talk to listing agents, showings on most listings are very slow and a lot of homes are getting pulled from the market. In the first chart, note that in Oct, 60% of all listings that departed the Austin MLS were failed sales efforts. That’s a lot of homes not selling. Year to date, the “not solds” are at 46%, which is still almost half of all listings in 2010 not selling. That’s a tough market.

Below is the last 32 months of sales in Austin. This shows the jagged ups and downs in our market monthly.

Austin real estate stats - last 32 months sales

I use the above graph to put the market into perspective. We can’t ever look at a single month of pricing up/down movement and decide that it means anything, especially with so many external influences, including lagging ones such as the tax credit hangover, affecting the market.

What would be informative though is if we see a sustained trend, month after month, of price improvement attributable to natuarally occuring market demands, which normally flows from job growth. As long as price shift are merely a result of market interference from external forces, we don’t really know where we are heading. That said, we do see what could be the start of a trend, breaking out of the range that prices have been bouncing around in for the past 2+ years, but it’s too soon to know, and we’d want to see lower unemployment and more relocation of new employees into Austin occurring at the same time to know that it’s real.

Finally, below is a new graph which I created to illustrate the price bracket shift that’s responsible for the increase in median and average sales prices, but I’m not sure that the graph makes it as plainly evident as I had hoped. But here it is anyway. You have to study it a bit but you should be able to see how the lower end of the market, as a percentage of total sales, has decreased after June 2010 while upper end ranges have increased.

austin real estate sales by price range

Even though it may not seem like much, that small difference in the size of the $400K+segment of the market pulls average prices up quite a bit. Meanwhile, that big bubble of green at the top was the tax credit induced increase in lower priced homes.

As usual, questions, comments and observations are welcome.

{ 9 comments… read them below or add one }

1 Tim November 17, 2010 at 6:30 pm

Do you think home equity loans had an effect on our market even without the housing bubble? I wonder if perhaps buyers have become spoiled by the idea that someone would have the resources to pour $20-40k in updates into a 50 year old house before attempting to sell it. Obviously the old homes that look like brand new homes are selling. Do you think this is related, or do you think there weren’t as many home equity loans in Texas and the upgrades are basically on par with what you would expect an average home owner to do?

2 Steve Crossland, Austin REALTOR November 18, 2010 at 1:24 pm

Hi Tim,

We see this sort of stuff no matter the market, but I think the proliferation of cable do-it-yourself shows has caused more people to do their own projects than was the case 20 years ago. I think that’s the cause more than home equity loans.

Steve

3 Chris November 18, 2010 at 5:29 pm

If you normalize the last graph to percentages instead of units, it will better show the point you are trying to make.

4 Nate November 19, 2010 at 6:37 am

The lower end in Westlake is warming up. Plus the amount of service trucks in the area on a given day is through the roof.

5 Steve Crossland, Austin REALTOR November 19, 2010 at 8:52 am

A foreclosure in Westlake near our house just came on at $299K and already has 5 offers. They’re gathering offers for the first 4 days, through Sunday, so it won’t surprise me if they end up with a dozen or more offers.

The house is a real junker, very outdated, “apartment grade” throughout with the old brown stained cabinets and Formica counters, and possible slab issues.

But at that price-point in that location – walking distance to all three schools – it’s the lowest “entry fee” to the neighborhood that can be found in a single family home in that location so the condition almost doesn’t matter to buyers who could never imagine getting in to Eanes at $300K.

Another one around the corner from us had multiple offers last month in the mid-$400Ks and also sold immediately. But another one was withdrawn at $399K after getting no action on the market so, even in hot pockets, success is not guaranteed.

6 Grand Haven Homes November 22, 2010 at 4:22 pm

Great article! Although time on market is extended, our homes are, for the most part, retaining their values. New jobs and relocations into the Austin area would certainly help increase sales velocity. Thanks for the insight.

7 Craig Decell November 22, 2010 at 6:20 pm

In the Frisco Area of Dallas we are seeing some of the same things that you guys in Austin are seeing. Overall Texas hasn’t done to bad in the current economic conditions. Great article.

8 Steve Crossland, Austin REALTOR November 23, 2010 at 8:29 am

We all focus on prices so much, but it’s interest rates that really matter when considering the true cost of owning a home. I’m somewhat surprised that the sub-4% rates we’ve seen at several closings haven’t motivated more buyers. 4% puts an $8K tax credit to shame in terms of true value. It’s not even a close contest.

I’m also surprised at how price sensitive pre-approved buyers are and how some are willing to give up and NOT buy because they deem the market not flexible or not. They are focusing on the prices instead of the interest rate. It’s difficult to get buyers to understand the immense long term value of that low interest rate, for some reason.
Steve

9 Woody November 25, 2010 at 3:51 am

Thanks for that article about weird things people do to their homes, that was very funny.

Regarding 4% rates and affordability, I think buyers worry that they won’t own the home for all 30 years of the mortgage contract. The national average is around 5 or 6 years and I don’t know many people who have lived in their homes longer than that. So what happens when today’s buyer has to sell their home in 5 years when rates are at 6% or higher? Unless wages and employment improve substantially by that time, home prices would be lower. While it’s true that the next home they wish to buy would also be priced lower, they may not be able to buy it because they lost their equity already. Price matters a great deal in this case – you want that downside protection. This mindset is very different from long term investors like yourself who focus on cash flow.

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