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.
|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|
|Avg $ SQFT||$115.72||$112.61||2.76%|
|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.
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.
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.