Below is a chart breaking down the 2010/2009 sales comparisons by MLS Area for the Austin real estate market. This time I’m adding a couple of new things. First, there is color coding on each of the summary rows for each area. A green shade indicates “improvement” in the measured metric. I put “improved” in quotes because it’s debatable what that means, and for whom, so perhaps a better word to use would simply be “increase” toward seller’s market. Note that a decrease in Days on Market is an “improvement”, however, as it means homes are selling faster, so a negative number on DOM is coded green and vice-versa, whereas the other negative numbers are red. Confusing enough? I hope not.
Next, I added a new column called SP/OLP which is the Sold Price divided by the Original List Price. I think this is a useful metric to observe as it informs us of the gap between the original list price a seller was hoping to obtain and the ultimate sold price achieved. This is more useful to know than the more commonly reported metric of SP/LP (Sold Price/List Price) because it doesn’t disguise the price drops that occurred before the home eventually sold.
In other words, a home that started at a list price of $300K, was eventually dropped to $270K, and then sold for the $270K list price, would produce a SP/LP ratio of 100%, but a SP/OLP of 90%. The 90% is a more accurate measure of market strength or weakness in a given area. You’ll see below that some areas are right at 95% (which is pretty good) and some are below 90%, which is a tougher market requiring bigger price drops.
OK then, let’s take a quick look at the new format using the cumulative sold data for all of 2010 compared to 2009.
|All MLS||# Sold||Avg Sold||Med Sold||Avg SQFT||Avg PSF||Avg Days||Med Days||SP/OLP|
So, with the color coding, this allows a “quick glance” gleaning of which areas saw increases/decrease in the measered metrics across the board. We can see above, looking at the entire Austin MLS market as a whole, that the average sold price increased 3.78%, median sold also increased, by 2.63%, Sold Price Per Square Foot increase 2.04%, and homes sold faster when looking at Avg Days on Market. But we also see that 5% fewer homes sold (lower demand) and that the median DOM and the SP/OLP ratios worsened. This “mixed” market is in fact what most areas produce.
One last aside, if an MLS Area is mostly red all the way across, such as Area 10S, does that mean buyers should avoid that area? Absolutely not. This is a look in the rear view mirror and doesn’t necessarily predict the future or indicate a trend. Same with areas that did well in 2010. This is just a snap shop of what happened in the given year 2010 compared to the year prior. If you own a home in an area that had a dog year, your particular neighborhood or size/price of home may have perfromed differently, and that won’t be reflected in this type of macro analysis of area-wide stats.
OK, the entire Austin MLS is broken down by MLS Area in the chart below. As usual, questions, comments, observations are welcome.
I was at the TAR (Texas Association of Realtors) Winter Meetings in Austin yesterday. One of the events I dropped in on was the Professional Development Open Forum. It was announced at the forum that the Texas Association of Realtors is going to start providing a pre-license course for those thinking of obtaining a real estate license in Texas.
The course will provide an opportunity for those thinking of becoming a Realtor to get the straight skinny on what being a Realtor in Texas is really all about. This way, before you waste a bunch of money taking classes that don’t really teach you anything useful about succeeding as a Realtor in Texas (but which are required before you can obtain a Texas Real Estate License), you can decide if you’re willing to do what it takes to thrive in this profession.
This idea is a result of complaints from Texas Brokers about the the fact that most newly minted real estate agents are fairly clueless about and unprepared for the real estate career they just entered into. The state-required classes that are mandatory to become a real estate agent do not prepare one to become a successful practitioner. Those classes are designed to help you pass the real estate exam, that’s it. Your ability to pass the Texas real estate exam does not at all correlate with the actual skills and attributes needed to be a successful Realtor. In fact, few, if any, newly minted real estate agents are ready and able to write up a mistake-free sales contract, or even properly explain the real life implications of each paragraph of a standard contract.
This pre-license education makes sense to me. If was the instructor, I’d make sure those contemplating real estate as a career know about the extremely high failure rate and why the failure rate is so high. I’d make sure they know the truth about what “business” you are really thinking about entering. (hint: it’s not really a “real estate” business). And I’d make sure you understand the harsh financial realities of being self-employed with a highly unpredictable monthly income stream.Let’s see what it takes to become successful Realtor.
what does it take to succeed as a Realtor ?
The Austin real estate market finished 2010 with increased overall sales prices. The market is roughly a bit higher than the peak 2007 values. See the graph below for an illustration of Austin home sales values from 1999 through 2010.
The graph can be deceiving though. It simply represents the cumulative data from all MLS sales. Certainly, most homes in Austin are at or still below the 2007 values. Some are significantly below the 2007 values, especially in the high end at $500K and above. For the entire year of 2010, 48% of all MLS listings departed the MLS as a failed sales effort (expired or withdrawn). Anytime half the listings are not finding buyers, it’s a tough market for sellers overall.
On the flip side, 2010 was not exactly a “buyer’s market” in Austin. There was little to no “low hanging fruit” to be plucked from the market. Sellers were, for the most part, not crying Uncle and were not dropping prices drastically. Yes, we have anecdotal examples of some good deals that were had by some buyers, but most buyers were simply frustrated at the difference between the perceived “buyer’s market” and the actual reality of trying to find a great home at a great price.
The only winners in 2010 were the sellers who were fortunate enough to sell quickly at an acceptable price, and the buyers who allowed for themselves enough flexibility and patience to eventually find the right combination of motivated seller and acceptable home. It was not a good year for picky buyers with narrow parameters, as they kept running into stubborn sellers unwilling to negotiate to the degree buyers thought warranted by market conditions.
Year 2011 will be more of the same in the Austin real estate market, but volume will pick up and I believe sellers will start enjoying a slightly better market. 2012 is the year that things will really bust loose again, in my opinion, but we’ll see. 2011 may have a surprise upswing in store if job growth continues to pick up in Austin. More market stats below.