Austin Real Estate Market Suddenly Very Hot Spring 2012

by Steve Crossland, REALTOR in Austin TX on March 16, 2012 · 12 comments

Almost overnight, with little warning, the Austin real estate market has caught fire. We are encountering multiple offers and buyer frustration. Not everywhere, but in the popular neighborhoods. Let’s look at some Active/Pending stats for popular neighborhoods.

Circle C
27 Active Listings. Average Days on Market = 35
31 Pendings.  Average Days on Market = 32

Over half of all listings under contract. A normal ratio is about 1 of 5 listings under contract in a balanced market.

Southwest Austin 78749 Zipcode (includes Legend Oaks, Village at Western Oaks, Westcreek)
25 Active Listings. Average Days on Market = 88
49 Pendings.  Average Days on Market = 38
Double the number of homes under contract than there are available. This is an ASTOUNDING ratio reflecting a lot of pent up demand.

South Austin 78704 Zipcode  - MLS Area 7 – Zilker/Barton Hills
10 Active Listings. Average Days on Market = 126
16 Pendings.  Average Days on Market = 50
Like SW Austin, the Active/Pending ratio is inverted, with more Pending listings than Active.

Northwest Austin 78759
60 Active Listings. Average Days on Market = 59
51 Pendings.  Average Days on Market = 47
Nearly half of all listings under contract.

The ratio for the entire Austin MLS at present is 1 of 3 listings under contract, which is very strong overall, even in typically weaker areas like Manor and Hutto. What does this mean for the Austin real estate market?

Our Austin real estate slump, which began the second half of 2007,  may be over. Prices are increasing as demand increases. If this demand carries over into the summer, and job growth continues, we might be at the start of our next 4 to 7 year uptick, and we may have just turned into a seller’s market.

This also could be a temporary spike that doesn’t carry over into the summer selling season. We will need to see if it is a sustained surge or a short spike. Also, the increase in demand may just trigger a whole bunch of “sellers in waiting”, who have either held off or rented their homes, to list and sell this summer as the leases end or they decide to move up. That will increase inventory and perhaps balance the excess demand. It’s going to be an interesting Spring/Summer season, and I’m really excited about the possible end of the doldrums.

Meanwhile we continue to have a lot of difficulty with lenders. A deal we closed yesterday was delayed a couple of days because the lender suddenly wanted an IRS “receipted” copy of the buyer’s 2011 tax return. the accountant’s signed copy along with the Certified return receipt wasn’t good enough. They wanted something directly from the IRS. The underwriter decided this was needed a couple of days before closing.

Another of our buyers had to terminate a contract because the lender would not approve the income using a signed employment contract for the buyer’s new job in Austin. Bank wanted a paystub, which buyer obviously didn’t have as the job has not started. So, buyer will have to move to Austin, find temporary digs, start the job and get the first paycheck before buying a house. What a hassle.

So, we’re dealing with a lot of this sort of stuff with lenders, which, oddly, is reducing the already strong demand we’re seeing. And if investors, like Sylvia and I, could get multiple new loans again, there would be a lot more investor activity which always follows an upturn in the market.

I’ll try to increase the number and frequency of the Austin real estate market updates .I use to produce monthly but have been slack in doing since the market has just been slogging along in an uninteresting way the past couple of years.

{ 12 comments… read them below or add one }

1 Downtownliving March 16, 2012 at 4:12 pm

Well I was so glad to read your post today and what a great blog! I love the stats and hoping for the return of some life back to this real estate market. It looks strong downtown too as there are a lot of properties/condos selling within days of being listed except mine of course. But hoping for some traction in the next few months. Keep up the great insights!

2 Steve Crossland, REALTOR in Austin TX March 16, 2012 at 4:16 pm

Downtown,

Why are you leaving the Austonian? Seems like it would be a great place to live.

Steve

3 Downtownliving March 16, 2012 at 4:35 pm

The Austonian is great but for me it was short term and transitional living here in Austin. I love your blogs…think the information is priceless. :) Thanks for helping others with your info.

4 Michael Fontana March 16, 2012 at 5:13 pm

hi, Steve…
Surprising, yes… News, not to me… I met with Circle C owners in January, and then found out they had pre-listing offers before lifting a finger to prepare. Twice. Visited Travis Country last week – two offers at open house on Sunday. I think I saw like 14 houses for sale around this home, and most had contracts. Been called off a vignette job as offer came in overnight the day I was supposed to stage. Even had a seller in Pflugerville sell in under two weeks! I feel bad for my photographer friend, as he is losing business! He does not even get over to take pictures before the houses are receiving offers.
Now that Spring Break is over, it will be interesting to see if this is an ongoing trend, or just a lack of inventory fluke that sputters out when owners try the market again.

5 Todd Breen March 17, 2012 at 6:35 am

Great article Steve. I suspect Warren Buffett may have something to do with the ‘almost overnight’ change in the real estate market.

During an interview in late February, he said ‘I’d buy 100,000 single family homes right now if I could manage them’. Apparently when Warren talks, people listen! In one day, I spoke with 11 different people who just purchased or were buying homes, and calling us to manage!

I put a video of Mr. Buffett’s interview in my blog if anyone would like to see the interview:

http://www.homepropertymanagement.com/pbc-housing-market-update/warren-buffett-thinks-great-time-invest-real-estate/

6 Tim Thomas March 17, 2012 at 9:11 am

It’s been interesting watching my zip code – 78741 – since it has so many rental properties. I noticed over the past two years there have been a fairly decent number of properties for sale. Now there’s almost nothing. I wonder if this is some sort of pivot around the strong rental market.

7 Steve Crossland, REALTOR in Austin TX March 17, 2012 at 9:21 am

Hi Tim,

Currently in 78741 there are 16 Active and 15 Pending. So it’s a strong performer at present as well. I own a duplex over there and think the E Riverside corridor will be the next area to experience appreciation higher than the city average. Still a lot of old, crap properties imbedded in the area though. Rundown apartments, lousy condos. But the turnaround for that area has started. May take a decade or longer, but it’s too well-located to remain stuck forever.

Todd, thanks for the link. I had seen that clip before. Interesting how Mr. Buffet says that “management” is the main reason he can’t dive in. No easy way to manage all those properties. I wonder if we should send him a link to http://www.NARPM.org

Steve

8 Cedar Park TX Girl March 19, 2012 at 9:18 am

I know!

My sister is a real estate agent in Cedar Park and she said exactly the same thing.. Even new home sales are way up.. and seriously with the looooow interest rates, now is the time!

dee :)

9 vi March 19, 2012 at 11:05 am

Steve, do you think inventory from foreclosures/short sales as banks get their act together will affect this?

10 Steve Crossland, REALTOR in Austin TX March 19, 2012 at 6:27 pm

Hi vi,

No, I don’t think foreclosures in Austin will impact the market in any of these strong areas.

Steve

11 Amber March 26, 2012 at 2:21 pm

This is great news means our economy is going in the right direction!

12 Chris Adams June 15, 2012 at 11:10 am

There is no doubting one thing-Austin’s economy is on the move. My son is in the financial marketing industry and moved there earlier this year. He is doing very well and is able to buy the home of his choice.

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