We all know that some Austin MLS listings don’t sell. The reasons vary, but when demand is insufficient to absorb supply, the prettier better priced homes win, and the sellers who love their homes, and express that love and devotion through too-high list prices, get to continue the romance.

Let’s see what that looks like when put on a graph.

This is one of my favorite real estate statistical charts. The relationship between the number of successful sales efforts and the number failed sales efforts in any given market tells us a lot. This graph shows what happened to the relationship of success/failure of Austin’s MLS listings immediately following dot.com boom, 9/11 in 2001, and the subsequent bleeding out of jobs over the next few years. The real estate market became saturated with homes for sale as people had to leave Austin to find jobs, and new people stopped coming.

If you’ve seen the Austin real estate sales history graph that I post every month, you’ll know that home values stayed flat from 2002 through the end of 2005. Volume held steady during that period, but prices were flat while the rest of the country had its massive real estate bubble.

For Austin, there was no bubble. Instead, we suffered with too many homes for sale, not enough buyers, and thus in 2003 the number of listings that departed the Austin MLS as failed sales efforts (Expired or Withdrawn) actually exceeded the closed sales for the entire year. Austin sellers had it rough in 2003.

We’ve recently seen this inverted Sold/Not Sold ratio a lot during recent months throughout 2008 and 2009, but neither year ended with more total failed sales than successful sales. So, in that regard, these past couple of years haven’t been as bad as 2003.

Wanna know what happened to all those unsold homes in Austin between 2002 and 2005, back when foreclosing or short selling was still such a shameful event that sellers knuckled down and figured out how to hang on? A bunch of them became rental properties. This in turn caused a severe over-supply of Austin’s rental home market. Simultaneously, the in-migration that feeds the rental market stopped cold, and the chart below shows the result.

When people can’t sell their homes, and still have to move, and are too proud or unwilling to go into foreclosure, the home becomes a rental. At least, that’s how it use to be. And the above chart explains why 4 bedroom homes that leased to Dell employees in Round Rock for $1,500/mo. in year 2000 were lucky to fetch $1,250 by 2004. Our rental home market in Austin is still climbing back slowly.

Returning to the subject of Not-Solds, in January 2010 we had an inverted Sold/Not Sold ratio. Sylvia and I continue to run into large numbers of over-priced listings as we help buyers look for good values. Some of these listings are actually selling for too much as some buyers operate under the odd believe that it makes sense to pay $16K too much for a home in order to receive an $8K tax rebate. April 30th is going to be a wonderful day, when government meddling in our real estate market ends, hopefully for good, and the over-motivated buyers leave the market.

Meanwhile, I’m not sure what to make of a real estate market that produces a 5% increase in sold prices, and improvement in almost every performance metric while simultaneously giving the finger to 54% of the departed MLS listings, which failed to sell. When more than half the listings in a market cannot find buyers, prices should be dropping, or at least staying flat, not rising 5%.Blame it on the tax credit buyers, bent on trading negative equity for $8K in the pocket.

So it’s with sober caution that we advise current Austin buyers to be willing to walk away from over-priced homes, no matter how frustrating it might feel when it seems inexplicably difficult to find properly valued homes. But it’s not going to surprise me if Austin prices continue to rise through May, then start dropping again, or flatten out, as incentives go away and interest rates rise and we begin the slow return to normalcy in market behavior.

If you’re a seller, get your home on the market, now, and you might get lucky and snag a buyer willing to pay top dollar or more.

Someday in the near future, I’ll be able to post a chart that shows increasing separation month over month of the Sold vs. Not Sold listings. That, to me, will be an indicator that the market might be gaining true, valid strength and returning to normal behavior, where Not Sold equal less than 40% of all departed listings.

The rental market for houses in Austin is still slowly improving, climbing out of the huge dip we took after the tech bust and 9/11. For October 2009, average and median rents are both up about 1%, but homes are taking longer to rent, averaging 42 days on market compared to 38 a year ago in October.

This is a macro view though. In talking with other property managers in Austin, it’s not uncommon for some homes to be renting for the same or less than a year earlier, while others can do a bit better. It’s really a function of the number of competing homes and the location of the property. It took 45 days for me to rent a central Austin home in 78704 recently and we had to take $50/mo. less than a year earlier. Had I accepted large dogs and/or poor credit, it would have rented right away, so rental criteria is also a determining factor in how long it takes and the amount attainable.

October stats are listed in the chart below.

Let’s have a look at 2009 year to date through October, compared to the same period in 2008.

For the year, the median has dropped a bit while the average remains up about 1%. Remember though, 1% is only $14/mo for the average rental home in Austin. That’s about 1/3 of an average day’s rent, so nothing to get excited about. Days on market in 2009 are much higher than 2008 overall, which drives rents down as owners and property managers drop rents seeking faster rental. For $1,250 rental, it only has to remain vacant and extra 2 weeks to lose all of the additional rent gained over a faster $1195/mo. attempt, so landlords are always trying to find the market rent that will get it rented in an acceptable amount of time.

Finally, below the the history of our rental market average and median prices for rental homes in Austin. We’re still below our 200/2001 peaks rental rates.

As usual, questions, comments and observations are welcome.

The Austin rental market continues to be strong.Average and monthly rents continue to rise. Days on market is low. But, even with recent gains in prices, we are nearing the end of a decade in which rental prices for landlords will have remained virtually flat. Let’s check the historic graph below before we get into current figures.

If we draw a straight line from 1999 to now, and you own the average rental home, and in 1999 you assumed a 3% per year increase in rents over time, that increase didn’t happen, but your property taxes, insurance and maintenance expenses sure did go up a lot. What we see above isn’t good from a landlord standpoint, but if you’re a renter, you’ve had a nice 10 year run of good rental values in Austin. At present, our rental values are still below where they were in the dotcom boom era of 2000 and 2001.

And if it’s any consolation, had you invested your real estate money in the stock market in 1999, you’d be a whole lot worse off than a decade of flat rents. At least real estate values have come up. We’ll look at that in a minute.

Currently in Austin, average rents for single family homes are about $1,500 per month and the median rents are $1295/mo. See the chart below.

For the most part, we’re not having any trouble getting our homes rented. Occasionally, just as it is in the sales market, we’ll have a slow mover, but not too often.

Average rents in Austin have taken a slight dip for the first quarter of 2009. The number of rented homes is up 11% over the same three months a year ago, no doubt due to the fact that many sellers are opting to rent instead of dropping prices below their bottom dollar. This creates additional rental inventory, which gives renters more homes to choose from, and prevents prices from increasing.

Personally, I’ve leased 4 or 5 homes in the past 2 months, and the market is really spotty. One house I leased central received 4 applications in 2 days. Another one I leased north central leased immediately for $1,650 a year ago, but took about 45 days to lease for $1,595 this year. Another one in Western Oaks leased for $1,550 (same amount as last year) in about a week. A different home in Western Oaks, also listed at $1,550, and newer and in better condition, has not received any showings in more than a week. It’s not an easy market to predict right now, much like the sales market. 

The stats chart is below, followed by the 1999-2009 Austin leasing history graph. 

As noted in the chart above, average rents in Austin (for single family homes) are $1,364/mo., down 1.45% from $1,384/mo. the same quarter 2008. Median price has fallen from $1,225 a year ago to $1,200 this year, meaning half of all homes in Austin rented for $1200 or less. 

Below is a graphical representation of the Austin rental market from 1999 through March 2009.

See what happened (below) after the tech bust and 9/11, back in 2001? We are not going to see that sort of dip, but I think we might be flat this year before prices keep rising next year. One thing we have working against us in the residential leasing of single family houses in Austin is that the apartment vacancy rates are rising and will continue to rise this year due to over building of new apartments. That will create move-in specials and incentive deals offered by the apartments that siphon away our house renters who normally would not want an apartment. 

Note above that renters are still paying less in average rents than they were in the year 2000. That’s really amazing. Renters have had it good in Austin for many years now.

I was going to write more about the typical sales/rent price ratios seen over time (1%) compared to what we see today (0.7%), but it’s turning into an entirely new topic as I work on the graphs, so I’ll end this one here and invite you to subscribe to the Crossland Team blog to stay current on Austin real estate market stats and other related stuff.

As always, comments and questions are welcome.

The rental market for single family homes in Austin continues its march upward. Rent prices increased about 6% in 2008 over 2007. Remember though that the 2008 average rent amount of $1,424 per month in Austin is still less than the year 2000 average rent of $1,497/mo. and the year 2001 peak of $1,524/mo. The graph below shows the historic average and median rent values for Austin from 1999 through 2008. The big dip you see in the chart is a result of the tech bust, 9/11 and the resulting job losses, weak economy and over-supply of rental homes that resulted in all the failed sales efforts from 2002 through 2004. You can see that our rental market bottomed out in 2005 and turned upward in 2006 and has continued that trend for three years now. But most rental homes in Austin still rent for less than they did in 2000 and 2001, so renters have had a good run.

Will the Austin rental market continue its upward climb in 2009? It’s hard to know for sure, but I think it might level off a bit for 2009. Demand for rental homes will increase due to the non-buyers who are choosing to not buy a home and instead becoming or remaining renters. But that is offset by the slower job market, and the increased rental supply provided by sales listings converted to rentals after not selling, as those sellers refuse to lower the price further and instead decide to simply hold off on selling for a year or two until the sales market rebounds. Also, although the rental stats look really good for landlords, those of us in the business of renting properties know that we are not always able to increase rents and not all homes rent as quickly as the stats suggest.

Finally, apartments are over-built again in Austin and there will be a large number of just completed new apartment units coming online in Austin in 2009, as well as new condos converted to rentals due to slow sales. The move-in deals and concessions offered by apartments tend to siphon away at least some of our home renters who ordinarily might not consider an apartment but can be swayed by economic incentives such as three month’s free rent, $99 deposits and free washer and dryer. So, while demand will increase, supply will be increasing by even more.

I just mailed lease renewal notices out for 4 rental properties I manage, and we did not raise rent on any of those particular properties. It’s much cheaper and more prudent to retain a tenant at the current rental rate than to cause them to think about moving because of a $50 or $100/mo rent increase.

December rental stats, Year to date rental stats, and a breakdown comparing 2008 to 2007 by MLS area are all posted below.

You’ll note that in December rentral rates are less than the average for the year, and the increase over the prior year is smaller. In general, landlords can fetch higher rental rates during the Spring/Summer months than in the Fall/Winter months. I ran a comparison several years ago and determioned that, on average, homes leased bewteen Mar and August rent for about $50 more and about 10 days faster than the same type of homes rented from September through February. This is why, for the properties we own and/or manage, we generally attempt to keep the lease ending dates timed for the Spring/Summer cycle. That isn’t always possible, but it’s something we attempt nonetheless. 

Below is the year to date totals for all of 2008 compared to 2007.

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Some are suprised to know that there are actually failed rental efforts, as well as failed sales efforts. You all know the terms Expired and Withdrawn as related to sales listings, but the bottom of the chart below shows that the same thing happens in the rental market. Usually, the reasons are exactly the same for the rental market as in the sales market. The house is over priced and/or in poor condition. Often, an uneducated owner encounters an inexperienced Realtor, and together they put a home up for rent at the owner’s “must have” price, which is usually incorrectly determined by the owner’s mortgage payment. The problem is, the rental market is ignorant of and unconcerned with your mortgage payment. It is a 100% irrelevant number that is completely useless in determining a rental value for a home. Most rental homes in Austin that were purchased with 20% or less downpayment in the last 3 to 5 years will produce a $300-$600 per month negative cash flow after management fees, leasing expenses, repairs and maintenance, and vacancy loss are all factored in. 

We do see above that the number of failed rental efforts increased in 2008, just as in the sales market, so although I would characterize the rental market in Austin as “strong”, the market still punishes those landlords who do not know how to price, prepare and properly market a home.

Below is the Austin rental market breakdown comparison for 2007/2008 by MLS area. It’s important when reviewing and interpreting stats like these to understand that we are informed by a combination of metrics, and not simple average rental price. For example, the first area below is Central Austin MLS Area 1B. You’ll note that the average rent is up 7.58%, the median rent is up 10%. Does that mean that a typical average size home of 1983 square feet should rent for $200 more this coming summer than it did last summer? No, it doesn’t. If you look at the average sqft size for homes in area 1B, you’ll see that the size increased in 2008 by 0.5%, and that the average rented price per square foot actually decrease by 1.75% from $1,27 psf last in 2007 to $1.25 in 2008.

These stats are usefull to observe macro trends, variances in market behavior across different areas in Austin, and to gain a general since of what is happening in Austin, but each individual home is still unique and different and so it’s a mistake to draw conclusions about specific homes from the general data.

I cover this because I recently encountered a landlord who wrongly thought that her home should lease for the “average square foot” lease price in the neighborhood. Well, her home was almost twice the size of the average home in the neighborhood, so the “average square foot price” did not apply to that specific home. 

An MLS map is below the chart if you aer not familiar with Austin’s MLS areas. As usual, questions, comments and thoughts are welcome.

Austin TX MLS Map

At my monthly Property Manager’s luncheon yesterday in Austin, the general consensus among the 30+ property managers in attendence was that the leasing market has taken a nose dive since September. The number of renter calls has really slowed down. One manager remarked “I keep calling my own phone to make sure it’s working”.

Indeed, the Rental market seems to have slowed down, but the market stats don’t make that obvious. You’ll just have to take my word on it. So treat this prelude to the stats report as an asterik, noting that some homes are in fact leasing slower and for less money than a year ago, even if the general overall stats for October seem to be as good or better than a year ago.

So, let’s take a look at the October stats below, and notice that the average rents in Austin are up 3% over October last year. Median rents are the same, which is common for rentals, as the median doesn’t move often. Days on market look good at 31 average and 23 median. The average and median prices per square foot , however, are down. This is more in line with what the leasing agents and other property managers are reporting. The number of expired lease listings is up and the number of withdrawn listings has more than doubled from a year ago. See the chart below.
 

So in a market in which the phones are not ringing and inventory is building (from failed For Sale properties being converted to rentals), price drops and incentives are the only cure (assuming there are no condition issues). I had a house listed at $1,395 with ZERO showings for 1 month. We dropped it to $1,275 (for the first 6 months), which represents a $720 rent incentive, and it leased immediately thereafter. That $720 is equivilent to 16 days of vacancy at $1395, so as we approach the current tenant’s move-out date at the end of November, we had to get more agressive.

Below are the year to date leasing stats for Austin 2008 through October compared to 2007 Oct YTD.

Note that the year to date improvements are much greater than October alone, which tells us that October was a much weaker leasing month than the prior months of 2008, and that the market is slowing down disproportionately to what we’ve experienced through the Spring and Summer 2008, compared to 2007. In other words, 2008 looks like it will be another up year, but some of the Spring/Summer strength is going to be eroded as we finish the year.

The graph below shows where the Austin rental market is with respect to its historic patterns. The graph tells a self explanatory tale. The rental market in Austin tanked after 9/11, and didn’t start upward again until 2006. We are still experiencing a slow climb up, but notice that our 2008 average rental rates are still lower than the rental rates 7 years ago.

The Austin TX rental market continues to do well overall. Rents are steadily rising for the third year in a row after falling for 4 straight years (2002 through 2005). Average rents for homes in Austin for July 2008 were $1,493 per month. Year to date the average rent is $1,425. the graph below shows nearly the past 10 years of Austin’s rental market and our ups and downs.

The rental market is helped now by the fact that fewer renters can qualify to purchase homes, which increases demand. The easy loans that renters were able to obtain from 2002 through 2007 are gone. You need a down payment and decent credit to buy a home now, as it should be.

The chart above shows the past decade of the ups and downs in Austin’s rental market. Despite three years of gains, the average and median rents are still lower than they were in 2000. Yes, that’s right, rents are lower still today than they were 8 years ago. Austin renters have had a great ride, while landlords have been nailed with higher property taxes, insurance costs and repair costs.

I just rented a home I own for $1,225 after an extensive remodel. I rented the same home, in average condition, for $1,325 in 2001. Rents are still very specific to location, price range and condition. We just rented a luxury home for $2,295 that rented for $2,495 a year ago. We simply did not have the number of showings needed to fetch the higher rent this time, and we disallowed large dogs.

Below are July rental stats chart and the year to date stats chart. I’ve added some color formatting to the charts this time. Green fields indicate numbers that are moving in a direction positive for landlords.

. Austin Rental Market Update - July 2008 . Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data . Jun 2008 Jul 2008 Jul 2007 Yr % Change . # Rented 733 884 813 8.73% . Avg List $1470 $1504 $1385 8.59% . Med List $1300 $1295 $1250 3.60% . Avg Rented $1457 $1493 $1378 8.35% . Med Rented $1300 $1295 $1225 5.71% . Rented/List % 99.12% 99.27% 99.49% -0.22% . Avg SQFT 1912 1949 1845 5.64% . Med SQFT 1756 1827 1756 4.04% . Avg $ SQFT $0.76 $0.77 $0.75 2.67% . Avg DOM 25 23 27 -14.81% . Median DOM 16 17 20 -15.00% . # Expired 50 39 38 2.63% . # Withdrawn 68 74 90 -17.78% . Not Rented 118 113 128 -11.72% . Not Rented % 14% 11% 14% -21.43%

Below are YTD rental stats for July.




As usual, questions, comments and observations are welcome.

Homes in Austin are renting for 8% more than last year, on average. Average rent price for homes across the Austin Metro area was $1401 per month for March 2008 compared to $1295/mo the year before. The Median leased price remained about the same at $1200. Homes are renting fast this March. The average days on market was down to 37 days from 42 last year. The Median days on market was 26 compared to 28 days last year, which means half of the rental homes in Austin that leased through the Austin MLS rented in 26 days or less, and half took more than 26 days to rent.

The average rental price per sqaure foot is up almost 6% to $0.73 compared to $0.69 last year. The average size rental home in Austin was 1915 sqft and the median size was 1794 square feet.

The number of homes rented was down about 10%. More renters are renewing leases as fewer can qualify for home purchases than in the past several years. This is good for landlords. Note that our average rental rate of $1401/mo for March 2008 is still lower that the average of $1497/mo that renters paid in the year 2000 and the $1524/mo renters paid in 2001 before Austin rents tumbled for four years and bottomed out at $1235/mo in 2005. So we’re still trying to climb back to where we were 6 or 7 years ago.

Below is the data chart for March Rentals in Austin. Further below is a year to date chart, breakdown by city, and a historical graph of rental rates in Austin from 1999 through the end of March 2008. As usual, comments and questions are welcome.

Below is the Year to Date Comparison chart.

Below is a breakout by city. Notice that Austin-proper still commands the highest rents. Renters willing to be further out can get a lot more house for their money.

Below is a historical graph of rental rates in Austin TX. The graph speakes for itself. We boomed through the end of the 1990s until the tech bust and 9/11 in 2001, then the market tanked for 4 years until we finally started seeing an upturn in rental rates again in 2006.

For 2007, the Austin Rental Market continued to see gains in average and median rental rates for single family homes. But we still lag behind the rental rates landlords enjoyed 6 and 7 years earlier, if you can believe that. The graph below shows where we were in 1999 through 2007. You can see the huge 4-year plunge rental rates took from 2001 until we started back up in 2006 and 2007.

The average rental rate for a single family home in Austin during 2007 was $1344 per month, up 7% from $1256 in 2006. The average sized rental home was 1883 square feet. The median rental rate for 2007 was $1200, up 4.3% from $1150 in 2006. The average rental price per square foot was up 4.4% to $0.71 in 2007. Average days on market improved to 45 days from 54 days in 2006. And median days on market fell to 33 days in 2007 from 43 days in 2006.

All said, another good year heading in the right direction for Austin landlords. See the graph below.

Below is a chart breaking down the 2007/2006 metrics.

I’m still having a lot of trouble extracting stats from our MLS system following the switch to new MLS software, which is why I’m so behind, and why I don’t have breakdowns by MLS Area. It’s really frustrating not being able to run stats the way I have for the past 2+ years. Especially knowing from my web traffic that the stats are among the most read blog articles. Nevertheless, I’m posting what I have and hoping that the bugs will be ironed out of our MLS software soon. As usual, feel free to post questions or comments about the leasing market.

The Austin Rental Market keeps chugging along. Not much new to say for the stats report this month as the steady climb in rents continues. Average rental rate is up 5.7% from a year ago, to $1354 (though down from last month due to our seasonal shift). But remember, average rents in Austin are still not yet back to the year 2000 rates. Stats are below. I did a breakout this month by city just to include something new. As usual, questions and comments are welcome. Sales stats will be coming next.

Below is a previous month and Year-to-Date comparison.