When you read a news article about Austin real estate that reports average and median home prices, the values quoted are often those from total Austin MLS sales. Those sales figures are compiled from the entire Austin MLS service area, including suburbs, nearby cities as well as some far flung areas. The “Austin MLS” might more accurately be referred to as a “Central Texas MLS”.
Therefore, you might read in one of the “Best of” articles about Austin, that “The Average Sold price for single family homes in the Austin Metro area for 2013 is $314,300 and the Median Sold price is $235,000”.
Those values are represented in the green bars in the graph above. To those thinking of moving to Austin, a median price of $235K sounds pretty affordable. It means half of all houses in “Austin” sell for less than $235K. A buyer with good credit earning the Austin median family income of $65K annually, can qualify for a mortgage payment of $1,950 per month at 5%, or a $266K home. Austin seems like a sweet deal and a great place to live to an outsider reading about it.
If you’ve tried to buy a house in Austin lately, in an area of high demand and low inventory, such as Southwest Austin, you may have run into some competition. In fact, you most likely have. As of this writing, there are 43 Active listings and 84 Pending listings in SW Austin. I won’t go into a breakdown of what that means statistically, but let’s just call it a Mega-Seller’s-Market and leave it at that.
Other buyers want the same house you want, often the first day it hits the market. A new listing in South Austin 78745 that I showed a buyer a few days ago had a parade of buyers waiting in line when I got there, and more when we left. An offer I wrote today for a SW Austin home that came on the market 3 days ago has multiple offers and we’ll see how ours did tonight or tomorrow. It’s really, really crazy out there.
This type of market changes the way you have to approach your home buying effort in Austin. You are no longer “shopping” for a home, you are competing for a home. You are not a home buyer, you are a contestant. You are not trying to negotiate an acceptable offer with a seller, you are trying to beat your opponent(s), the other buyers, by making a better offer. Suit up, game on. And you’re not able to know what it will take to make your offer “better”, you can mostly only guess, then decide how high you want to jump.
This is disconcerting and frustrating for those unaccustomed to the stress. It can tie you in knots emotionally. It’s too much for some buyers, and they simply bow out of multiple offer situations, not wanting to compete at all. Others get it right away, put on a game face, and bring their A Game to the first offer, crushing the competition and “winning” a home on the first try. Still others, go through several failed offer attempts before they can muster up the fortitude and grit to throw down a wining offer. If you’re one who keeps losing, read How to Win Multiple Offers in Austin for some tips that will help you and your agent increase your chances of coming out on top.
Are we in a Bubble?
I’m not ready to call this a “bubble”, but this marks about 12 months now of very strong demand and shrinking inventory in many areas of Austin. Read more …
The Austin real estate market started 2010 on an upswing. Average sold price is up 5.39% from a year ago, median sold price is up 2.12%, days on market are down. In fact, every measured metric on the chart below moved in a positive direction except for median list price, which is down slightly, but of no consequence. Let’s have a look.
|Austin Real Estate Sales Market Update – January 2010|
|Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data|
|Dec 2009||Jan 2010||Jan 2009||Yr % Change|
|Avg $ SQFT||$115.01||$111.61||$108.34||3.01%|
|Not Sold %||53.92%||54.12%||60.41%||-10.40%|
So, is this good news? Maybe. I don’t think sellers should get too excited, and buyers need not start worrying about rising prices. Jan 2009 was a down month, so topping it is nothing to brag about. Nevertheless, I do think our Austin real estate market has sunnier weather ahead, at least for the first half of the year.
The extended tax credit and continued low interest rates will motivate buyers in the lower ranges. An improving job market and the return of good job news, (some of which was announced today with Facebook bringing 200 new jobs and a Solar Panel company bring several hundred more), will cause an already “ok” Austin unemployment rate to keep dropping through the summer, barring any terrible macro-economic setbacks in the national economy. Once interest rates starts rising, as we expect later in the year, that will frighten some additional buyers into getting off the fence for fear of missing out on the good rates.
I think the upper end market will be slower to come back as many of the former $500K to $800K buyers will, I think, scale back lifestyles and settle for less Austintacious digs. Mercedes Homes said as much during a lunch presentation I heard today. They’ve redesigned a bunch of new floorplans to accomodate what their research says will be a more frugal market in the $300K and up range, as buyers seek smaller, better quality homes instead of sprawling big layouts. Makes since to me.
Below are some additional charts and stats. Let’s start with the 23 month lookback chart.