Austin Real Estate Market Update – July 2009 Stats

It’s getting real hard to write about the Austin real estate market when month after month it just keeps doing what is expected, treading water overall, doing well under $200K, especially close in, and still soft in the $400K+ price ranges. That really sums it up, month after month. At the beginning of the year I predicted Austin would be down 3% to 5% overall this year, and we’re still on track for that.

For July, the average sold price compared to July 2008 is down about 4%, a bit more than the 3% average we’ve been seeing each month, but not a surprise. Median sold price is down 1.5%. Average price per square foot is down 5% from a year ago. Days on market is up to 71 average and 44 median, which are not bad numbers, but still worse than a year ago, which was worse than the year before. See the chart below for the previous month and pevious year comparisons for July.

Austin Real Estate Sales Market Update July 2009
Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data

Jun 2009 Jul 2009 Jul 2008 Yr % Change
# Sold 2031 1950 2017 -3.32%
Avg List $264,959 $259,167 $269,724 -3.91%
Med List $206,000 $199,900 $203,000 -1.53%
Avg Sold $254,059 $249,560 $260,832 -4.32%
Med Sold $200,000 $195,000 $198,000 -1.52%
Sold/List % 95.89% 96.29% 96.70% -0.42%
Avg SQFT 2221 2188 2166 1.02%
Med SQFT 2012 1985 1962 1.17%
Avg $ SQFT $114.39 $114.06 $120.42 -5.28%
Avg DOM 77 71 61 16.39%
Median DOM 48 44 39 12.82%
# Expired 392 476 537 -11.36%
# Withdrawn 679 825 881 -6.36%
Not Sold 1071 1301 1418 -8.25%
Not Sold % 34.53% 40.02% 41.28% -3.06%


The year-to-date chart is below. For the year Austin Average Sold price for houses is down 2.96%, median is down is dead even at 0% change, and average price per square foot is down about 5%. Our “not sold” are holding at 42%. See below for the details

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Austin Real Estate Market Update – June 2009 Stats

austin-sales-market-last-16-months-200906

We’re at mid-year (June 2009 stats) for the Austin real estate market stats, and still the Austin real estate market is hanging tough. We continue to see stubborn bouncing up and down from month to month, as the graph to the left shows (click to enlarge), but the overall yearly trend is holding steady at around 3% below last year’s YTD.

Let’s look at the breakdown of the Austin single family home sales for June 2009:

• Number of homes sold is down 9% (was down 27% last month) from 2,178 June 2008 to 1,986 June 2009.  This is a small decline compared to what we’ve been seeing for the past year, in which most months decline by more than 20% over the year before.

• Average list prices in Austin were down 2% over the same month last year to $265,868.
• Average sold prices in Austin were down 2.9% over the same month last year to $254,924 from $262,512 last year.
• Median sold price was up slightly (0.11%) to $200,500. Last year in June it was $200,278.
• Average List to Sold price ratio is 95.88%, down slightly from 96.40% the same month last year. Note that this reports the sold price compared to the last list price, not the original list price.
• Avg sold price per square foot is down almost 7% to $115 compared to $123 a year ago in Mar.
• Avg days on market is up 16 days (26%) from 61 last year to 77 this June.
• Median days on market is up 14 days (33%) from 36 days last year to 48 June this year.
• Number of “Not Sold” (exp or withdrawn) is down 12% over the same month last year, to 34% of all removed listings compared to 36% for the same month last year.

The chart below shows the June stats for 2009/2008, plus last month’s stats.

Austin Real Estate Sales Market Update
Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data

May 2009 Jun 2009 June 2008 Yr % Change
# Sold 2060 1986 2178 -8.82%
Avg List $274,380 $265,868 $272,312 -2.37%
Med List $203,037 $207,000 $208,250 -0.60%
Avg Sold $265,878 $254,924 $262,512 -2.89%
Med Sold $199,788 $200,500 $200,278 0.11%
Sold/List % 96.90% 95.88% 96.40% -0.54%
Avg SQFT 2154 2224 2135 4.17%
Med SQFT 1945 2016 1955 3.12%
Avg $ SQFT $123.43 $114.62 $122.96 -6.78%
Avg DOM 61 77 61 26.23%
Median DOM 36 48 36 33.33%
# Expired 516 390 530 -26.42%
# Withdrawn 598 679 691 -1.74%
Not Sold 1114 1069 1221 -12.45%
Not Sold % 35.10% 34.99% 35.92% -2.59%

Below is the Year to data stats for the Austin sales market.

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Austin Real Estate Investing – Then and Now

Since the end of WWII, rent prices in the U.S. have run parallel to relative sales prices consistently over time. By this I mean that a $60K home would normally rent for about $600 per month, or 1% of its sales value. The chart below illustrates the gap in sale to rent value ratios that has developed over the past 10 years in Austin in a certain class of home. I limited the stats to what I believe is the “meat and potatoes” or “bread and butter” rental stock. Those are homes between 1400-2200 square feet in size, minimum 3 bedroom, 2 bath, 2 car garage and a maximum 4 bedroom, 3 bath, 3 car garage. 

Of course there are rental properties outside these parameters, but for an investor following the approach we follow – to stick with good, basic homes that will always attract good average renters –  these are the homes that accomplish that. So the chart below shows both sold and rented homes in Austin that fall into the above profile of basic rental stock. 

 

Austin Sales to Rent value ratio from 1999 to March 2009


What we see above is that sales values essentially ran away from rent values in the early 2000s in Austin. In 1999 and 2000, the ratios for typical rental stock were holding to historic ratios. 

Our sales market would have taken a larger dip after 2001 were it not for the investors fleeing the dot.com tech stock bust and turning to real estate. Also, we had home owners unable to sell and turning to leasing instead, which created excess rental inventory and drove down rent values. 

The big question is, will these lines ever converge again, and if so, will it be because rent values increase or sales values lag until rents catch up again? Or a combination. Or, alternatively, is the old rule gone forever and rent will continue forward in our lifetimes at a ratio of about 0.75% of sales value instead of the historic 1%. How does this affect the viability of real estate investing in Austin long term?

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Are Price Reduced Homes the Best Deals?

price-reduced-signAn interesting news announcement came to me the other day. The title was Trulia Introduces ‘Hair Cut’ Search Engine”. This is a new feature that allows someone searching for real estate listings on Trulia to weed out listings that haven’t had a price reduction, and thus view only listing that have had a price reduction.

Trulia CEO Pete Flint says:

“It doesn’t matter if your price point is $200,000 or $2 million, in these difficult times people are searching for the best deals they can find on homes. Our new price-reduction functionality makes it easier for people to find the home of their dreams without laboring through unwanted results.”

Oh brother. What a bunch of hogwash. This does not in any way make it easier to identify better deals. And why would a listing that hasn’t had a price reduction be an “unwanted result?” This gimmick joins the list of stupid and useless features and functionality pushed out to unwitting online consumers who gladly eat it up because they don’t know any better. It does give Trulia a reason to push a news release, but their programmers could have been better utilized doing something less worthless than this. Such is the world we live in today.

News flash for Trulia: the best priced listings are already marked “Pending”, and most went Pending before a price reduction occurred. OK? This is an ascertainable fact, not a marketing gimmick to boost web traffic. 

For example, of the 75 listings currently pending in SW Austin, 10 had price reductions. That’s 13% of the listings that have already been deemed the best out there by real buyers writing real offers. Of the 173 listings still on the market in SW Austin (MLS Area SWW), 39 have had price reductions, which is 23% of the available listings. Which homes are a better buy? The ones that are Pending, or the 23% of homes still available that have had a price drop? And why would someone only want to know about 23% of the available listings in an area when searching for a home? Only a really stupid buyer would restrict his search in such a manner, Mr. Flint. 

So, what factors do help us determine which listings are a good buy?

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Why picky buyers pay more for Austin real estate

It’s called a “buyer’s market” because real estate buyers have a market advantage over sellers. The buyer advantage is a result of high inventory and lower demand. Buyers have a lot of Austin homes to pick from, and there are more homes for sale than there are buyers to buy them. This means Austin buyers should be getting great deals, right? Wrong. Many don’t.

Many buyers give away their buyer’s market advantage in favor of indulging a highly particular and restrictive set of search criteria. In other words, some buyers are looking for the “perfect” house, and once they find it, they are not willing to walk away even if the seller stubbornly holds out for a higher price than market conditions should bring.

The buyer doesn’t have a strong #2 or #3 choice to move on to. Instead of enjoying the benefits of an ample selection of homes, some buyers create their own artificial shortage of homes by ruling out adequate candidate properties, and thus limiting their options, and thus their negotiating leverage. So long buyer’s market, for those buyers.

Many sellers might be saying, “yeah, well bring me one of them there picky buyers because we’re priced too high and we need to get lucky”. Well, some of you will. Not many of you, but enough to keep the others hoping.

Here’s the thing if you’re a buyer in Austin….

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Never a Dull Moment in Austin Real Estate

squirrel in austin home for saleIf you are looking for an interesting, versatile, challenging and very rewarding career, where each day brings something new, then look no further. Real estate is the job for you!

I never fail to be amazed at how wonderful this job is and how there is never a dull moment! Every time I take someone out to look at houses I am filled with anticipation about what interesting thing or event might happen next!

Last week I was showing houses to a nice young couple, and as we walked up the stairs and turned down the hall into a bedroom, the husband noticed something sitting on the window sill. “Is it alive?” he asked.

The wife and I stepped closer to what looked like a statue of a small furry squirrel. Just as we did, it turned and started running straight toward us. We (the wife and I) screamed and jumped up and down in terror. I really came “unglued”, as Steve would say. The husband meanwhile had a good laugh.

After we left, I called the listing agent to let him know that there was a live squirrel running around in the house. I have run across many pets in over 22 years of showing houses in Austin, but somehow, I did not get the impression that this one was domesticated!

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