Austin Homes sales jump 15 percent in May

House Sold Sign Photo

This is from today’s Austin Statesman. I’ll post some graphs and charts on Austin May Sales when I get some time. Meanwhile, this article reflects what we are seeing and experiencing in the Austin real estate market. Namely, this month we’ve had to start “fishing in some new ponds” so to speak, as some of our favorite neighborhoods to take buyers are getting pricier and more competitive. For the investors we work with, a home we could have found in Area SW near Oak Hill, Circle C, Shady Hollow, etc. for less than $200,000 a year ago now costs $225,000 to $240,000. That same home won’t rent for much more than it would have a year ago though ($1250/mo. to $1600/mo.) because supply is keeping pace with demand. So, already tight cash flow numbers become even harder to work with and one has to really become dedicated to the notion of future appreciation. Otherwise, as the article says below, we are starting to migrate buyers somewhat to areas that were not previously strong candidate areas. I have more to say about this but will have to catch up later. Article is posted below.

Supply continues to tighten in popular neighborhoodsAMERICAN-STATESMAN STAFF
Thursday, June 22, 2006

Austin homes continued to sell at a brisk pace in May, despite a cooling of the housing market on a national level.

Sales of existing single-family homes jumped 15 percent in May as 2,260 residences changed hands. The median home price rose 8 percent from a year ago to $174,000.

Homes are moving faster and demand is increasing as the Austin housing market continues to heat up. Homes stayed on the market an average of 58 days in May, a 12 percent decrease from last year, according to statistics provided Wednesday by the Austin Board of Realtors.

Supply in areas such as North Central and Northeast Austin was especially tight, with homes selling in less than 30 days, on average.

The strengthening housing market is a result of Austin’s healthy job market as well as the cooling of home prices in other areas, said John Rosshirt, chairman of the Austin Board of Realtors.

“You have not just the good economy, (but) you have people who are getting out of other markets,” Rosshirt said.

Though Rosshirt predicted that there will be enough homes for sale in most neighborhoods to stave off a major tightening of the Central Texas market, it is certainly squeezed in some areas.

In Hyde Park and Tarrytown, for example, demand is so high and supply so low that median home prices have soared. In Tarrytown, the median price is $345,000, a 23 percent increase from May 2005; Hyde Park’s median home price jumped nearly 31 percent to $433,750.

As home prices rise, more buyers are turning to outlying areas such as Round Rock, Oak Hill and neighborhoods south of Slaughter Lane, where homes continue to sell at a brisk pace.

“People are trying to stretch the dollar as prices rise,” said Sam Carroll, a real estate broker for RE/MAX Downtown Austin. “They are going to fall back on the outlying areas.”

In the Oak Hill area, the number of homes sold in May rose to 41 from 28 last year, bumping the median home price up 31 percent to $359,000.

East Austin homes are selling at a brisk pace. The median price for homes in neighborhoods such as Dellwood and Windsor Park east of Interstate 35 rose 11 percent to $154,000, with homes there selling in less than 30 days on average.

“You see people going across I-35 that wouldn’t go across five years ago,” Carroll said.

Homes are regularly getting multiple offers as the housing market continues to heat up, real estate agents said. Home prices flattened in Central Texas after the tech bubble burst in 2001. Last year, prices started to move steadily up.

Central Texas is also becoming popular among out-of-state investors and those looking to relocate from elsewhere, area real estate agents say.

“Somebody living in California in a 1,400-square-foot home could sell it anywhere from $700,000 to $1.2 million, take the profit and buy a mansion in Austin,” Rosshirt said.

He doesn’t expect home prices to cool anytime soon.

“Because (prices) are higher than ever, people are saying it can’t get much higher,” Rosshirt said. “But if you look at job creation, which is a big leading factor for the home market, jobs look like they are going to go up for the next few years.”

Steve Crossland

Steve is a Real Estate Blogger, UT Austin Grad, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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