Today’s Austin Business Journal reports more of what’s been happening this year – the number of sales are falling COMPARED TO LAST YEAR, but the prices keep rising and days on market look good. In other words, the Austin real estate market is sending conflicting signals. What gives?
Let’s take a look at the article.
Austin Business Journal – 3:01 PM CDT Monday, September 24, 2007
Home sales in Austin continue to fall.
A total of 2,501 single-family homes were sold in August, down 10 percent from a year ago, according to the latest Multiple Listing Service report released Monday by the Austin Board of Realtors. The August sales figure is also down 5 percent from July, further proof of a market in decline.
Still, other factors are tempering the sales downturn. The median price for single-family homes rose 6 percent year-over-year to $192,000 as the number of days homes sit on the market fell 3 percent to 58 days.
Pending sales dropped to 2,196, down 24 percent compared with last year as the number of new listings ticked up 16 percent.
No doubt the market is shifting, but we’ve had less than 2 years of an up market following 4 years (2002-2005) of a flat market. This isn’t the normal real estate cycle. What’s up?… The national down market is washing into Austin’s fundamentally good market. Let’s look at some quotes from area agents below.
Jack McDonald with RE/MAX Austin Associates says one thing he’s noticed is that those moving to Central Texas from other parts of the country — particularly places like California and Florida — are having difficulty selling their homes and therefore are delaying purchases in Austin. However, McDonald says the dominant problem is the mortgage situation, which has taken a lot of potential buyers out of the mix.
“We’re going to have to go back to doing real estate the way we used to,” says McDonald, which means more FHA and government loans.
“We are seeing a slow down,” says Tausha Carlson realtor and co-owner of Marathon Real Estate. “I think it’s been so hot for so long it had to experience a slow down. But I don’t think we’re going to experience the crash that is happening in other markets like Las Vegas and Miami because we didn’t have the tremendous rise that those places did.”
Like McDonald Carlson says she’s seeing a growing number of contingency offers, where buyers moving to the area agree to purchase a home here only if they can sell their existing one elsewhere.
But Carlson says even with the slowdown, she believes “Austin remains a healthy market overall.”
I will add that the number of investors Sylvia and I work with has decreased tremendously, starting about the middle of summer 2007. The loan products that were once available to investors have decreased. There are still good loans for qualified investors, but I think many have decided to sit back for now, and we’re also seeing a lot of investor homes coming on the market as the weight of negative cash flow starts to erode the excitement of owning rental property.
We’ve shifted to working more with traditional buyers and sellers. We also wrote our first FHA deal in more years than we can remember (see Jack’s comments above – he’s right), which will close for our buyer this week.
The sales decline is also likely to be mean a significant cutback in the ranks of agents operating in Austin. McDonald says the number of agents has grown tremendously during these boom years, but that’s unlikely to be sustainable. “I think we need to be somewhere around 7,000 agents, and I think right now we’ve got about 11,000,” he says.
Yes, we have way too many Realtors in Austin. See what I wrote about “the pretenders dropping like flies” a while back.
Finally, there is a class at our Southwest Market Center this week – “How to Sell Homes in a Shifting Market”. The sky ain’t falling in Austin, but rose colored glasses can come off for now, and we’ll start seeing the market separate some of the agents and sellers from the crowd.