The real estate slowdown crept up on us, but it’s really here for sure, despite the fact that the headlines say it (see below). Yet prices in Austin keep rising. A buyer a couple of weeks ago told me “I’m going to wait to buy because the bubble in Austin is going to burst soon”. Huh?!? Austin has no bubble, dude. Our prices were flat as a pancake from 2001 through the end of 2005. We saw reasonably decent appreciation of about 10% for 2006 and the first part of 2007, but not the sort of appreciation that creates a “bubble”. The medain home price in Austin is still $185,000. In other words, there is no inflated price ceiling from which Austin has to fall.
By the way, during our 4 years of ZERO appreciation in Austin, each year was a record year in NUMBER of sales, yet many, many sellers could not sell.
Anyway, I’m going to work on my monthly, quarterly, and YTD stats this weekend and see exactly where we stand in all the different areas of Austin as we head into the last three months of the year. Meanwhile, here is a story from today’s Austin Statesman.
Number of homes on the market hits four-year high.
Friday, October 19, 2007Mirroring the national housing slump, existing home sales in Central Texas continued on a double-digit decline in September. Sales fell 22 percent from a year ago, following a 10-percent drop in August, and the number of homes on the market reached a four-year high of 9,979.
September sales were the lowest for the month in three years, according to figures from the Austin Board of Realtors today.The sales drop was sharpest for homes below $200,000, but also hit higher price ranges. Sales of houses between $400,000 and $599,999 fell almost 23 percent.
Experts say that though Central Texas’ housing market is faring better than many others around the country, it hasn’t been immune to the national credit crunch. Banks and mortgage companies have toughened lending standards, shutting many first-time buyers out of the market.
But the news isn’t all grim. While prices are declining in many areas around the country, the median home sales price in the Austin area rose to $182,500, up 9 percent from September 2006. Experts attribute the increase to price appreciation as well as rising construction costs and more sales of higher-priced homes.
The scary thing is that the Austin market can still drop even though there was no bubble — although I do think we have a bit of a bubble in some parts of central and close in south Austin. The burbs in most Texas cities are so well supplied with new construction, that an economic slowdown can still crash prices around here even without an appreciation bubble which will make it even harder on local owners since they don’t have an “equity cushion” like their coastal brethren.
to chime in with Mike B above, could south austin be be considered a bubble candidate? Ive heard anecdotal comments of over 30% appreciation within the last 6-8 months in travis/bouldin.
How do you define bubble? Things becoming too expensive and they are obviously over valued? If that’s the case, I can’t wait to jump in when things to “crash”. Say some 2000 sq. ft. houses used to be selling at 500k in Westlake or 750k at Rollingwood? If they crash, drop their value to half, I am there…
Of course it’s never gonna happen.
I think a “buuble”, in it’s purest definition, is an inflation of something with air. A balloon is the most iconic image, and also the popping of a balloon.
The “air” as related to the real estate market is the inflation of prices such that they bacome disconnected with the common underlying foundations that justify price increases, such as job growth, supply and demand, etc.
Austin has not seen price inflation such as the “bubble” type appreciation of Florida, California, Nevada, Arizona where speculation and easy access to loans (plus a good amount of old fashoin fervor) drove prices up to amounts that are disconnected from the local economic fundamentals.
Steve
If we truly have a bubble or not in parts of Austin depends on how many buyers were stretching to buy homes using teaser rate loans and the like (IO/negam/etc) with little money down. Personally, I don’t think it was all that many, but I have no hard facts to back that up.
The people who were stretching into these loans may have problems refinancing when the time comes and may not be able to afford their houses on a traditional fixed loan. This does two things: it creates more inventory when they people sell or potentially foreclose, and it takes away demand since the people who were using these loan products are no longer candidates to buy at the current price level now that the availability of these loan products has diminished.
“The medain home price in Austin is still $185,000. In other words, there is no inflated price ceiling from which Austin has to fall.”
Thats cuz they are cranking out $140,00 houses out east like crazy.
the livable parts in austin cost considerably more then $185,000. The livable parts of austin have doubled ( or more) in the last 8 -10 years. a pull back makes good sense to me.
A bubble? Nah.
by the way what is the mean (average) price in austin ? isn’t it considerably higher?
PS – I enjoy the blog very much!
I’m working on YTD stats this morning. I haven’t got to the specific area breakdowns yet, but the stats continue to send mixed signals.
Here is a quick preview for September Sales numbers:
Number sold is down 25% (excludes condos, townhomes, etc. – houses only)
Average Sold price up 11%
Median Sold Price up 8.9%
Average days on market up 1.7% to 59 (which is still very good)
Median days on market up 5.4% to 39 (also very good)
YTD numbers are not as good, but still good. The market is slower though, we can feel it, yet the overall stats still look great with the exception of number of homes sold, which should eventually hurt the other numbers but hasn’t done so yet.
Steve
> I think a “bubble”, in it’s purest definition, is an inflation of something with air. A balloon is the most iconic image, and also the popping of a balloon.
I heard the other definition:
“You can’t go anywhere without hearing people talk about “the real estate bubble.” Such talk drives me to distraction, and I’ll tell you why. It’s because there is no real estate bubble. Bubbles are for bathtubs.” (c) Kendra Todd
Kendra Todd is the first and only woman to win Donald Trump’s smash hit NBC show, “The Apprentice” on NBC. Additionally, she is Broker of Florida-based The Kendra Todd Group, host of the popular HGTV Show “My House Is Worth What?” and a regular real estate contributor on Fox News Live. Her first book “Risk and Grow Rich: How to Make Millions in Real Estate” has been an instant success.
🙂