A Tale of Two Real Estate Markets

No matter where you live, there always exists two real estate “markets”. One market consists of homes that are priced “in the market”. These are the homes that will sell. The other market consists of homes priced “out of the market”. These are homes that probably won’t sell unless a price or condition adjustment is made to move the property to the “in” section of the market. It is the combination of pricing and condition that determines whether or not a property is in or out of the market, and thus whether it will sell. The best graphical depiction I’ve seen of the “two market” rule was outlined in a Power Point presentation at the Keller Williams Mega Agent Camp earlier this year in Austin. I’m going to share the graphics and explain this simple but powerful rule.

Take a look at the chart below.
Tale of 2 Real Estate Markets

The dark yellow portion in the bottom left corner represents the relative position, based on the competition that the “in the market” listings hold. Homes in the outer light yellow band, are either over-priced, not properly prepared, or both. The vertical left line represents pricing, and the horizontal bottom line represents condition. The closer your listing can be to the bottom left on both price and condition, the better your chance of a quick sale at full price. And, by the way, many listings in Austin are in fact selling very quickly, even while many others are sitting stale on the market for more than 6 months.

Now let’s take a look at what the chart looks like in a Seller’s Market.

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Austin Real Estate Market Update – Oct 2007

Home sales in Austin are getting better or worse, depending on which side of the equation you’re on – Buyer or Seller – and some other factors. If you’re a Buyer, you currently have more homes to choose from and are more likely to find a seller willing to negotiate compared to 2006 and the first half of 2007, though you probably won’t obtain a lower purchase price than you would have a year ago if you remain in Austin proper.

If you’re a Seller, you’re going to have to work harder to prepare your home for sale and you don’t have much room for error on the pricing. Buyers are simply bypassing overpriced listings as they have plenty of other homes to pick from. You will, however, probably sell your properly priced home for more than you could have a year ago, though it might take slightly longer. There is also a greater chance that, if your home isn’t priced right for the condition, it won’t sell at all. We are seeing a lot of homes in Austin be withdrawn from the market or expire unsold compared to a year ago. See the Sold vs. Not Sold chart I posted last month.

For October, the number of single family homes sold through the Austin MLS was down 5.9% from a year ago, which was expected. The average sold price is up about 5% over last year from $235,487 Oct 2006 to $246,796 for Oct 2007. The Median sold price is up 3.3% to $183,961 and the average price per square foot is up 4.5% to $117. The days on market inched up slightly from 66 to 69 and the Median days on market is up one day to 47. See the October chart below and the Year to Date stats further down.

Austin Sales Stats October 2007
Previous Month and Year Comparison
All MLS Areas - Houses Only

 
Sep 2007
Oct 2007
Oct 2006
Yr % Change
# Sold
1697
1641
2024
-19%
Avg List Price
$268,896
$255,617
$241,449
5.9%
Median List Price
$189,900
$189,888
$180,000
5.5%
Avg Sold Price
$258,813
$246,796
$235,487
4.8%
Med Sold Price
$185,00
$183,961
$178,000
3.3%
Avg Size SQFT
2114
2102
2101
0
Median SQFT
1934
1917
1918
0
Avg $ per SQFT
$122
$117
$112
4.5%
Avg Days on Mkt
59
69
66
4.5%
Median Days on Mkt
39
47
46
2.1%

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Austin Rental Market Update – thru Oct 2007

The Austin Rental Market keeps chugging along. Not much new to say for the stats report this month as the steady climb in rents continues. Average rental rate is up 5.7% from a year ago, to $1354 (though down from last month due to our seasonal shift). But remember, average rents in Austin are still not yet back to the year 2000 rates. Stats are below. I did a breakout this month by city just to include something new. As usual, questions and comments are welcome. Sales stats will be coming next.

Austin Rental Market Stats October 2007
Previous Month and Year Comparison
All MLS Areas - Houses Only

 

Sep 2007

Oct 2007

Oct 2006

Yr % Change
# Leased
570
571
645
-12%
Avg List Price
$1368
$1354
$1281
5.7%
Median List Price
$1207
$1250
$1150
8.7%
Avg Leased Price
$1354
$1337
$1267
5.5%
Med Leased Price
$1200
$1245
$1150
8.0%
Avg Size SQFT
1837
1927
1882
2.4%
Median SQFT
1734
1829
1784
2.5%
Avg $ per SQFT
$0.74
$0.69
$0.67
3.0%
Avg Days on Mkt
43
40
52
-23%
Median Days on Mkt
31
32
44
-27%


Below is a previous month and Year-to-Date comparison.

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