I received a call from a KXAN-36 reporter today who found my blog and wanted to ask some questions about the Austin real estate market. I answered some questions and then she asked if she could come out and interview me on camera. I said “sure, come on over” so she and her camera man came to my house.
“Finally”, I thought. “I can explain why these newspaper and TV reporters get it wrong so often and don’t know how to interpret market stats and report market activity”. She showed up with a camera man and we set up in my front yard and chatted a while.
Now I’m terrified about how this interview will come off. I quickly snapped to the fact that the short time slot in which the story would need to fit doesn’t accommodate good, detailed explanations of market activity. In fact, the reporter repeatedly explained to me “I need simple information that our viewers can understand”. She wanted to know which were the three “best” and “worst” areas to buy in right now in Austin.
I tried to explain that sometimes the “worst” areas are in fact the best areas in which to buy, depending on how one defines a “bad market”. And that even areas with slow sales and high inventory (such as Steiner Ranch) can have a segment of the inventory that is a seller’s market (such as homes under $280K in Steiner Ranch). I’m not sure I did a good job of making my points though. I’m worried about what will be snipped and spliced and therefore don’t really know just exactly what viewers will hear me saying, or whether it will make sense.
The points I wanted to make were:
– Focusing on Number of Sales is insufficient to describe market activity.
2006 was a record year in number of sales for Austin. 2007 was the second best year in number of sales, but all year long the headlines said “sales falling in Austin”, “Sales in Austin Down 16%”, etc. There were no headlines or news stories correctly stating in 2007 “Austin homes sales on track for second best year ever”. Instead, we saw doom and gloom being reported in one of the very best real estate markets in the U.S. I want reporters to put things into context.
– The Austin market is comprised of many geographic sub-markets and price segments, some of which are doing very well and others not so well. It’s therefore hard to pick the three “best” and three “worst” areas in terms of market activity because the real estate market is more complex than simply tagging an entire area as “thumbs up” or “thumbs down”, or “good” or “bad”.
One can purchase the wrong house in the right area, the wrong house in the right neighborhood, and pay too much for the right house in the right neighborhood. And it’s never the wrong time to buy the right house.
– If I had to pick best and worst areas, I’d stick with the best broad generality that I know, which is that the outskirt areas outside Austin that still have new entry level development going on are the first to suffer when things slow down, and the closer in areas hold up better during slower markets such as we are in now.
So, a 2 year old home in Hutto or Kyle, where new starter homes are still being built, will probably not sell for more than it did two years ago. A home in South Austin 78745 zip code, on the other hand, will undoubtedly sell for more than it did two years ago, unless the current seller paid too much 2 years ago (which some did).
That said, a starter home in Hutto may in fact be the very best choice for the right buyer, depending on that buyer’s needs. So it’s hard to pick three MLS areas in Austin and say “these are the best areas in which to buy”. Yet I clumsily attempted to do so since that’s the question the reporter wanted answered.
– Austin has too much inventory in the $400K+ range for the current level of demand.
If we split the market up into price segments, we have a straight line graph of Month’s of Inventory starting with the lower end (3 month’s) homes on up to the higher priced homes (17+ months).
In general, it’s a seller’s market in Austin below $300K and a buyer’s market above $400K, yet that statement will not be true for every home priced below $300K or above $400K in Austin. It depends on where the home is located and the level of inventory in that particular area.
Gosh, even as I type this I can see why these sorts of explanations probably don’t convert well to short sound bites in a news interview. That’s frustrating because so many people think they are being educated by what they see on the news and now I’ve probably contributed to that which I despise – bad news stories that get it wrong.
I’ll post a link to the news segment after it’s available online.
Edit: OK, here it is. As I suspected, they took a “What’s Hot, What’s Not” approach, which I suppose sells better than “A Detailed Look at Austin’s Multi-Faceted and Complex Real Estate Market”.
|Hot spots in Austin’s housing market|