Austin Real Estate Market Update for March 2008

The Austin real estate market continues to be sluggish for March 2008 according to our stats. Number of sales dropped 25% from the same month a year ago. Average list price is down 2%. Average sold price dropped 3% year over year for March. Last month was about even, but 3% is a definite drop, our first since Feb 2005 not counting last month. On the brighter side (if you want prices to increase), our Median Sold price is up almost 6% for March. So we still have a lot of cross currents in the market.

I added a new stat to the chart this month – Sold/List price percentage. For March, listings sold for 96.50% of the list price, down from 98.14% last year. This tells us that sellers are starting off a bit high and having to drop the price to sell. Average sold price per square foot is down 4% from $119 last year to $114 this year. Days on market has increased to 69 average days to sell and 45 median days. Nevertheless, with days-on-market numbers like those, Austin is still the envy of almost any other market in the country.

Finally, the Sold vs. Not Sold ratio is up 43% from last year. In March 2008, 1,691 Homes sold through the Austin MLS, and 1,028 were withdrawn or expired, which was 38% of all disposed listings. A year ago it was 24%. You may remember in December 2007, there were actually more homes coming off the market unsold than sold, as sellers pulled listings for the holidays. But with about 4 of 10 listings eventually failing to sell, it’s ever more important for sellers and agents to be smart in pricing and preparing the home for sale.

Austin Real Estate Market Update for March 2008
All MLS Areas – Houses Only

Feb 2008 Mar 2008 Mar 2007 Yr % Change
# Sold 1473 1691 2259 -25.14%
Avg List $247,105 $251,643 $256,746 -1.99%
Med List $189,000 $196,900 $182,900 7.65%
Avg Sold $237,432 $241,566 $249,134 -3.04%
Med Sold $182,471 $190,000 $179,500 5.85%
Avg SQFT 2091 2126 2100 1.24%
Med SQFT 1909 1937 1888 2.60%
Avg $ SQFT $114 $114 $119 -4.22%
Avg DOM 70 69 60 15.00%
Median DOM 53 45 31 45.16%
# Expired 499 547 337 62.31%
# Withdrawn 509 481 383 25.59%
Not Sold 1008 1028 720 42.78%
Not Sold % 41% 38% 24% 56.43%
On the Market as of April 15 2008:
11,522 = Total Active Residential Listings in Austin MLS
9410 = Total Single Family Homes listed
1845 = Condo/Townhome/Loft/Garden Homes listed
267 = Mobile/Manufactured Homes

I look at these numbers and still wonder when our reality will begin to match the apparent slowdown. Sylvia and I remain very busy and it is in fact no cakewalk finding good, well priced homes for our buyers in the areas we work, mostly south and southwest.

Many listings we see are selling for higher prices than last year and the best listings receive multiple offers. We continue to encounter an amazingly large number of over-priced listings and stubborn sellers though. Those are the sellers who won’t even counter-offer a market-value offer on their overpriced listing, holding out for a higher price. Those are the same listings we see coming off the market unsold, and it helps explain why the sold/list price ration dropped about 2 points from last year, as price adjustments are being made by the more motivated sellers.

Below is the year to date breakdown.

Austin Real Estate Market Update
Jan-Mar 2008
All MLS Areas – Houses Only – YTD

Jan-Mar 08 Jan-Mar 07 Yr % Change
# Sold 4429 5382 -17.71%
Avg List $252,788 $252,052 0.29%
Med List $194,364 * *
Avg Sold $242,396 $244,483 -0.85%
Med Sold $187,000 * *
Sold/List % 95.89% 97.00% -1.14%
Avg SQFT 2124 2094 1.43%
Med SQFT 1930 * *
Avg $ SQFT $114 $117 -2.25%
Avg DOM 70 64 9.38%
Median DOM 50 * *
# Expired 1626 1031 57.71%
# Withdrawn 1614 1212 33.17%
Not Sold 3240 2243 44.45%
Not Sold % 42% 29% 43.62%
* MLS software won't provide median for over 5,000 results

Year to date, the market is slightly down. We’ll see if April continues a downswing or levels up again.

Next is a breakdown of the YTD stats only for homes listed with “Austin” as the city. The slight problem with filtering for “City=Austin” is that many areas have an “Austin” mailing address, but are not actually in Austin. For example, Belterra in Dripping Springs has an Austin mailing address. Nevertheless, the bulk of the returned listing are in Austin.

I simply wanted to see if the recent trend holds true that closer in homes are holding up better, which is what we see in the field. Surprisingly, they are not, at least on a macro level, as the average sales price is down almost 10%. Not what expected. When I get around to the MLS area breakdowns, which I haven’t completed yet, we will be able to see if the central areas are still holding up at 6% to 8% appreciation as they have been. Also, I think we’ll see that the homes priced $350K and below are very strong and the average is being moved down by fewer high end homes selling.

Austin Real Estate Market Update for March 2008
Compiled from Austin MLS Data
City of Austin Only – Houses Only *

Feb 2008 Mar 2008 Mar 2007 Yr % Change
# Sold 619 714 980 -27.14%
Avg List $296,749 $302,642 $333,190 -9.17%
Med List $224,900 $235,250 $235,450 -0.08%
Avg Sold $287,220 $290,841 $322,495 -9.82%
Med Sold $216,530 $230,000 $233,085 -1.32%
Sold/List % 96.79% 96.10% 96.79% -0.71%
Avg SQFT 2062 2082 2156 -3.43%
Med SQFT 1815 1897 1888 0.48%
Avg $ SQFT $139 $140 $150 -6.61%
Avg DOM 66 61 54 12.96%
Median DOM 47 37 23 60.87%
# Expired 199 201 101 99.01%
# Withdrawn 212 188 146 28.77%
Not Sold 411 389 247 57.49%
Not Sold % 40% 35% 20% 75.19%
* Some “Austin” listings are actually outside city limits.

Finally, I ran a YTD breakdown of all MLS Home sales, filtering out new home. The resale market has a smaller decrease in homes sold, and the sales numbers are closer to even.

Austin Real Estate Market Update for March 2008
All MLS Areas – Resale Houses Only YTD Mar 08

Jan-Mar 08 Jan-Mar 07 Yr % Change
# Sold 3444 4410 -21.90%
Avg List $240,906 $241,063 -0.07%
Med List $184,900 $175,000 5.66%
Avg Sold $232,949 $234,536 -0.68%
Med Sold $180,000 $173,000 4.05%
Sold/List % 96.70% 97.29% -0.61%
Avg SQFT 2017 2016 0.05%
Med SQFT 1840 1828 0.66%
Avg $ SQFT $115 $116 -0.73%
Avg DOM 65 56 16.07%
Median DOM 45 33 36.36%
# Expired 1415 887 59.53%
# Withdrawn 1369 1023 33.82%
Not Sold 2784 1910 45.76%
Not Sold % 45% 30% 47.91%

Bottom line, the Austin market is down for March overall. When I do the area breakouts we’ll see some strong pockets that still have rising prises.

As usual, comments and questions welcome.

7 thoughts on “Austin Real Estate Market Update for March 2008”

  1. “Stubborn sellers [not willing to negotiate]” is a subjective comment. I can equally well state that those sellers are generally very well informed, not at all desperate to sell, and rightly confident that the days of impatient realtors, misplaced negative news spin about the local market by lazy, incompetent, or ‘agendized’ media, etc are numbered. Why sell low ball now if you don’t need fast cash and can wait six months or a year without breaking a sweat? Local real estate is a real steal compared to prices paid in many parts of Europe and many other US regions. Just a thought. Thanks for the blog.

  2. “Stubborn sellers” is referring to sellers who are over market, yet unwilling to negotiate. They may very well be well informed and not desperate to sell, but selling at market price is not selling lowball. The buyers decide what the house is worth not the sellers. It is more the fault of the realtor for taking the overpriced listing in the first place, than the seller hoping and praying some uninformed buyer comes along and pays more than the house is worth. But then maybe they are converting inquiries into buyer clients and getting something out of it besides spending marketing money with no hope of commission.
    Steve, I am also seeing well priced homes selling very quickly in north Austin, esp in the sub 250k range. Lots of multiple offer situations. Sellers in the duplex market have been much more willing to negotiate than in the single fam market. The ‘burbs are deader than a doornail except for the nicer parts of Cedar Park. I expect more listings to pile up over the summer as we transition to a more “average” market. Rents seem to still be rising and units are leased quickly. The credit crunch is really helping landlords, as fewer borderline qualifiers can afford to buy.

  3. Ray, those sellers will probably be wishing they had negotiated a year from now if/when the market is even slower and the prices are lower. Just because the prices in Europe are higher, it means nothing to our local market where the prices are set by supply and demand mostly driven by the local job market and the pay those local jobs command along with mortgage rates and mortgage availability.

  4. I guess it’s hammer on Ray day….Ray, in LS there is a glut of homes. I haven’t seen March numbers yet, but last month there was nearly 15 months of inventory. That, my friend, is the very definition of stubborn. You have to consider too that in LS many homes will require jumbo mortgage financing. Jumbos are still very costly and require 25% down payments and in many instances are so filled with hurdles that buyers just give up in exasperation. Then, you have to factor in home affordability and put property taxes into the equation. With increased property values, property taxes in some areas of Austin are as costly as anyplace in the country. Lakeway is overbuilt and overpriced. I’m not suggesting the market is dead. Sure, homes are still going to sell, but the days of the uninformed buyer are gone and right now it’s a buyers market.

  5. FYI home prices in the UK, Spain and Ireland are crashing very hard. Here is a chart on affordability

    This compares local home prices to local incomes. Austin while not at the top of affordability, Austin does pretty well. This data is from 3Q 2007, but since then the regions with the highest price to income ratio have fallen the furthest. Future real estate appreciation will have to come without altering this ratio. When this number gets large its actually a pretty good indicator of a bubble. If we see appreciation, without the P/I ratio increasing, then its healthy appreciation.

  6. Not that I’m supporting Ray’s points, but I’ve seen homes in my neighborhood selling and holding. Almost uniformly, those sold (fast or slow) took a beating on the price (I’d say about 5-7% lower than what they could’ve sold a year earlier. Maybe those prices are consider “fair” market price, but I can tell you that those who sold their homes aren’t feeling any better than those “stubborn” sellers. So, say everyone got enlightened and is willing to sell lower price. You will then create a downward competition (meaning that price will sliding down further). The balance point of supply and demand is not going to catch on for a while (it seems the supply will continue to over take demand for a long while). The only people that will gain from this downward spiral is agents. They collect 6% only when a home sells regardless of the price.

  7. Thanks for the comments. What I meant by “Stubborn Sellers” is that we are seeing many listings that are priced at amounts not supported by market activity – current or past. Before my buyer wrtes an offer, we do a market analysis to make sure we offer the right amount, often, we see listing priced way out of range.

    I wrote about a specific example of this a couple of months ago. House was price $20K over market. Listing agent (eventually admitted) knew it was over priced, seller knew it was over priced, but we were told that the seller didn’t need to move (i.e. unmotivated seller) and if he didn’t get his price he would just stay.

    Out of curiosity, I just now looked up that listing (which my buyer of course passed up after receining no counter-offer, just a “no thans to our offer) and sure enough, it was withdrawn from the market and is no longer for sale. Net result, Seller and Listing agent wasted their time and that of others by believing that some fool would actually come along and pay $20K over market for the home. Buyers are smarter than that. So are most agents.

    That’s what I mean by a stubborn seller. I have no problem with a seller holding fast to a list price that is in line with the market. That’s what a seller should do, depending on their timeframe needs and level of motivation.



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