Austin Sales Market Update for August 2008

The average sales price for houses in Austin in August 2008 remained about level, decreasing slightly (-1.96%) to $259,500, down from $264,695 a year ago. Median sold price rose slightly (+2.05%) to $199,000. The number of failed sales efforts, or “Not Solds”, (expired or withdrawn) was 46% for August, up from 41% last month and up 33% from a year ago in August.

The “not solds” are a number I keep a close eye on, and I predict that we’ll see that number creep up over 50% by October or November. It’s almost guaranteed it will go above 50% in December, as many sellers pull homes off the market for holidays. The take-away for sellers with homes on the market this time of year is that you are competing for a limited number of buyers in an increasingly sluggish Austin market. That means proper pricing and condition are extremely important.

Days on market continues to climb also, to 63 days average on market and 43 median days on market, up from 60/39 last month and 54/34 a year ago. Those days on market number are not bad numbers though, especially if we want to compare Austin the to anywhere else in the country. But, the trend here in Austin is without a doubt that homes are taking longer to sell and fewer are actually selling. That doesn’t mean buyers are obtaining great deals, though we are seeing some of that, but, at present, that more sellers are giving up and pulling their listings from the market.

Here is a quick summary of the August stats.
• Number of homes sold is down 24% from 2,425 Aug 2007 to 1,837 Aug 2008.
• Average sold prices in Austin were down 1.96% over the same month last year to $259,500.
• Median sold price was up 2.05% over the same month last year to $199,000.
• Avg sold price per square foot is down 3% from Aug 2007 to $118 per sqft.
• Avg days on market is up 9 days (17%) from 54 last year to 63 this Aug.
• Median days on market is up 9 days (26%) from 34 days last year to 43 this year.
• Number of “Not Sold” (exp or withdrawn) is up 40% over the same month last year, to 46% of all removed listings.

Below is the chart with these stats, along with a YTD chart.

Austin Real Estate Sales Market Update
Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data

July 2008 Aug 2008 Aug 2007 Yr % Change
# Sold 1969 1837 2425 -24.25%
Avg List $270,569 $269,807 $272,527 -1.00%
Med List $203,385 $204,409 $199,900 2.26%
Avg Sold $261,638 $259,500 $264,695 -1.96%
Med Sold $199,000 $199,000 $195,000 2.05%
Sold/List % 96.70% 96.18% 97.13% -0.97%
Avg SQFT 2170 2187 2164 1.06%
Med SQFT 1965 1986 1995 -0.45%
Avg $ SQFT $120.57 $118.66 $122.32 -2.99%
Avg DOM 60 63 54 16.67%
Median DOM 39 43 34 26.47%
# Expired 525 721 503 43.34%
# Withdrawn 870 857 691 24.02%
Not Sold 1395 1578 1194 32.16%
Not Sold % 41.47% 46.21% 32.99% 40.06%


Below is the year to date numbers.  

Austin Sales Market YTD Update – August 2008
Homes only (no condos, duplexes, etc) – Data from Austin MLS

Jan-Aug 08 Jan-Aug 07 Yr % Change
# Sold 14476 17911 -19.18%
Avg List $263,625 $262,249 0.52%
Med List $199,900 $189,900 5.27%
Avg Sold $253,951 $255,314 -0.53%
Med Sold $193,900 $187,500 3.41%
Sold/List % 96.33% 97.36% -1.05%
Avg SQFT 2144 2179 -1.61%
Med SQFT 1949 1931 0.93%
Avg $ SQFT $118.45 $117.17 1.09%
Avg DOM 65 55 18.18%
Median DOM 42 31 35.48%
# Expired 4439 2915 52.28%
# Withdrawn 5198 3876 34.11%
Not Sold 9637 6791 41.91%
Not Sold % 40% 27% 45.37%


Essentially, I’d say the Austin real estate market this year is treading water. I would again point out though that the Not Sold number is important to look at. at this point last year, the unsolds were 27%. YTD through August 2008 it’s 40% and climbing. Since those failed sales efforts drop out of the stats completely (except these that I produce), it causes the Sold stats to make the market look perhaps a bit better than it is. Heading into the end of the year, I feel safe in saying that fully half or more of current listings will be withdrawn or expired before the end of the year. Many, many sellers out there still don’t get it. On the other hand, buyers don’t fully get it either. Sellers think things are better than they really are, and buyers think the market is worse than it really is.

7 thoughts on “Austin Sales Market Update for August 2008”

  1. I think it might not be accurate to say that buyers think the market is worse than it really is. If so, they might jump into the market.

    The buyers are thinking the worse is yet to come.

  2. Steve.. great post and thanks for your blog…. Lakeway sellers are the biggest offenders and are still drunk on the kool aid of 2005 and 2006. But, I have to disagree somewhat about the buyers. Mortgages are still very costly and difficult to obtain and only the highest FICO scores get the best rates. Further, lenders are trying to decrease their risk by making the process costly in order to find out if someone can really afford the house. I’ve even seen where appraisals come in very low giving the buyer a tough choice of either coming up with additional downpayment cash or walking away from the deal.

    Last week, Thursday afternoon to be exact, our country dodged a bullet. We were a stones throw from a complete collapse in the markets. We are in unchartered waters economically and buyers are very prudent to let the system settle out before they take on debt.

    On the other hand, if a seller has their home listed and doesn’t really need to sell, they probably won’t. I would recommend that they suspend their listing until the spring selling season. I would venture to say that there are still many listings where sellers would tell you they really don’t need to sell. Which begs the question, why would you list in this market in the first place if you didn’t need to sell?

  3. yup, didn’t need to sell (only wanted a bigger backyard) and this week we withdrew the listing. I realized my biggest fear was getting an offer and then have the buyers bank withdraw financing before the close. Every day is a new nightmare on Wall Street, it it time to work on my personal balance sheet, not chase the perfect house.

  4. I don’t quite understand the hesitancy of buying in this market. Interest rates are low, and we are looking at future inflation that would drive the rates up. If you need to buy now, and you do not overextend yourself, why wouldn’t you?

  5. Interests rates are low now, but they may not be soon. The fundamental problem with the market was that risk was not correctly priced since derivative products were thought to cheaply transfer the risk to others. The natural mortgage rate is 7-9 percent and not the 5-7 percent we have seen in recent memory. These additional percentage points make a big difference in a bank’s balance sheet. This is the rate banks would charge if they had to hold the mortgage on their books, which in the long term, is what will solve this mortgage problem. What kind of house could you afford with an 8% mortgage? The answer is the same house that you could afford with a 6%. The house will just lower in value to match the payment just as real estate rose in value when interest rates declined.

  6. Barry,

    Mortgage rates have historically tracked the 10 year treasury rate at about a 1.5% premium, meaning mortgage interest rates are typically 1.5% higher than the 10 year treasury rate. The 1.5% is known as the “risk premium”, because the 10 year treasury has virtually no risk, whereas mortages have historically had some risk.

    At present, the “risk premium” is running at about 2.5%, meaning the mortgage interest rate is about 1% higher than it would be under normal risk circumstances. Of course, mortgages are at present viewed as more risky, thus the higher risk premium.

    What should happen eventually is that the markets settle back into the normal differential of 1.5%, and interest rates drop. More likely though, is that simultaneous to the downward adjustement of the risk premium gap, 10 year treasury will rise from where it is now and perhaps offset the adjusted differential. It won’t surprise me if, at the end of this year, mortgage interest rates are still at or below 6%, which is a superb rate.



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