October saw a huge 31% increase in the number of sales in Austin over the same month last year. Remember though, Oct 2008 took a 28% dip from the year prior, so while this October did see a good increase in sales volume, due in part to the $8,000 tax credit program, we’re comparing a dreadful month one year prior to a turbo-charged market this year, thus the big swing. Nonetheless, brisk sales for October was not an unwelcome result.
Let’s take a quick look at the monthly home sales prices in Austin for the past 20 months.
You can see that May 08 and May 09 were both the peak sales prices in their respective years and that sales prices drop in the off seasons. This year is no different but our sales volume has picked up more than usual.
Let’s see in the graph below how October 09 compares in all the metrics to October 2008.
|Austin Real Estate Sales Market Update|
|Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data|
|Sep 2009||Oct 2009||Oct 2008||Yr % Change|
|Avg $ SQFT||$114.08||$114.98||$114.81||0.15%|
|Not Sold %||43.76%||43.18%||58.23%||-25.83%|
Average sold price is still running sightly lower than a year ago at $241,688. But if you look at the drop in median price, it helps explain why. The market below $200K is strong in Austin right now and we have a higher volume of lower priced homes selling than we would have without the stimulus effect of the first time home buyer credit.
Sylvia and I were really busy in Aug-Oct with first time buyers. Oddly, the extension of the tax credit has removed the urgency we were seeing and so I think we might be in for a winter breather before buyers come back in the spring trying to beat the new deadline of an April 30th contract date.
The other metric you might take note of compared to last year is the drastic swing in the Not Solds from 58% a year ago to 43% this October. Remember, we took it on the chin last year as the financial markets cratered in September. By October sellers starting pulling listings from the market and/or letting them expire. A “Not Sold” is a failed sales effort that departed the MLS as Expired or Withdrawn. The percent is arrived at by dividing the Not Solds number into the Not Solds + Solds figure, thus telling us what percentage of the listings no longer Active or Pending we failed sales efforts. In a healthy market, it would be in the 30% range, give or take. We’ve been holding steady at about 43% lately.
Next, let’s see how the Austin real estate market looks year to date compared to last year.
|Austin Sales Market YTD Update – Jan-Oct 2009|
|Homes only (no condos, duplexes, etc) – Data from Austin MLS|
|Jan-Oct 09||Jan-Oct 08||Yr % Change|
|Avg $ SQFT||$112.71||$118.01||-4.49%|
|Not Sold %||43%||43%||-0.61%|
Nothing unexpected or notable on the YTD stats. Sales volume is down 11%, which is an improvement. Average sold price is down 3%, which is what I’d expect, median is down 1%, average sold price per sqft is down 4%. The Austin market is still just chugging along waiting for the economy to wake up again.
One thing I have noticed, as seen below, is that the number of price ranges in which inventory supply is too high is shrinking. I use to say everything over $300K is soft. Now it’s moved up to everything over $550K . And take a look below at the $500K to $549K price range.
|Price Range||#Sold||DOM||Active||Mo. Inv||Sold 90 days|
|$149,999 or under||507||54||1680||3.42||1474|
|$150,000 – $199,999||437||61||1634||3.69||1328|
|$200,000 – $249,999||265||61||1087||4.24||770|
|$250,000 – $299,999||149||85||850||5.35||477|
|$300,000 – $349,999||85||80||570||5.94||288|
|$350,000 – $399,999||76||102||536||6.70||240|
|$400,000 – $449,999||44||92||348||7.15||146|
|$450,000 – $499,999||33||96||338||10.04||101|
|$500,000 – $549,999||19||112||175||7.50||70|
|$550,000 – $599,999||15||99||193||15.65||37|
|$600,000 – $699,999||13||149||275||15.57||53|
|$700,000 – $799,999||8||119||187||18.10||31|
|$800,000 – $899,999||7||137||155||16.61||28|
|$900,000 – $999,999||3||425||108||23.14||14|
|$1,000,000 or over||28||148||525||27.16||58|
The “Month’s of Inventory” figure is an indicator of current supply/demand balance. A balanced market has about 6 month’s inventory, meaning at the current rate of sale (average of trailing 3 months), it would take 6 months to sell all existing inventory. When the MOI dips below 4 months, we have a lot more demand than supply (seller’s market), which is what you see in the lower price range brackets. When MOI gets above 8 or 9, buyers have the advantage as there are too many homes for sale relative to current demand.
In the chart above, it looks like our market in Austin right now is balanced up to about $450K. Then, with the exception of the $450K-$499K range, it’s double-digit months of inventory on up through the higher ranges. And most of those inventory numbers are whoppers.
The far right column I left in accidentally so I’ll go ahead and explain what I do with that. It’s just a computational column where I plug in the number of sales for the past three months. I divide that number by 3 and then divide the result into the number of currently Active listings. For example, in the first row, $150K and below, we end up with the month’s inventory = 1,680/(1474/3) = 3.42
Why not just use the number sold in October of 507 instead of the 491 that my formula produces? That would probably work out nearly the same in most instances, but the trailing three months is more reflective of the trend than a single stand-alone month. For example, 507 is a much higher sales number than we’d normally see in October (due to the tax credit buyers), so looking back three months just smooths it down a it. Some people use the past 12 months, but I think 12 months is too far back and too disconnected from current activity and market conditions.
My method with under-report inventory heading into a slow season, as now, and over report it at the start of a strong season, but overall I think it offer the best balance.
Finally, below is my running graph of the Austin sales market going back to 1999. I like this chart because it puts the market in perspective. That tiny pimple in 2007 is nothing compared to what some of the bubble market charts look like across the country. It’s better to just draw an imaginary line from 1999 to 2009, as real estate is a long term investment. Austin has nothing to complain about.
As usual, questions, comments, opinions, observations are welcome.
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