The average year-to-date sold price for homes in Austin is $256K, which just broke through the (peak) year 2007 YTD of $255K.
Now, there is a lot of discussion and caveats that must be considered along with this milestone statistic, but nevertheless, look at the graph below for a visual representation of where average and median home prices in Austin stand right now relative to past years. Further down you’ll find additional monthly and YTD stats and an overview of what Sylvia and I are seeing in the real estate market in Austin as we continue to wheeze through the tax credit hangover and head into the fall/winter months .
Looking at the above graph, one might assume that home prices are rising in Austin. Actually, what’s happening more specifically is that fewer lower priced homes are selling than before, as a percentage of all homes sold. This is dragging the average and medians upward. Nevertheless, the graph remains what it is and to the casual observer, newspaper reporter, or market cheerleaders, this will be fodder for the simple utterance that “prices are rising in Austin”. The real question is, is your particular home worth more today than is was at the peak in 2007?, and the answer is “probably not”, unless it’s a sub $200K home. The graph is really a reflection of segment and price range shifts.
Below is the chart for August sales, YTD sales, a Pending Sales analysis, and some other stuff that I hope you’ll find interesting and useful.
|Austin Sales Market Monthly Update – August 2010|
|Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data|
|Jul 2010||Aug 2010||Aug 2009||Yr % Change|
|Avg $ SQFT||$122.79||$118.85||$111.93||6.19%|
|Not Sold %||50.44%||56.24%||44.45%||26.52%|
Number of sales are down 20% compared to Aug 2009, but, because of a shift in price range segments (see more on that below) average sold price is up to an incredible $270K and the median for Aug 2010 was $203. Homes in Austin in August sold for about 96% of the final list price, median square footage size of the avg home sold in Austin increased 4.6% to 2,066 sqft. Days on market looks stable, even good all things considered.
But take note of the increase in Not Solds, well above 50% now for Aug. This represents sellers who gave up. These were unsuccessful sales efforts. So, more than half the listings (56%) departing the Austin MLS in Aug 2010 left as a “Not Sold” (Expired or Withdrawn). A year ago the percentage was 44%. In a solid seller’s market, the percentage would be in the mid 20s or low 30s.
Bottom line, there is still not enough absorption of inventory to satisfy all sellers, but those who do sell seem to be fairing moderately well both in terms of days on market and percentage of final list price.
Below is the Year to Date stats chart for Austin comparing 2010 to the same Jan-Aug period in 2009.
|Austin Real Estate Sales YTD – Jan-Aug 2009/2010|
|Homes only (no condos, duplexes, etc) – Data from Austin MLS|
|Jan-Aug 10||Jan-Aug 09||Yr % Change|
|Avg $ SQFT||$116.04||$112.17||3.45%|
|Not Sold %||43.28%||42.46%||1.92%|
In the year to date stats we see a bit of smoothing of the tax credit effect as this chart reflects both the surge and the dip in the 2010 market that the tax credit incentive caused. From a YTD standpoint, average sold price is up 4% and the median is up 1%. Again, this doesn’t mean that your individual home value is in line with the above figures, but it does give us a sense of the overall market, artificial market forces notwithstanding.
Note also on the YTD stats that the “Not Solds” are more in line with last year’s. If the Expired/Withdrawn listings remain above 50% for the remained of 2010, we’ll see this YTD number increase though.
Next we have the Sales by Price Range Chart. I’ve added two additional columns so we can verify the assumption that the increase in average/median home sale prices is a result of fewer lower priced home sales. Let’s have a look and see if that hold true.
|Price Range||#Sold||DOM||Active||Mo. Inv||% Sold 2010||% Sold 2009|
|$149,999 or under||399||62||2,483||5.88||28.79%||27.28%|
|$150,000 – $199,999||277||75||2,259||7.11||19.99%||25.95%|
|$200,000 – $249,999||185||64||1,374||6.30||13.35%||13.94%|
|$250,000 – $299,999||127||68||1,089||6.98||9.16%||10.74%|
|$300,000 – $349,999||107||83||676||5.44||7.72%||5.79%|
|$350,000 – $399,999||72||73||662||7.38||5.19%||5.31%|
|$400,000 – $449,999||45||76||377||6.32||3.25%||2.66%|
|$450,000 – $499,999||37||64||391||9.38||2.67%||1.93%|
|$500,000 – $549,999||26||80||197||7.30||1.88%||1.75%|
|$550,000 – $599,999||22||63||262||10.08||1.59%||0.72%|
|$600,000 – $699,999||28||120||277||7.91||2.02%||1.45%|
|$700,000 – $799,999||23||132||187||7.48||1.66%||0.66%|
|$800,000 – $899,999||7||98||164||16.40||0.51%||0.78%|
|$900,000 – $999,999||9||39||129||12.90||0.65%||0.30%|
|$1,000,000 or over||22||135||588||20.51||1.59%||0.72%|
I’m not that good at math, but what I see in the two right hand columns above tells me that the spike in average/median sales prices are NOT a result of low price range buyers going away, but rather the return of higher price range buyers. I knew that the increase in higher priced sales was a factor, but it seems to me now to be the main factor.
Starting at the $300K row, ever price range is showing an increase in the number of sales as a percentage of total sales over Aug 2009. At the $1M and above range, the percentage has increased from 0.72% a year ago to 1.59% this year. When the percentage of $1M+ priced homes more than doubles, and it’s being measured against a smaller smaple size (20% drop in number of homes sold), the higher sold prices have a dramatic effect on the overall averages.
True, the percentage of total sales below $300K dropped from 78% in 2009 to 71% in 2010. But the real movement in the averages is caused by the increase in higher value homes, $300K+, from 22% in 2009 to 29% in 2010.
Why the surge in upper end activity? Two reasons, I think. First, the buyers able to qualify at higher sales prices might be more motivated by and able to take advantage of record low interest rates. Secondly, the higher end homes are exceptionally valued compared to 2007 prices, having fallen in many cases $100K or more, and thus, for many buyers in that range, this seems like a good time to go ahead and move up. The discount given on the $400K home to overcome the sluggish market is much less than the discount received on the more expensive home. Couple that with the obtaining of a much lower interest rate, and a well qualified move-up buyer will conclude that it makes a lot of sense financially to do something new.
One final note on the chart above, this chart is really an “inventory level” chart. It tells us whether the market has excess inventory based on current absorption rates. A balanced market has about 6 or 7 month’s inventory, more for the higher price ranges. At present, the Austin market seems to have solid housing inventory levels, neither too much or too little. Of course, tell that to the 56% of sellers who gave up, but those listings have already been removed from the equation. As owners continue to give up, and new listings slow during fall/winter, inventory will stay in balance unless sales pick up.
A couple of additional graphs to wrap things up. First the Monthly sales graph showing the fluctuations in sales values over the past 30 months, and the pattern of sold prices.
Not much to say about this. There’s the spike in values the last couple of months. We’ll see if that holds into the next few months as the market tries to rebalance and return to “normal”.
Finally, the Pending Listings graph. Note the green line representing 2010. We can assume based on the low number of listings that went Pending in August, that the number sold for Sept is going to remain very low compared to recent historic norms. What will be more interesting to see in coming months is whether the trajectory of the green line joins up with the historic lines at the end of the year, possibly marking the return to normal sales volumes to start Jan 2011. If not, if the green line remains well below the others, we’re going to be seeing the lowest sales volume in Austin in more than a decade.
As usual, comments and questions are welcome.