Austin Real Estate Market Update – Sept 2010

The number of residential home sales in Austin continued to fall off for September. Even record low interest rates are not enough to motivate buyers. Most buyers who really need to buy already did so earlier this year. Looks like everyone else is hunkering down and waiting.

Let’s start with the year to date stats.

Austin Real Estate Market Year to Date Jan-Sep 2010
Homes only (no condos, duplexes, etc) – Data from Austin MLS

Jan-Sep 10 Jan-Sep 09 Yr % Change
# Sold 13,837 14,002 -1.18%
Avg List $266,279 $256,544 3.79%
Med List $199,900 $199,000 0.45%
Avg Sold $255,634 $245,428 4.16%
Med Sold $195,000 $192,000 1.56%
Sold/List % 96.00% 95.67% 0.35%
Avg SQFT 2,210 2,184 1.19%
Med SQFT 2,016 1,978 1.92%
Avg $ SQFT $115.67 $112.38 2.93%
Avg DOM 69 75 -8.00%
Median DOM 43 48 -10.42%
# Expired 4,122 4,066 1.38%
# Withdrawn 7,158 6,318 13.30%
Not Sold 11,280 10,384 8.63%
Not Sold % 44.91% 42.58% 5.47%


I start with the YTD stats because it’s easier to put the September stats into context if we first look at the first 3 quarters compared to the same 9 months a year ago. What we see above is that the number of sales for 2010 overall is just slightly below the same period a year ago. Hidden in the figures is the fact that much of 2010 was front loaded to the earlier part of the year due to the tax credit that drew first time buyers into the market earlier than they would have otherwise entered.

We see that the average and median sold prices are up year to date, but so is the number of failed sales listings (expired and withdrawn). Days on market is down to 69 average from 75 a year ago. This is counter-intuitive when viewed with the higher “not solds”, but is a reflection of a bifurcated market in which some homes sell quickly to waiting buyers and other languish, often without more than a few scattered showings. This is frustrating for sellers and agents as our margin of error in setting list prices is higher than normal because of the unpredictability of the market.

Let’s see what happened in Sept 2010 compared to Sept 2009.

Austin Real Estate Market – Monthly Update Sep 2010
Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data

Aug 2010 Sep 2010 Sep 2009 Yr % Change
# Sold 1,453 1,222 1,728 -29.28%
Avg List $281,206 $265,742 $254,713 4.33%
Med List $209,974 $202,773 $194,450 4.28%
Avg Sold $269,263 $253,546 $243,763 4.01%
Med Sold $201,000 $195,950 $188,750 3.81%
Sold/List % 95.75% 95.41% 95.70% -0.30%
Avg SQFT 2283 2241 2141 4.67%
Med SQFT 2075 2009 1929 4.15%
Avg $ SQFT $117.94 $113.14 $113.85 -0.63%
Avg DOM 72 77 67 14.93%
Median DOM 51 55 40 37.50%
# Expired 612
692 539 28.39%
# Withdrawn 1170 1054 787 33.93%
Not Sold 1782 1746 1326 31.67%
Not Sold % 55.09% 58.83% 43.42% 35.49%

Let’s start at the bottom of the middle row with the 59% “Not Sold” figure. This is a reflection of the strong headwind we are seeing. We simply don’t have enough buyers to buy the number of homes on the market, and most sellers are giving up instead of dropping prices. The number of homes sold is down 29% from the same month last year. That’s a huge drop month over month and a reflection of the pulling forward of so many buyers to spring 2010. In short, this is a tax credit hangover.

Meanwhile, sold values are up as we see a combination of higher end sales going to bargain hunters and the lower end dropping out somewhat, from lack of buyer demand. From the YTD chart above remember that Days on Market is down overall for 2010, but for Sept 2010, DOM is up from last year and last month. Homes are sitting longer.

Sylvia and I just placed two new listings on the market in the past week. To those sellers, and others we talk to who are thinking about it, we have to confess not knowing whether their house will be chosen quickly or if there will be a long wait. Yes, we can look at inventory and absorption rates, Pending/Active ratios, and other stats, but those stats don’t predict market behavior as reliably as in the past. For most sellers we talk to, unless circumstances dictate selling now, we advise waiting. If you can’t wait, you have to realistically be prepared to be patient, flexible or both.

Let’s take a graphical look at price behavior. First the graph showing Austin real estate sold values from 1999 through end of Sept 2010.

Austin Real Estate Sales Maket Graph

If we were to view the Austin real estate market solely in terms of price direction, this above graph paints a hopeful picture. Of course there are many homes currently selling for below the 2007 value, some substantially below. Nevertheless, the overall price direction does not appear to be heading down.

Next, the price swings of the past 31 months.

Austin Real Estate Sale Prices Past 31 months
This chart illustrates the monthly swings we see in values. In general, what I look for is when or if we’re going to break out from the range we’ve been bouncing up and down within.Looks like we’re trying to do that, but we’ll really need to wait and see what the market looks like as we head into the spring.

Finally, the Pending Sales chart, which shows the number of accepted contracts each month.

Austin Pending Sales Graph Sept 2010

I keep this running graph each month to illustrate what the tax credit did our market activity in April and May of this year (green line on graph). The trend is heading toward a normalized state compared to the previous 3 years though, so I’m hopeful that we’ll start 2011 from a “normal” starting point relative to years past.

I’ll be posting some segmented stats next, broken down by areas and some other factors to see if we can find any clear patterns in the market.

As usual, comments and questions are welcome.

7 thoughts on “Austin Real Estate Market Update – Sept 2010”

  1. Yeah.. we’ve noticed the same thing out here in the Hill Country. (We are builders/investors) We.. as in hubby and I .. are kinda hoping that once Congress extends the tax cuts, businesses will regain some confidence, and get us back on the road to recovery.

    What do you think?

  2. Business aren’t waiting for taxcuts to magically start hiring. It all depends on business lending and the ability of people to move around to find the right jobs. With slow sales, people can’t move to get a job, therefore they don’t spend and business can’t hire. Kind of a catch 22?

  3. @Rick, if houses were more afforabled, more people would be willing/able to purchase them… thus, increasing mobility… I still don’t understand why a lot of people feel like higher home prices are a good thing. People could spend their money buying other goods/services instead of dumping so much of it on their home

  4. Once people get passed the media induced misinformation that passes for news in the USA (whatever sells ad time) they’ll realize that real estate is indeed a local matter. Austin is one of the most desirable places to live in the USA and World for that matter, and yet prices here are very low compared to almost all other similarly desirable places in the USA or World, and even lower when one considers that despite general wage stagnation for the last decade here the price to income ration here is also amongst the lowest to be found. So, I agree, as far as Austin and especially the down town area is concerned just enjoy living here and wait out the tail end of this madness. Then, sell for a reasonable price a little later when buyers decide they have held their breath long enough already with no result and realize they are running after the train leaving the station.

  5. > People could spend their money buying other goods/services instead of dumping so much of it on their home.

    @Brett – the problem with consumption spending versus investing in home ownership is that the stuff you’re talking about drops in value immediately whereas, over time, real estate always appreciates in value.

    That said, I don’t believe everyone should own a home. Many should be renters their entire lives in fact. But for about 2/3 of the American population, home ownership makes sense and should be pursued ahead of consumption spending, the recent dip notwithstanding.

    @Ray – The media is also partly responsible for the bubble due to the breathlessly hypoed reporting we saw about kids in their twenties flipping condos, people cashing out after homes doubling in price in 4 years, etc. Reporters in heat selling the notion of real estate as a “get rich quick” tool rather than what it really should be.

  6. to Rick and Brett:

    Higher priced homes are not the answer to economic recovery, but a steady trend UP is a sign of a healthy economy.

    And YES, taxes DO matter to businesses!! If we have to spend $20k more per year on taxes, that’s 20k we could have spent on hiring an assistant or buying a lot (putting $ into the economy), etc. …BTW, we have $20k lots in TX!

    I can tell you, as a small business owner, we are circling the wagons until we see if our government will pass legislation that creates a business friendly environment or a big government way of life.

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