Austin Housing Market Update – Midyear 2011

Homes values in Austin are trending up overall. This graph shown below can be deceptive though, because market activity is highly localized within pockets and neighborhoods. Let’s have a look and I’ll discuss further below.

Austin Housing Market Graph - 1999 thru June 2011

It’s impoortant to understand what a graph like this is and what it isn’t. It’s not an indicator of the value of your specific home. Many homes in Austin still won’t sell for the price they sold for in 2007. Many will sell for more now. It’s very dependent on activity and demand in your local area.

We recently listed a home in Avery Ranch at a farily agressive price and had multiple offers right out of the gate. That actually surprised me. Many other homes in Avery Ranch are just sitting though. We put our listing through a lot of prep and staging in preparation for the market, and the market responded. I see a lot of listings that may look similar on paper, but when you walk in, they fall flat on preparation and staging, often with dumb things left undone such as minor touchup paint and yard cleanup.

Meanwhile, one of our Central Austin  listings which is priced well (a 3/2 under $250K) in a great location off S. 1st  in the 78704 zipcode isn’t receiving the level of activity we’d expect at that price point in that location. It’s staged and well prepared as well (though it did have tenants occupying it at first). But we’re still waiting for the right buyer. This is frustrating. I know this house is a good deal but can’t explain why the market isn’t responding.

So, “prices in Austin are up” doesn’t apply to every home.

Nevertheless, the chart is meant to show the overall macro trend as indicated by the data in the entire Austin MLS for all homes sold. From that viewpoint, the Austin real estate market has surpassed the former peak of 2007 and looks to be experiencing increased values overall. Eventually, a rising tide floats all boats and that’s where I think we’re heading. I think Austin is on the leading edge of what may be a steady 4 to 7 year up cycle. Not a boom per se, but steady and reasonable value appreciation of 3% to 5% annually.

One of the indicators of this can be found in the new home market. Many builders are slowly increasing prices on floorplans. It’s very tentative, but, for example, in one neighborhood in which we sold a buyer a home in Lakeway, the on-site agent says they’ve already sold more homes this  year than in the previous two combined. And they just raised prices again and they are entering into the last third of available lots. There will be a shortage of “Grade A” lots soon, so builder are going to be hesitant to run out of inventory and will instead slow that by increasing prices. This will in turn affect resale values.

Let’s have a look at the month-by-month Austin home sales for the past 40 months.

Austin Home Sales by month March 2008 thru June 2011
The Market spiked in July last year because all of the lower priced sales close by June 30 (remember the $8,000 tax credit that caused a lot of buyers to pay $10K over value to get the $8K credit?), so July 10 saw a disproportionate number of higher price listings sold. Remember, this is the first summer in 4 years where we don’t have some sort of government meddling and interference in the market. So out look-back stats are still looking back at distorted data and the resulting market hangover that persisted through the remainder of 2010.

Not show in these charts is the decrease in the “Not Solds” (the number of Expired/Withdrawn listings versus sold listings each month) which, for June, dipped to about 32%. More on those stats in a later post.

On a side note, I’ve been in a blogging slump. I just haven’t felt like writing, but I’m trying to get my Mojo back. After 5 years of cranking out blog articles about Austin real estate and other various stuff, I sort of hit a wall this year. They use to just drip off my fingers without much effort, but it’s become difficult for me to sit down and start writing. I think June 2011 was the first month ever where I didn’t write anything at all. My plan is to try to start writing shorter articles and more of them, and see if I can get back in the groove. We’ll see how it goes.

12 thoughts on “Austin Housing Market Update – Midyear 2011”

  1. Steve,

    I’m not in real estate, but I’ve read and enjoyed your blog posts for a number of years to keep my finger on the pulse of real estate (and hence, economic) activity here in Austin. I’ve kept your blog as a “favorite” on my home page.

    I have to imagine it raises your profile and brings you business, and would encourage you to keep it up – if a blog “goes stale” for too long people may stop checking back.

    Thanks for the good info –


  2. Just wanted to say I also enjoy reading your posts, I discovered your blog through the Austin Bloggers Metablog. I noticed the blog of another agent coming up in that feed lately and his posts are pretty much pointless, just trying to drive traffic to him apparently. You, on the other hand, always provide interesting and useful information.

  3. Glad you’re back in the blog saddle, Steve.

    This is highly anecdotal and based only on my area (78751, with many houses sitting on the market for a year or more) and a friend who has been looking for a house in the ‘burbs for the last year, but here goes. It seems like central Austin properties under $350k are just languishing on the market, but houses in a similar price range in the desirable suburban school districts are getting multiple offers.

    My theory is that a majority of the buyers right now are operating out of necessity to find more space and better schools for their growing families. Everyone who doesn’t have to move right now is either sufficiently scared by the market to hang out in their present living arrangement. The families looking to buy see that for the same $250k they can get a good deal on a 1200 sq. foot central city house that may not feed into a good school…or a much larger, newer home further out. So there is something of a demand-donut for the smaller, close-in properties.

  4. Steve,
    We all hit walls, for what ever the reasons.
    Great insight on Austin real estate. You wrote on the 4th of July, whats up with that?

  5. Morning, Steve!
    It seems to be a strange year in some pockets of town. I have noticed a few homes near some sellers I’ve worked with where one home is under contract in a week and others have dragged for close to a year. I have seen well prepared/Staged homes sit, while nearby homes with 10 yr old wall paper throughout sold in two weeks.(Wall paper house was a client – didn’t heed my advice – I guess they showed me…) I watched a Tera Vista golf-course home that was listed under market and less than new models sit for 90 days. High Traffic – Great feed back. Just no interest. The Buyer got one heck of a deal.
    I know the saying goes, If it’s not Price, then it’s Condition… but I wonder if that needs to be modified? Could Timing be an added factor? As in, the right place for sale at the right time for the right buyer? Could it be Neighbors? I tell my sellers all of the time that their neighbor’s yard will affect the sale of their house almost as much as their lawn. Or are sales moving back to Location, Location, Location as more people want to be closer to work with shorter drive times?
    I look forward to your next post on Withdrawns.

  6. Hey Steve, also glad to see that you are back to blog posts. I just assumed you were so busy moving property that you had little time for blogging. I will be interested to see your average rental price updates this summer during renewal season. Seems like a lot of anecdotal strength coming out during this rental renewal cycle, and if that holds for the market, rising rents will also buoy sales prices all else being equal.

  7. Hey Steve, keep on blogging – you popped right up for a search on “austin real estate market update”, and since I saw it was your blog, I read the article and enjoyed it. I didn’t read any of the others, as I think you tell it how it is. I also had lunch with a friend last week who said he’d used you to buy some investment property in South Austin – I was glad that he was in good hands. Thanks for compiling the stats for us – consumers and agents alike!


Leave a Comment