Nuwire Investor’s interview with me and Sam Chapman

A Nuwire Investor reporter interviewed me recently about the Austin real estate market. Me and Sam Chapman (another Austin KW agent and blogger) were quoted heavily in the article.

Nuwire Investor focuses mainly on alternative investments. On their website, they describe an alternative investment as “any investment that falls outside the realm of traditional stocks, bonds and mutual funds. The most common alternative investment is single family real estate. However, there are many other alternative investment options”.

All together I think it’s a pretty good write-up. You can ready the full article here.

These interviews have slowed down lately, though KXAN Channel 36 was at our local investor club meeting last night interviewing people, and I saw some friends of mine on the 10PM news last night. But I showed up when the reporter was packing up and leaving so I thus missed the opportunity to pontificate and have my ego stroked by being on TV as a purported “expert”. The investor club meeting was good and one of the members put on an economics presentation using cobbled together graphs and charts from a vast number of sources. I’m going to try to get a copy and post it up on the blog here. 

The general sentiment of the meeting goers, many of whom are hardcore Austin real estate investors?:

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Austin Real Estate Market Outlook for 2009

Well, 2008 is behind us and it seems like every Realtor in Austin except me and Sylvia are saying “good riddance”. For reasons I won’t fully go into in this blog post, Sylvia and I actually did better in 2008 than in 2007, by almost every measure. It was another record year for us, which I know isn’t fair to all those other Realtors who are suffering and dropping like flies, but we work hard. So, most agents are looking forward to 2009, expecting an upturn in Austin real estate sales activity by this summer.

Yesterday was the Austin Economic Housing Forecast, and here are some quotes from the panel members and todays article about the forecast in the Austin Statesman:
“The Austin-area housing market took a big hit last year, and more pain is in store for 2009”.
“Things are probably going to get a little bit tougher before they get better”.
“Austin-area builders started construction on slightly more than 8,000 houses last year, according to Metro-study, the lowest number since 1997”.
“home starts will plunge by another 25 percent this year to about 6,000. That would be down 63 percent from the peak in 2006”.
“Expectation is that we will continue to see a decline in pricing through 2009”.
“The 990 sales (in Nov 2008) were the lowest number for November since 1997”.
“The area will lose more jobs than it creates in 2009, much as it did in the tech-bust years of 2002 and 2003”.

Jeez, was there any positive news? Yes, a small bit.

“Austin’s housing market remains healthier than many across the country”.
“Austin’s economy also continues to outperform most areas of the country, but the number of jobs in Central Texas grew by 2.2 percent in 2008, about half the growth rate experienced in 2006 and 2007”.

So what does all of this mean? Well, it depends on who you are, whether you’re a buyer or seller, the price range of your home, location, whether you are moving up, down or out, your credit score, and a number of other factors. There is no one label that can properly describe the Austin real estate market as “good” or “bad” for all people, so let’s try to break it down and see which categories are the winners and which should be the waiters.

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Austin Continues to be Economic Top Performer Nationwide

The Austin Metro area ranks 4th among the country’s largest metropolitan areas on the Milken Institute and Greenstreet Real Estate Partners’ 2008 Best Performing Cities list. Texas as a whole did well, with Dallas, Houston, San Antonio, Killeen, and McAllen joining Austin in the top 25 of large metro areas. The top “small metro” area in the country was Midland TX.

Last year Austin ranked number 20 on the list. The list ranks cities according to metrics such as job creation and salary and technology growth.

Is there are corelation between the economic strength of a metro area and its real estate market? Of course there is. Absent the type of speculation that happened in cities like Merced California, a metro area must have solid job growth and positive net migration figures in order to generate the kind of market buyer demand that sustains or propels a real estate market.

Remember, Texas had a soft economy and no real estate price run up during the early/mid 2000’s, and Texas had a relatively low percentage of sub-prime loans, compared to the areas in the U.S. that saw crazy real estate appreciation during those same years. Those 4 years of zero appreciation in Austin from 2001 through most of 2005 are looking pretty good in retrospect. Bleeding out 30,000+ jobs in 2002/2003 was tough medicine back then, but makes for a healthier economy today.

Let’s take a look at some of the cities on the list compared to the real estate markets they are experiencing.

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Austin Real Estate Market Update – July 2008

The average sales price for houses in Austin in July 2008 remained about level, decreasing slightly (0.05%) to $262,114. The number of failed sales efforts (expired or withdrawn) was 42%, which is a large number. Days on market continues to climb also, to 60 days average on market and 39 median days on market. Those numbers are not bad actually, but last year DOM was 51 and 31, so things are definitely slower this year.

Here is a quick summary of the July stats.
• Number of homes sold is down 24% from 2,544 July 2007 to 1,926 July 2008.
• Average sold prices in Austin were down 0.05% over the same month last year to $262,114.
• Median sold price was up 3.65% over the same month last year to $199,000.
• Avg sold price per square foot is down 2.62% from July 2007 to $121 per sqft.
• Avg days on market is up 9 days (18%) from 51 last year to 60 this July.
• Median days on market is up 8 days (26%) from 31 days last year to 39 this year.
• Number of “Not Sold” (exp or withdrawn) is up a whopping 56% over the same month last year, to 42% of all removed listings.

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

One thing to note is that it was about this time last year, or a bit earlier, when we really started to notice the Austin real estate market slowing down. Because of that, I think moving forward we’re going to see the year over year gaps narrow somewhat as we move into comparing a slower period 2008 to a slower period 2007. In other words, we’re a year into our Austin lull, so were not comparing a hot market for the year prior to a cool market as we have been for about the past year.

Austin Real Estate Market Update for July 2008
All Austin / Central TX MLS Areas – Houses Only

Jun 2008
Jul 2008
Jul 2007
Yr % Change
# Sold
2032
1926
2544
-24.29%
Avg List
$274,504
$271,058
$269,722
0.50%
Med List
$209,000
$203,443
$196,250
3.67%
Avg Sold
$264,653
$262,114
$262,233
-0.05%
Med Sold
$202,000
$199,000
$192,000
3.65%
List/Sold %
96.41%
96.70%
97.22%
-0.54%
Avg SQFT
2133
2170
2114
2.65%
Med SQFT
1949
1965
1919
2.40%
Avg $ SQFT
$124
$121
$124
-2.62%
Avg DOM
61
60
51
17.65%
Median DOM
36
39
31
25.81%
# Expired
522
522
367
42.23%
# Withdrawn
687
875
568
54.05%
Not Sold
1209
1397
935
49.41%
Not Sold %
37%
42%
27%
56.43%
On the Market (houses) as of July 21, 2008:
12,756 = Active Res Listings in Austin MLS (12,466 last month)
10,620 = Total Single Family Homes listed (10,335 last month)
1853 = Condo/Townhome/Loft/Garden Homes listed (1870 last mo.)
283 = Mobile/Manufactured Homes

Below is the year to date breakdown.

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