Austin Real Estate Blog

The number of new home builds in Austin has slowed to the lowest point since 2004. This is actually kind of good news for the Austin real estate market. Yes it's a sign that we are in a buyers market but we have been in a buyers market for a few months now. I was worried builders would take awhile to slow down the pace of building, causing a rapid increase in inventory which would hurt the market. But thankfully builders have learned their lessons from other parts of the country where they continued to build after the market changed from a sellers to a buyers market.

So how much has the number of new home builds slowed. Austin had 3516 new builds in the 4th quarter of 2006. In the 4th quarter of 2007, we saw 2824 building starts for a year over year decrease of 19.68%. We also saw a large decrease compared to the third quarter of 2007 where we saw 4357 new builds. Below is a graphic which shows the amount of new home starts for the last 2 years.

There is another statistic which is pretty interesting. Usually I look at the months of supply on the market. But since we are talking about new home builds, another stat to look at is the months of supply of vacant homes. This is related to new builds because lenders for new construction use this number as a gage for understanding if the market has a demand for new. Overall the months of supply of vacant homes is 2.4.

If we look at the graphic above we can see a breakout of the months of inventory of vacant homes for different subsections of the Austin real estate market. The numbers for vacant homes are not that surprising based on what we have been seeing. East Austin has been seeing a rapid rise in inventory. We talked about the high inventory levels in East Austin in our blog on the October Stats for the Austin real estate market. There were a lot of investors in East Austin that built properties over the summer. We are seeing less inventory in intown/central Austin. This is probably due in part to the fact that there is simply less vacant land in central Austin.

So how does this fit in with the larger picture of the Austin real estate market. First of all, we are in a buyers market and none of this really changes that. Even though we are in a buyers market, we actually have one of the best markets in the country right now. How? Basically the rest of the country is a lot worse.

The second question is why is Austin not tanking like the rest of the country? There are a few reasons.

First Austin never saw the rapid price increases we saw in California and Florida markets. And consequently the income/house price ratios look a lot better in Austin.

Second the subprime issues hurt the Austin real estate market but not as bad as it did in California. When the subprime fiasco happened, California had extremely lenient/borderline illegal lending practices. So when the changes happened California went from extremely lenient to strict lending practices. On the other hand Austin went from normal to strict so while it hurt us, it didn't have as bad of an effect.

And lastly Austin is just kind of cool. I can't put a number or a graph on that. But people that live here know what I am talking about. Every time I visit people in other cities by the end of the trip I am just thinking "Yeah I like Austin". There are cool businesses and events and more importantly the people here are generally pretty nice and friendly.

I want to be clear- all the above said, we are still in a buyers market. I am simply explaining why our real estate market is better than most. I actually kind of like working in a buyers market. While we are still seeing multiple offers I am not seeing them as frequently as I did over the summer. Buyers can feel a little more relaxed now when looking for a home. Due to rising rents we are also starting to see more properties cashflow in decent areas which we didn't see this summer.

If anyone has any particular questions about the Austin market or a particular neighborhood or house, feel free to send us an email.

If you want to look at more stats we have stats for the last few years here Austin real estate stats if you want to check what is currently on the market you can look here Austin MLS search