Austin Real Estate Blog

The stats for July are out for the Austin real estate market. First let's look at the big picture. Compared to last year sales are down 21% (2621 to 2071) and active listings are up 15% (9451 to 10913). The 15% year to year increase in listings is the lowest we have seen over the last few months (from Dec 2007 to June 2008 the year to year increase in listings ranged from 19% to 24%). So does this mean this month's statistics point to the market turning around? No. Basically last year at this time was when the market first started slowing down and we started seeing more listings. Average prices are pretty much the same as last year and Median prices increased 2.7 percent from last year (189,900 to 195,000). So in summary the overall market is still down from 2007 but it seems to be holding steady at its new slower pace. Below are the month's stats for the last 3 years. And although the Austin real estate market is slower compared to the beginning of 2007, Austin is still considered one of the strongest markets in the country.

So let's break out the market by property type. First let's look at commercial properties.

Last year when the market started slowing down some optimistic commercial brokers predicted that the commercial market would remain strong throughout 2008 even while the residential market slowed down. In contrast it looks like the commercial market has been one of the worst performing markets. As the below chart shows, year-to-date sales are down 32% compared to last year. In contrast, sales in the residential market is only down 18% compared to last year.

The other property type that is down is Multifamily. Year-to-date multifamily sales are down 44% compared to last year. So what is pushing down the multifamily market? Basically lenders have gotten a lot tighter for multifamily loans. Many are requiring 30% down payments; additionally, most lenders are limiting individuals to have only 4 property loans. This has basically really slowed down the multifamily market. Therefore we are seeing lower prices and more properties that cashflow.

Ok let's look at the different areas of Austin.

Central West Austin is still the strongest market. East Austin is still slower because too many investors rushed in during 2007. But the good news for the east Austin real estate market is it seems to be improving. Back in January it was 6.68 months of inventory and now it is down to 5.67. The suburbs are doing worse than the market in general.

So what areas of the market do I like right now? As has been the case for awhile I still like area 10N and SWW (the area just south of Ben White, here's a map of the MLS areas). Basically the area is still pretty affordable and close to town. What's not to like.

So that's what I recommend. What would be the last thing I would recommend? Basically condos that are farther from town. I generally say houses appreciate faster than condos and central Austin outperforms the suburbs. So getting a condo in a condo complex outside of central Austin is kind of like getting the worst of both worlds.

So if you are thinking of getting a place what's my advice? First of all, if you are looking for a good deal, ignore list price. And this goes both ways. If a property is overpriced you are not getting a good deal just because you get it for 10% or 20% off. At the same time it might make sense to get a property for close to list price if its already priced well.

Second a lot of people have been asking when the market is going to bottom out. Not only do I not know but generally no one knows until way after the fact. We are definitely going through a low point now. So even if you are not planning on buying this week or next, now is probably the time to start looking and familiarizing yourself with the market.

As always if you have any questions about the market or a particular property, feel free to contact us. Also if you want to look at what is currently on the market, feel free to use our map-based search of the Austin MLS.