Austin Real Estate Blog

The stats are out for the Austin real estate market. First let's look at the overall numbers. Above is the summary. Below is the breakout for the last few years.

First, sales are down 20% from last year going from 2772 to 2211. Also inventory is up 19% going from 9159 in June 2007 to 10866 in June 2008. That all sounds pretty bleak. So how the heck did we get listed in yahoo's list of top 10 cities to buy a home http://promo.realestate.yahoo.com/best-cities-to-buy-a-home.html. And not only that, we were listed at number 3. To be honest I was a little surprised myself. We are still in a buyers market after all.

There are a few reasons why Austin is considered one of the top real estate markets. First of all, while our numbers are down compared to last year, 2007 was an extremely hot year for us. Kind of like taking an iron out of the fire. A few minutes later it's not as hot as it was but it's not freezing. This can be seen by looking at our months of inventory on the market (MIV). Last year at this time we were at 3.304 which is extremely low and is a sign of a very hot market. Currently we are at 4.915. 6 is usually considered the average. So basically we are doing worse that last year but overall we are not doing that bad.

The second reason we were listed is the rest of the country is doing bad. Really really bad. Let's take a snapshot of the months of inventory of a few cities in the month of June. This cross section was based on which cities I could find recent reliable data on the web.

Los Angeles 9.34
Phoenix 9.37 (down from 18.18 last year)
Miama 39.4 (ouch)
Tampa Bay 13.89
Portland 9.5
Houston 6.7
Austin 4.9

Incidentally Houston and Portland were numbers 6 and 7 in Yahoo's list.

So the Austin market is a hot market then right? Not really. I would still say Austin is a buyers market. We are seeing more negotiable sellers. We have a decent amount of inventory for buyers to pick from. And the general feeling is that buyers are more in control right now. Also our months of inventory is 4.9 and an average market is considered 6, but the months of inventory is typically lower in the summer. So even though we are at 4.9 I would not say we are in a sellers market. (Yes the fact we are in the middle of summer and Miami is at 39.4 months of inventory makes it even worse for them)

Ok so what is going to happen over the next few months? As always I can't predict the future. That said if I had to bet I think the next few months are going to be tough. Why? Basically mortgage rates are going up.

There are a few positives coming into play but I don't expect to see them have an effect on the market for a few months. First the government is rolling out some plans that should have a positive effect on the market. And its expected that at some point banks are going to ease up lending. But I don't expect to see either of those changes having an effect in the next 2 months unlike higher mortgage rates. In addition, historically the economy picks up after an election, but that is still 3 months away.

Before we talk about areas I want to talk about property types. Right now in the market I think multifamily properties are pretty appealing. Why? Basically the market for multifamily properties has weakened considerably. The number of sales compared to last year has fallen 53%. But at the same rental rates have remained strong. There are a few reasons why the multifamily market is so weak but one of the reasons is that lenders have tightened the rules on multifamily properties considerably.

The market that I am not as hot on is the condo market. In a nut shell, they built a lot of condos and they are not selling. In June 2008, there were 199 sales and 1883 condos on the market. In June 2007, we had 314 sales and only 1192 condos on the market. So both the condo and multifamily market are currently weak so what is the difference? The multifamily market seems to be weak because lenders have tightened the rules on multifamily properties. When lenders ease up on these restrictions the multifamily market should improve. On the other hand the condo market is weak because they built a lot of condos and they are not selling that quickly. Even when the market improves this should take awhile to work itself out.

So now let's look at areas finally. East Austin is still the weakest at 5.8 months of inventory. The suburbs are at 5.11 and Central Austin is the strongest market at 3.83.

Below is a breakout of the central Austin MLS areas. Here is a map of Austin with the Austin mls areas. I also have links to stats for the other Austin MLS areas here Areas 8W-9, BA-HD Areas HH-NW Areas OT-WW. And finally below are the stats on the central Austin MLS areas. 10N still looks to be one of the hottest markets.

Any final words of advice. Basically all this analysis of the market trends and different mls areas is just part of the equation. The other part is the actual property. The house, the street, what its near. Most of the foreclosures we see are by investors that look at stats from afar and then never visit the actual properties. The actual property is a very important part of the equation. And of course if you want someone experienced on your side to help you through the transaction feel free to contact us. Also if you are not in the market for a property but have any real estate questions feel free to send us an email as well.

Also if you want to see what properties are currently on the market you can use our search for homes in the Austin MLS