Austin Real Estate Stats For November
The November statistics are out for the Austin real estate market. There are two major topics this month. First sales are way way down. Second mortgage rates are at 40 year lows. Here are the sales stats for the last few years.
We had 990 sales in November 2008. Compared to last year we are seeing a 40% decline. But I think we need a little more perspective to understand how low that 990 number is. In June of 2008 we saw a 20% year over year decline. But we were comparing the weak market of June 2008 to the strong market of June 2008. So a 20% decline was not really that bad. By November 2007 the market had slowed down. So now when we talk about a 40% decline from last year, we are talking about a 40% decline from last year when the market was already pretty weak. We are seeing a two year decline of 49% (Nov 2008 - 990 sales, Nov 2006 1939 sales). So when was the last time we saw less sales than this? It actually took a little digging. Most of the stats only go back to 2004. But after looking through the archives I found 931 sales all the way back in January 2000. So this is the lowest number of sales we have had in over 8 years.
So in summary the sales market is very very slow.
This is also the first time we have seen a decent drop in prices from the official stats. Average prices are down 3 percent. As we have talked about over the last few months even through the official stats showed median prices up they were actually down. This was because less expensive houses were not selling. In a similar way I think prices are down more than 3 percent compared to last year. The 3 percent decline is significant for 2 reasons. First people that believed the stats are now going to feel prices are declining which is important. Second I think it shows prices are coming down a little more.
Ok now that their is no doubt sales and prices are down lets look at different market segments
Condo and Townhouses are down 39%. If you are worried about resale I would avoid the condo market. And in addition, I would especially avoid the high end condo market (500k+). That market is way overbuilt. The multifamily market is down 41% compared to last year. While this is comparable to the 40% drop in single family sales the multifamily market was much weaker this time last year. To illustrate this lets look at multifamily sales for the last 3 years.
Nov 2006 - 94 Sales
Nov 2007 - 49 Sales
Nov 2008 - 29 Sales
This kind of illustrates what people in the industry have been saying about the multifamily market. It's not just weak. It's dead. Compared to 2 years ago we are seeing a 69% decline.
Last month I talked about how of all the markets I liked the multifamily market. I am beginning to swing toward the single family market more for 2 main reasons. Prices have come down more in the single family market over the last few months. Second mortgage rates are extremely low. We have not seen mortgage rates this low by some measurements since 1959. And yes that is not a typo. Mortgage rates are incredibly low. But they are only low for single family homes not for investment properties. So with low prices and low mortgage rates the payments one would make on a single family house are much lower than they were a year ago. We are going to come back to rates in a little bit because it's a complicated mortgage market. Mortgage rates are low but only for certain situations.
Now let's look at areas.
So besides East Austin moving pretty slowly this isn't that interesting. (Months of inventory is the amount of months it would take to sell everything currently on the market. It's basically inventory/sales. Low numbers indicate a strong market).
And it doesn't paint a good picture of what is going in. Central Austin is 8.40 and the suburbs have a months of inventory of 9.29. But if we look at the different mls areas in the central market we see a wide discrepancy. 10N is 5.78 and 1B is 37.00. So what is going on? Here is a chart showing the market broken down by price range.
In general more expensive houses take longer to sell. But in the current market that trend is accelerating. Basically the Austin market for homes over 300k has really slowed down. That is why 10N, with an average price of 194,500, has a pretty low months of inventory at 5.78. It also helps explain why 1B with an average house price of 790,000 has a much higher months of inventory at 37.00.
So earlier we touched on mortgage rates. Mortgage rates are very low. In 2002/2003 rates were low for pretty much everything. Today rates are low but banks are pretty selective. This is what they are looking for.
1) Single Family
2) Owner Occupant (basically not buying a house and renting it)
3) 20% Down
4) Stable Job
I want to touch on these a little more. The first one is obvious. They like single family homes over duplexes and fourplexes. A lot of investors that owned 3 and 4 properties are getting foreclosed on. Basically banks really don't want to loan to investors. We are seeing rates for investors in the high 6s. For down payments you can get a house with 3 percent down. The rate is going to be high. The days of No Doc loans where you state your income and expect the bank to believe you are dead. But if you are self employed and can prove your income for the last 2 years banks are still willing to give loans they just require a lot of documentation.
As always if you have a question about a specific house or neighborhood feel free to contact us. Also if you are interested in looking at what is currently on the market you can look at our Austin Property Search.