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Austin Real Estate Statistics For March 2009

The stats are out for the Austin real estate market. The market is still down. Sales are maybe doing slightly better than the last two months but prices are down so I would still consider the Austin market pretty weak. First let's look at house sales for the last few months.

Yr Month Sales % 1 Yr Change % 2 Yr Change Average Price % Price Change Median Price % Price Change Active Listings % Change Pending Sales Sold to List Price
07 Jan 1,475 $241,169 $175,000 7,060 2,186 96.9%
07 Feb 1,723 $233,936 $176,000 7,334 2,499 97.0%
07 Mar 2,315 $245,391 $177,000 7,776 2,934 97.0%
07 Apr 2,295 $249,912 $185,000 8,354 3,016 97.6%
07 May 2,698 $250,156 $184,050 8,821 3,125 97.8%
07 Jun 2,772 $259,310 $191,800 9,159 2,789 97.7%
07 Jul 2,621 $257,386 $189,900 9,451 2,573 97.2%
07 Aug 2,497 $259,686 $191,250 9,819 2,196 97.1%
07 Sep 1,816 $252,844 $182,500 9,979 1,695 96.2%
07 Oct 1,770 $242,399 $180,000 9,431 1,953 96.4%
07 Nov 1,648 $248,768 $185,000 8,069 1,278 95.9%
07 Dec 1,638 $251,123 $190,000 8,522 1,006 96.0%
08 Jan 1,312 -0.11 $245,305 0.02 $187,000 0.07 8,727 0.24 1,935 95.4%
08 Feb 1,547 -0.1 $233,945 0 $180,090 0.02 9,127 0.24 1,803 96.1%
08 Mar 1,829 -0.21 $239,777 -0.02 $188,000 0.06 9,638 0.24 2,063 95.9%
08 Apr 1,944 -0.15 $240,592 -0.04 $186,950 0.01 10,034 0.2 2,109 96.5%
08 May 2,108 -0.22 $261,580 0.05 $195,000 0.06 10,577 0.2 2,146 96.9%
08 Jun 2,222 -0.2 $259,114 0 $199,940 0.04 10,886 0.19 1,996 96.4%
08 Jul 2,068 -0.21 $256,526 0 $195,000 0.03 10,913 0.15 2,032 96.7%
08 Aug 1,993 -0.2 $256,335 -0.01 $196,500 0.03 10,348 0.05 1,792 96.2%
08 Sep 1,673 -0.08 $241,881 -0.04 $182,000 0 10,217 0.02 1,520 96.2%
08 Oct 1,322 -0.25 $243,364 0 $192,460 0.07 9,944 0.05 1,234 95.4%
08 Nov 997 -0.4 $234,444 -0.06 $182,000 -0.02 9,243 0.15 1,147 94.9%
08 Dec 1,300 -0.21 $247,126 -0.02 $182,500 -0.04 8,520 0 1,114 94.2%
09 Jan 824 -0.37 -0.44 $231,516 -0.06 $177,420 -0.05 8,738 0 1,327 94.3%
09 Feb 1,088 -0.3 -0.37 $241,497 0.03 $189,450 0.05 9,373 0.03 1,406 94.7%
09 Mar 1,421 -0.22 -0.39 $230,893 -0.04 $180,160 -0.04 9,704 0.01 1,846 95.1%
Yr Month Sales % 1 Yr Change % 2 Yr Change Average Price % Price Change Median Price % Price Change Active Listings % Change Pending Sales Sold to List Price


For March we saw 1421 sales which gives us a 22 % decline in sales from a year ago. In January and February we saw year over year declines of 37 and 30 %. The two year decline for March is 39 %. In January and February we saw two year declines of 44 and 37 %. So in essence last year was a slow market and we seem to be doing worse this year. Median and Average prices are down 4 %. The last few months we talked about how even though official prices were up in reality most houses lost value. The only difference is that now we should not see any more headlines from the statesman about prices holding steady. The number of active listings is up 1 % from last year.

One misconception I wanted to talk about is multiple offers. I keep hearing the refrain of "There are multiple offers in our market therefore our market must be doing well". This is simply not true. If someone lists a property for way under market value there are going to be multiple offers. The number of total sales is a much better indicator of market strength than anecdotal evidence about multiple offer situations.

So for me the more interesting question is, why are there not more sales? Prices are down and mortgage rates are down. Last year a house that was selling for 220k would have a mortgage rate of around 6.25 %. That would correspond to a mortgage payment of $1354.57. Today that same house would probably sell for around 200k with a mortgage rate of 4.5 % corresponding to a monthly mortgage payment of $1013.37. With a mortgage payment drop of over 25 % one would expect to see more sales than we are currently seeing.

The first explanation is that buyers are less inclined to buy in a down market. This explains part of the drop in sales but I don't think it is the only reason we have seen a 39 % drop in sales from 2 years ago. Instead we have seen a lot of interest from potential buyers who simply cannot get a loan in the current market. Basically banks are taking the bailout money that is supposed to be an incentive for them to lend. And, according to press releases they are lending. The CEO of Bank of America recently said, “the company is lending as if the good times never ended." But if you look at the numbers this statement simply isn't true. Lending from Bank of America is up only 1.6% from a year ago when the credit markets fell apart. Other banks are doing the same thing. They are talking up how they are willing to lend. In realty they are avoiding everyone but buyers in the most straightforward circumstances with decent credit scores.

How are banks limiting credit? Basically there are a number of circumstances where one could have gotten a loan a few years ago but now would be turned away. And it's not limited to simply subprime borrowers who should never have gotten loans in the first place. For instance, properties that are not tear downs are being classified as tear downs by bank appraisers and getting rejected for loan approval. We have also seen multiple cases where someone moves to Austin with a new job. Although they have a stable employment history elsewhere for the last several years, banks will say they have not gotten pay stubs from their new job in Austin. This is one of the reasons we encourage clients to start looking at lending options early on in the home buying process. Since the banks all have different criteria to turn away loans we can sometimes find one bank that will give out a loan in a certain circumstance even if the others won't. In the end the banks are engaging in doublespeak. Publicly they are playing the role of the enthusiastic patriot willing to give loans in tough times. But in reality, they are looking for any reasonable excuse they can find to deny loans. In the end the current reluctance of banks puts people with stable income and decent credit scores in the unique position. They are able to buy properties with minimal competition because so many other potential buyers have been pushed out of the current marketplace.


Ok enough about banks lets go back to analyzing the market. Now let's look at some different property types

So while the single family market is down the market for condos, multifamily and land is teetering on life support. The number of condo sales is down 59% from last year and 69 percent from two years ago. I don't have high hopes for the condo market. Below are sales for the last few years.

Yr Month Sales % 1 Yr Change % 2 Yr Change Average Price % Price Change Median Price % Price Change Active Listings % Change Pending Sales Sold to List Price
07 Jan 169 $205,562 $159,000 898 243 97.7%
07 Feb 181 $224,362 $181,800 894 318 97.3%
07 Mar 287 $211,545 $175,000 920 366 98.7%
07 Apr 271 $192,225 $161,900 1,031 381 98.5%
07 May 314 $212,499 $179,000 1,166 351 98.9%
07 Jun 314 $203,701 $178,000 1,192 340 98.6%
07 Jul 338 $203,685 $179,020 1,306 357 98.2%
07 Aug 308 $223,261 $173,750 1,353 219 97.4%
07 Sep 168 $209,499 $160,500 1,400 142 97.0%
07 Oct 140 $209,641 $180,000 1,597 165 97.2%
07 Nov 157 $204,524 $173,000 1,530 136 97.4%
07 Dec 133 $234,112 $168,680 1,603 81 96.1%
08 Jan 123 -0.27 $199,346 -0.03 $170,000 0.07 1,676 0.87 205 96.1%
08 Feb 158 -0.13 $208,447 -0.07 $175,500 -0.03 1,734 0.94 215 97.0%
08 Mar 220 -0.23 $219,518 0.04 $184,500 0.05 1,793 0.95 262 96.9%
08 Apr 246 -0.09 $218,279 0.14 $178,950 0.11 1,799 0.74 246 97.5%
08 May 244 -0.22 $201,929 -0.05 $170,570 -0.05 1,838 0.58 246 97.1%
08 Jun 199 -0.37 $196,284 -0.04 $173,000 -0.03 1,883 0.58 247 97.7%
08 Jul 224 -0.34 $205,885 0.01 $160,000 -0.11 1,815 0.39 245 97.3%
08 Aug 220 -0.29 $190,574 -0.15 $168,250 -0.03 1,730 0.28 200 96.1%
08 Sep 156 -0.07 $209,979 0 $174,000 0.08 1,690 0.21 166 96.3%
08 Oct 122 -0.13 $197,573 -0.06 $153,090 -0.15 1,691 0.06 125 96.2%
08 Nov 92 -0.41 $192,050 -0.06 $156,000 -0.1 1,626 0.06 114 95.5%
08 Dec 114 -0.14 $164,573 -0.3 $120,500 -0.29 1,569 -0.02 110 95.6%
09 Jan 74 -0.4 -0.56 $154,965 -0.22 $140,000 -0.18 1,635 -0.02 129 95.4%
09 Feb 86 -0.46 -0.52 $171,900 -0.18 $141,440 -0.19 1,556 -0.1 122 95.0%
09 Mar 90 -0.59 -0.69 $179,162 -0.18 $151,900 -0.18 1,576 -0.12 158 96.1%
Yr Month Sales % 1 Yr Change % 2 Yr Change Average Price % Price Change Median Price % Price Change Active Listings % Change Pending Sales Sold to List Price

Basically the problem is sales have slowed down dramatically from two years ago while at the same time the amount of inventory has increased by more than 50 % in the same period. Even after the market recovers there is a lot of excess inventory that the market will have to move through. The Brazos condos recently had a foreclosure auction. I have not seen much reduction in prices. However, if we start to see multiple foreclosure auctions at the same time in the next 6 months the number of buyers enough to see pretty decent price reductions.

The multifamily market has seen an even more dramatic drop in sales. We have seen a 70% drop from 2 years ago (sales have gone from 100 in March 07 to 30 in March 09). But the number of active listings is not that high. The number of listings is actually down 16% from a year ago and up only 15% from two years ago. This is a much different situation than the condo market.

While the condo market has a problem with too many listings the multifamily market mostly has a problem with lending. Lenders are more reluctant to give loans on multifamily properties than single family properties. Therefore when the market recovers if lenders lift some of there restrictions we expect the multifamily market to recover quicker than the condo market.

Below is a breakdown for the different mls areas.

MLS Area 10N-8E
MLS Area 8W-HD
MLS Area HH-NE
MLS Area NW-WW

One thing we have noticed is that the suburbs have more sales than expected. Part of the reason for this is foreclosures.

Recently, we are seeing more activity in the suburbs and a lot of that increased activity comes from an increased number of foreclosures. For instance in MLS Area PF (Plfugerville) there were 259 sales this year but 50 of those sales were properties in foreclosure. Below are a few more mls areas and the number of 1) total sales 2) foreclosure sales 3) % of sales that are foreclosed properties.











AreaTotal SalesForeclosuresPercent Foreclosures
Suburbs
PF (Pflugerville)259500.193
LS (Lakeway)152250.164
RRW and RRE (Round Rock)47460.129
Central
1B (Central West Austin)5230.057
8E (West Lake)2900.000
4 (Hyde Park)5210.019

So it looks like a decent amount of the sales in the suburbs are happening on foreclosure properties. In Pflugerville almost 1 in every 5 sales is on a foreclosed property. While we are seeing a few foreclosures in central Austin the percent of total sales is much smaller.

The number of foreclosures has increased recently because lenders ended the moratorium on foreclosure proceedings. If you are interested in foreclosures we have a map search of Austin Foreclosures. I expect to see more foreclosures filings over the next few months.

So what is my advice for everyone? First, be wary of "great deals". When I recently looked at foreclosures I noticed that I had researched quite a few of these same properties a few years ago. At the time they were cheaper than average or had extremely high cashflow and therefore popped up on my radar. After some investigation I would discover various problems with them (being in the floodplain, hidden structural problems). Looking at the history it seems the new owners bought it, put it on the market 2 months later once they found the problems, and then went into foreclosure after a year or two.

Although there are a lot of foreclosures in the suburbs I would be wary of those areas. There are a lot of foreclosures because there is lower demand out there. Basically you are getting it for cheap because less people are interested in those areas and in a few years when you sell you will have the same problem.

In most cases I don't think this a good time to buy a property and plan to flip it in the next 6 months or a year. One of the big expenses with flipping is holding time. Holding time is the amount of time you are sitting on a property making payments waiting for it to sale. Currently with few sales the average time on market is pretty high.

I would say if you are looking for a long term investment either for a home or investment property now is not a bad time to buy. We are currently making offers on properties. Prices and mortgage rates are low. So as previously mentioned mortgage payments are significantly lower than they would have been a few years ago. I have heard some people say they want to buy before prices move up. I am less concerned about prices moving up than mortgage rates moving up. While I think eventually prices will recover in the short term, I am more concerned with getting a few properties while mortgage rates are down.

Also I would for the most part avoid the condo market. I don't see it recovering for awhile even after the economy turns around. Single family homes and the multifamily market look like they will recover faster once the economy recovers.

As always if you have any questions about the market in general or a property in particular feel free to contact us.. If you want to search for properties on market here is our Austin home search.