Austin Real Estate Blog

The July Stats are out for the Austin real estate market. The stats are generally more positive this month. Below is a breakdown of monthly sales stats for the last few years.

Sales are pretty much even compared to a year ago (July 08 = 2068 sales vs July 09 = 2069 sales). This is the first time in over a year and a half that the sales numbers for a month have not been down. It’s also much better than the average 22 percent year to year decline we have seen in the first 6 months of the year. So all this begs the question: Why are sales up?

Foreclosures certainly play a role. We are seeing an increased number of foreclosures but that doesn't account for all of the increased sales compared to the last few months. Low interest rates are certainly helping sales. However rates were lower in March, April, and May. I would say the two things that helped sales the most specifically in July were lending and the mood of the economy. Although lending is still extremely tight it has started to loosen up a little bit. Also the mood on the economy while not great is better than it was in the beginning of the year. Here is the number of times "economic depression" was mentioned in news sources this year. Basically besides a few spikes the general level has gone down from the beginning of the year.

So is the market going to continue to get better? Over the next few months the three volatile factors are the economy, interest rates, and the willingness of banks to lend. If two of these factors are positive I would expect the housing market to continue to improve.

So moving beyond sales let’s look at the number of active listings. We are seeing 8 percent fewer homes on the market this month than at this time last year. We have been seeing lower inventory compared to 2008 the last few months but this month is probably better. For the last 4 months we have seen year to year decreases in inventory of 1, 6, 7 and 8 percent respectively. So it looks like the inventory numbers are slightly improving.

With more sales and less inventory obviously the months of inventory ratio has improved. We are currently at 4.827. This is the lowest months of inventory we have seen since August 2007.

So let’s look at market segments.

Sales in the condo market improved. So am I hot on the condo market? In a word - no. There were 219 sales this month. This is down 2 percent from last month. The problem is there are still a lot of condos on the market (1461 condos on the market giving us 6.67 months of inventory). In addition, we are seeing condo foreclosure auctions (most recently the Bel Air and the Brazos) and expect to see more. While it’s good to see the condo market improving I don't see a full scale recovery.

The Austin commercial market saw an increase of 28% compared to a year ago. This is a little misleading since the sample size is so low (there were 23 sales this month). I am a little wary of the commercial market. I previously wrote about how there is a chance the commercial real estate market might implode. Basically the residential real estate market had problems because 3 to 5 years before the residential crash people were getting balloon mortgages. When those balloon mortgage started to expire (and the owners could not get new financing) the number of foreclosures started to spike.

There were a ton of people that bought commercial properties 3 to 5 years ago during a commercial real estate market boom and those loans are about to start expiring. To make matters worse, in the commercial real estate market pretty much everyone has a 3 to 5 year balloon payment because 30 year fixed mortgages are not available. So now most of the banks don't want to help refinance these loans because they are worried that the commercial real estate market is about to implode.

And here are the stats for the different areas around Austin.

June 2009 Stats By MLS Area

Compared to last year we are seeing more sales in the central areas. The areas 10n,10s,1a,1b,2,4,6,7,UT which roughly comprise central Austin collectively saw an increase of 11 percent in sales compared to a year ago. However, we are seeing fewer sales in some of the suburbs. We saw a 22% decline in Round Rock. We are also seeing an improvement in East Austin.

In summary, July was a good month for the Austin market. The commercial and condo market are in a difficult position but the residential market seems stronger than it has been for the last few months. Of course we will have to wait and see if the Austin residential market continues to improve.

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.