Austin Real Estate Blog

The stats for September are out for the Austin real estate market. By almost any measure we look at September was a strong month for the Austin market. This is first month we have seen a strong increase in sales compared to the previous year. We saw a 6 percent increase in sales from September 08 to September 09. September 09 has more sales than August 09 (1780 sales to 1748 sales). This is highly unusual. Typically sales slow each month as you move into winter and then start rising as you move from winter to summer. So sales increasing from September to August is pretty atypical. Lastly we have 10 percent less inventory on the market than this time last year.

There are some important caveats to the mostly positive numbers. First although we are not seeing as much news about it, mortgage rates are near historical lows. Additionally the expiration of the $8000 tax credit is causing an increase in sales, so basically two short term factors are helping to push sales. It would be interesting to see where we would be without historically low interest rates and the $8000 tax credit.

So the last question is what happens when rates rise and the tax credit expires (note: a new tax credit of $6500 was enacted today which lasts until April 2010). It really depends on the economy. Most signs point that the economy is improving (unemployment is still high but that is a lagging indicator and unemployment usually peaks as the economy is moving out of a recession). The question is whether the recession is a V, U or W. A V shaped recession means a quick recovery. Most signs don't seem to be pointing toward a V shaped recovery. We are going to talk about how that relates to inflation and interest rates in a bit. The two left are a U and W. A U shaped recession is one with a slow recovery and a W shaped recovery points to a double dip recession. So if we are in a U shaped recession (which seems to be the general consensus by April when the tax credit expires real estate should be moving along due to a better economy. If we experience a double dip recession though, we can expect the real estate market to have further problems in April when the tax credit expires.

Ok enough about the recessions and the economy let's look at the Austin real estate market. The residential market is up 6%. The condo market is up 24%. While this is good sign, there is still a lot of inventory on the market before we can start seeing a true recovery or rising prices.

The market for vacant lots is down 20%. To look at how difficult it is to sell a vacant lot right now, there were 102 sales this month and 4725 lots on the market. Compared to two years ago, there were 195 sales and 3315 lots on the market. In other words, lots are semi-toxic still. It’s probably going to take longer for the lot market to recover than the residential market. Builders are going to want to wait until at least they burn through their existing inventory (which is going to take awhile) before they start buying more vacant land.

The commercial market with 5 sales is down 52% from a year ago and down 63% from two years ago. As bad as this is, the reality of the commercial market might be worse. As we talked about in the coming implosion of the commercial real estate market there are a lot of balloon notes coming due and most banks have almost no interest in refinancing them.

For the areas of Austin here are sales based on the different mls areas of Austin.

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.