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Austin Real Estate Sales Hits the Skids

So to get out of the way the one positive factor this month, compared to last year at this time sales are up, Inventory is down, median and average prices are up. Sounds great right. But there is a huge huge caveat to that. January 2009 was the worst sales month in 10 years. And January 2010 is the second worst month in 10 years. Personally our sales were down in January and I thought we had just had a bad month. I was oddly relieved to see that the whole market was down.

So what happened? November and December showed steady improvement compared to the rest of the year. Is this a temporarily glitch or will the next few months be slow as well. I am going to argue this from both angles. In favor of a temporary glitch the preliminary indicators on February look somewhat better. Additionally investors account for a higher percentage of sales in January (regular buyers, distracted by the holidays are looking in January but not going to closing yet). Because of the lending environment investors are far and few between.

On the other side we had a massive slowdown that I don’t think can be explained away simply by the lack of investors. Additionally, the tax credit is still in place and mortgage rates are still near all time lows. When the tax credit is removed and interest rates rise they will have a depressing effect on home sales.

Here are the stats for Austin real estate market 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 Months of Inventory
07 Jan 1,475 $241,169 $175,000 7,060 2,186 96.9% 4.786
07 Feb 1,723 $233,936 $176,000 7,334 2,499 97.0% 4.256
07 Mar 2,315 $245,391 $177,000 7,776 2,934 97.0% 3.358
07 Apr 2,295 $249,912 $185,000 8,354 3,016 97.6% 3.64
07 May 2,698 $250,156 $184,050 8,821 3,125 97.8% 3.269
07 Jun 2,772 $259,310 $191,800 9,159 2,789 97.7% 3.304
07 Jul 2,621 $257,386 $189,900 9,451 2,573 97.2% 3.605
07 Aug 2,497 $259,686 $191,250 9,819 2,196 97.1% 3.932
07 Sep 1,816 $252,844 $182,500 9,979 1,695 96.2% 5.495
07 Oct 1,770 $242,399 $180,000 9,431 1,953 96.4% 5.328
07 Nov 1,648 $248,768 $185,000 8,069 1,278 95.9% 4.896
07 Dec 1,638 $251,123 $190,000 8,522 1,006 96.0% 5.202
08 Jan 1,312 -0.11 $245,305 0.02 $187,000 0.07 8,727 0.24 1,935 95.4% 6.651
08 Feb 1,547 -0.1 $233,945 0 $180,090 0.02 9,127 0.24 1,803 96.1% 5.899
08 Mar 1,829 -0.21 $239,777 -0.02 $188,000 0.06 9,638 0.24 2,063 95.9% 5.269
08 Apr 1,944 -0.15 $240,592 -0.04 $186,950 0.01 10,034 0.2 2,109 96.5% 5.161
08 May 2,108 -0.22 $261,580 0.05 $195,000 0.06 10,577 0.2 2,146 96.9% 5.017
08 Jun 2,222 -0.2 $259,114 0 $199,940 0.04 10,886 0.19 1,996 96.4% 4.899
08 Jul 2,068 -0.21 $256,526 0 $195,000 0.03 10,913 0.15 2,032 96.7% 5.277
08 Aug 1,994 -0.2 $256,345 -0.01 $196,740 0.03 10,348 0.05 1,792 96.2% 5.189
08 Sep 1,673 -0.08 $241,881 -0.04 $182,000 0 10,217 0.02 1,520 96.2% 6.106
08 Oct 1,322 -0.25 $243,364 0 $192,460 0.07 9,944 0.05 1,234 95.4% 7.521
08 Nov 997 -0.4 $234,444 -0.06 $182,000 -0.02 9,243 0.15 1,147 94.9% 9.27
08 Dec 1,305 -0.2 $247,025 -0.02 $182,500 -0.04 8,520 0 1,114 94.2% 6.528
09 Jan 840 -0.36 -0.43 $231,006 -0.06 $176,750 -0.05 8,738 0 1,327 94.3% 10.402
09 Feb 1,109 -0.28 -0.36 $241,586 0.03 $190,000 0.06 9,373 0.03 1,406 94.7% 8.451
09 Mar 1,405 -0.23 -0.39 $230,924 -0.04 $180,000 -0.04 9,704 0.01 1,846 95.1% 6.906
09 Apr 1,578 -0.19 -0.31 $232,488 -0.03 $189,900 0.02 9,889 -0.01 1,919 95.6% 6.266
09 May 1,689 -0.2 -0.37 $252,524 -0.03 $193,000 -0.01 9,939 -0.06 2,132 95.7% 5.884
09 Jun 2,090 -0.06 -0.25 $251,065 -0.03 $199,500 0 10,107 -0.07 2,084 95.9% 4.835
09 Jul 2,055 -0.01 -0.22 $244,915 -0.05 $192,590 -0.01 9,988 -0.08 1,996 96.3% 4.86
09 Aug 1,773 -0.11 -0.29 $243,257 -0.05 $189,000 -0.04 9,555 -0.08 1,980 96.2% 5.389
09 Sep 1,760 0.05 -0.03 $240,667 -0.01 $186,780 0.03 9,148 -0.1 1,886 95.7% 5.197
09 Oct 1,791 0.35 0.01 $236,857 -0.03 $180,000 -0.06 8,948 -0.1 1,811 95.9% 4.996
09 Nov 1,561 0.57 -0.05 $237,644 0.01 $177,000 -0.03 8,551 -0.07 1,232 95.8% 5.477
09 Dec 1,346 0.03 -0.18 $259,243 0.05 $191,940 0.05 8,079 -0.05 1,073 95.5% 6.002
10 Jan 884 0.05 -0.33 $244,451 0.06 $179,250 0.01 8,569 -0.02 1,417 95.3% 9.693
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 Months of Inventory

I hate when news outlets quote average and median prices. Basically they are widely inaccurate. If median prices move up or down it could mean prices are moving up or down, but it more often is an indicator that the high or low end of the market has heated up or slowed down. Basically if the high end market heats up average prices skyrocket even though the average house has not increased in value. That said average and median prices are down and my feeling is that the average property in Austin has lost value.

Let’s look at some different sub markets for Austin.

After a year in the doldrums the condo market is showing signs of improvement. But most of the sales are in the lower end market. The median priced condo that sold in January 2008 was 170k the median priced condo that sold in January 2010 was 130k. In January we saw 45 condos sell for under 100k and we saw 0 condos sell that were over 500k. It makes one wonder how a development like the Austonian, that is targeting the upper end condo market, is going to do.

The multifamily market is still slow. It’s better than this time last year but again January 2009 was the worst month in a decade. The multifamily market continues to be plagued by lenders that are not interested in working with investors. For those that can get loans we continue to see better deals than we saw a few years ago.

The market for lots continues to do worse than the market for single family properties in Austin. Basically developers are trying to unload current inventory and so are not interested in buying up lots. For the same reason the number of houses that are being demolished has dropped.

The Austin commercial real estate market is doing very poorly. Lenders (who think the commercial market is going to get worse) are not interested in giving out commercial loans. Since it’s hard to get commercial loans we are seeing very few sales (there were only 9 commercial sales in the mls this month). While there is speculation about what is going on with the residential market the general expectation is that the commercial market is in trouble and it’s just going to get worse. I still like the multifamily market over the commercial market because of the loans available. If someone buys a duplex they can lock into historically low rates for 30 years. On the other hand for commercial loans it’s rare to lock in for more than 5 years. And after 5 years when the rates start to adjust rates will probably be much higher.

As far as the different areas of Austin, here are sales numbers for 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 MLS search.

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