Austin Real Estate Blog

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.

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.