Austin Real Estate Statistics for June
The June statistics are out for the Austin real estate market. In a word sales were down. This is lowest number of sales we have seen in June for the Austin market since 2003. This is also the first time I have seen sales decline from May to June. All that being true I was actually surprised sales were not lower. With the tax credit ending it was assumed sales were going to go down. Most people that were thinking of buying bought while the tax credit was available. One factor that made the drop in sales less than what we expected was mortgage rates.
The rest of the data is pointing in different directions. Compared to last year sales are down 4 percent and compared to two years ago sales are down 11 percent. Considering the effect of tax credit ending I would say that overall the market is doing better than it was this time last year.
One factor that at first glance seems positive is that the average sales price is up 11 percent compared to last year and the median price is up 4 percent. I think these numbers are a little misleading. Properties for the most part seem to be selling for slightly less than they were last year. The statistics is probably influenced by the fact that less expensive houses were affected more by the tax credit. A 6,500 tax credit is a relatively bigger benefit when buying a 120k house vs. buying a 500k house. And homes over 800k were not eligible for the tax credit.
Inventory in the Austin real estate market is up 16% compared to this time last year. What we have seen happening is a lot of people put their houses on the market hoping that their houses would sell while the tax credit was in effect.
So what is the big picture? Compared to last year we are experiencing an extremely weak recovery. And at the same time it’s not a certainty the market will continue to recovery. Although we are still seeing life in the Austin real estate market after the end of the tax credit we are by no means out of the woods yet. If the economy starts to falter the real estate market is going to falter. Additionally, although the tax credit had a larger effect on the market than mortgage rates once rates move up off their current historically low values we are going to see a drop in sales numbers.
So let’s look at some different segments of the market.
The Austin commercial real estate is up 18% compared to this time last year. One thing to keep in mind is that most commercial sales are not reported so the sales numbers are usually somewhat unrealistic. Overall the commercial has a bumpy read ahead. A lot of balloons are coming due and banks still seem hesitant about giving out commercial loans. So a lot of balloon loans coming due and an unfriendly lending environment means we are going to see a decent number of foreclosures ahead in the commercial market.
The condo market has seen a 53 increase in sales compared to last year. Part of that has to do with the fact that 2009 was an extremely weak year for the condo market. But it’s still nice to see some life in the condo market. I still don't see condos as an attractive investment. They rarely cash flow and in general don't see to appreciate as fast as homes.
The multifamily market is up 14%. Lenders are still taking a dim view of investors. We are seeing a lot of people interested in buying investment properties but they are simply having a hard time getting loans. The multifamily market seems attractive. With extremely low rates and low prices we are seeing more properties with positive cash flow than we have seen in the last few years.