Austin Real Estate Blog

First the May Facts & Figures for the Austin real estate market, active listings are up 1756 from last year. Homes sold is down 544 from last year. Both these numbers indicate a trend for a buyers market. But then the average sales price is up as well as the median sales price, so what does that mean? I think this is a little misleading because lower priced houses are not selling which is pushing the median and average prices up.

So what is going on with the Austin real estate market? Certainly the market has been affected by the subprime issues and the national housing malaise that has affected the entire country. We are seeing sellers that are more negotiable and prices have come down. But that said, we are not seeing 30% price drops like what California is currently experiencing. This is likely because the Austin real estate market did not see the wild appreciation California experienced for the last several years before the subprime issues. Let's look over the past couple years.

One interesting thing to look at is the sold to list price. It was pretty steadily around 97% for 2006 and 2007 until September 2007. It then wavered a couple months, and now April and May have come back up to just under 97%. Now that said, you have to remember to not get caught up in what the asking price is because getting a place for 5% less than list price does not mean it is necessarily a good deal. This is a common misconception. Good deals are not a ratio of list to sale price. Good deals are those that sell for less than the current market price. A lot of people feel good when they get X amount off the sales price, but what if it was X amount overpriced to begin with? Actually, some of the highest appreciating properties and best deals we have personally bought were purchased at list price.

Next let's look at the months of inventory on the market. This is basically how many months it would take to sell off all the houses currently on the market. Generally anything over 6 is considered a buyers market. Anything below 6 is a buyers market. Last year at this time the Months of Inventory was 3.27 which basically indicates we were in a very hot sellers market. In May 2008 we are at 4.91. Although this is above what we say in 2007, 4.91 is not that bad. And it's certainly a different story than what other parts of the country are experiencing. (I think parts of Florida are hovering at around 20 Months of Inventory).

Overall I would still say we are in a buyers market. For sellers I would advise to make their house as spotless and presentable as possible. Buyers are not going to look past stains in the carpet and even general clutter is really hurting a houses chance of selling in the current market. For buyers, if you look over the market you can still find decent deals out there. But if you are looking for a decent deal , you need to be flexible in what you are looking for and be open to variety of different houses & areas. That way you have many opportunities and a higher probability of finding a deal.

Now let's look at the breakout of the submarkets. The suburbs months of inventory increased from last month, from 4.83 to 5.22. East Austin has also increased its MOI just slightly from 5.61 in April to 5.71 for May. And central has improved quite a bit with a drop from 4.01 to 3.46 of MOI.

And finally, below is the further breakdown of the different central Austin MLS areas. Here is a map of Austin showing the different Austin MLS areas.

As always, if you have any questions about a particular house or the market in general, or if you are looking for a home feel free to contact us. Also if you want to search what is currently on the market we have a search here for Austin homes.

Posted by escapeso at 01:40 AM | Permalink | Comments (1) | TrackBacks (0)

The stats for April are out for the Austin Real Estate market. I have gotten a few questions about why for instance April stats are not released until May. Basically although a sale happens in April, it is not reported until later. So if you were to pull the stats out in the beginning of April they would be pretty far off.

There is some interesting stuff going on this month so let's get started. First off, the basics. The market is definitely still slower than it was in 2007. Don't let anyone tell you different. The number of active listings on the market is up 20% compared to last year (8354 to 10034). The number of solds is down 14% (2295 to 1981). The median price is up ($185,000 to $187,900) and average price is down ($249,912 to $242,160). I think the median price is only up because cheaper houses under 150k are not selling due to the subprime issues. Basically in today's market, I am seeing lower prices and better deals than I did last year.

While the market is slower than last year, at this time we are actually seeing some positive signs over the last few months. One indicator people look at is the Months of Inventory on the market. It is based on the current number of sales and looks at how long it would take to sell all the houses currently on the market. A lower months of inventory means the market is a strong market/seller's market. Below is a graph showing the months of inventory over the last few years. As we see the months of inventory has been falling for the last few months. And the difference between now and last year is the lowest it has been in several months. Keep in mind the market is currently a buyers market and is worse than last year. But it seems to be weathering the storm better than a lot of markets that are currently imploding.

Now let let's look at average prices. Because of seasonal flucations in prices we usually compare the average price to what they were last year. So in contrast to the "Months of Inventory" graphs, what we discover when we look at prices is that seasonally adjusted average prices are down 3 percent this month the biggest year to year decrease in several years.

So are sellers overreacting to negative talk about the national real estate market? Maybe. Should sellers go with higher prices. I would say no for 2 reasons. First the Austin real estate market is not strong, it just seems to be weathering the current real estate storm. Secondly if everyone on your block is selling their houses for 200k and you list for 220k, well you can make your own conclusions about the likelihood of selling your home. What does this mean for buyers? Basically prices are down and interest rates are still relatively low. So if you take some time and look over the market you can probably find some decent deals out there. This is what promoted Lisa and I to make an offer on an investment property this week.

Ok lets look at the submarkets of the Austin real estate market. The Lakeway/Lago Vista market is moving incredibly slowly, by far the worst part of the market. East Austin has improved quite a bit from its dreadful performance a few months ago but is still underperforming the general market. West Central Austin is still outperforming all the other submarkets in the Austin area. The central part of the city outperforming the rest of the market is actually reflective of what we have been seeing in other cities around the country.

Here is a further breakdown of the different central Austin MLS areas. Here is a map showing the boundaries of the different Austin MLS areas.

Also if you want to search what is currently on the market we have a search here for Austin homes. As always, if you have any questions about a particular house or the market in general, or if you are looking for a home feel free to contact us

Posted by escapeso at 03:22 AM | Permalink | Comments (1) | TrackBacks (0)

So what do all these numbers mean for the Austin real estate market. Basically as we move into summer we generally start seeing more sales, and that is what we are seeing. Considering all the issues in the national market there was some worry that the real estate market would not heat up in the summer but it looks like we are seeing more sales as the summer approaches.

The number of sales this month (1832) is up from last month (1499). It's down quite a bit (21%) from last year. Another statistic we look at is the months of inventory on the market. Basically, based on current sales, this is how long it would take to sell everything on the market assuming nothing new was added. The average months on market is 6. This month the months of inventory in the Austin real estate market was at 5.26 down from last month's number of 6.09.

Overall the market slowed down in September 2007 with all the subprime issues. The months of inventory in September went from 3.93 to 5.51. Since then the market has been moving at a slower rate. But we have not seen the market getting worse or better. Kind of like being in a car going 70 mph and we shifted gears and since then we have been going steady at 40 mph. I cannot predict the future. But from the statistics we have been seeing, it looks like this summer will be ok although not as good as last summer.

Currently we are in a buyer's market. We are seeing much better deals than we saw this time last year. I have gotten a few questions from people trying to time the market. Basically wanting to buy in the worst month. Kind of similar to buying in the lowest month in a stock market. Market timing doesn’t work as well in real estate as it does in the stock market for a few reasons. First, statistics on the market are delayed. People putting in offers today will not show up in sales statistics for at least a month (it usually takes a month from initial offer to final sale). So we won't know what the bottom month is until way after the fact. In addition, the market doesn’t seem to be getting steadily worse. Instead it seems to be moving at a slower but steady pace for several months now.

Also getting a good deal in real estate is more dependent on the property than the exact time of sale. So instead of waiting for a particular low month and jumping into a property one would have better success having a long time window and waiting for a good deal in the area they are interested in.

Moving on, let's look at the different sub-markets of the Austin real estate market.

The East Austin real estate market ran into problems when the California investors left in September. There was a ton of inventory on the market and very few sales. While the East Austin market is improving somewhat from the last few months, overall it still is relatively weak.

The central Austin real market is doing pretty well. There were relatively few subprime mortgages in central Austin. In addition because properties in central Austin don't cashflow, California investors bought fewer property in central Austin than in other areas of Austin. Also the supply of homes in central Austin is relatively fixed.

As we have seen for several months, the central Austin market is outperforming the suburbs. I don’t expect this trend to change anytime soon. The markets in Lakeway and Lago Vista continues to be doing extremely poorly with a months of inventory just over 12.

So let's break out numbers a little more. Below is a chart showing the sales of homes in the central Austin real estate market broken out by Austin MLS areas. Here is a map showing the boundaries of the Austin MLS areas.

So what areas jump out to me? For investment I really like area 10N. 10N has a few things going for it. First, it's in central Austin which means the supply is relatively fixed. Second, prices are down because subprime borrowers cannot currently buy homes, which hurt areas with homes priced below 150k. But overall the area is pretty central, once banks loosen standards a little, the area seems primed for appreciation. If you buy something there ,I would recommend getting a decent realtor. A lot of the homes in the area have hidden problems with foundations and underground pipelines. (I happen to know this one realtor you can contact him here he has a blog :)). But seriously if you don't use me, find someone that knows what they are talking about.

So here are some more stats I found interesting. Below is a chart showing sales broken out by price of home.

What we notice when looking at the different home price brackets is that homes priced below 150k are selling at a much slower rate than last year. In addition homes over 400k are selling less frequently than less year. So what is going on? Because banks are not giving loans to subprime borrowers (bad credit scores) homes priced below 150k are having a difficult time selling. Homes priced between 150k and 400k are doing okay. Homes priced over 400k are selling slowly because rates on jumbo loans have gone up. This is just my opinion but I think increasing rates on jumbo loans was a way for banks to quickly exit markets like California that are doing poorly.

If you want to look at statistics for the last few year they are located here Austin real estate market statistics. Also if you want to search what is currently on the market we have a search for Austin homes. As always, if you have any questions about a particular house or the market in general, or if you are looking for a home feel free to contact us

Posted by escapeso at 02:38 AM | Permalink | Comments (4) | TrackBacks (0)

So I have posted a few maps of the US here over the last few months showing where subprime loans where given out. This is my favorite map to date. It is packed with a lot more information on where subprime loans, ARMs, and no doc loans are being give out. It also details where foreclosures and late payments are occurring. It basically is 12 maps rolled into one. You can toggle the view to see things like "Subprime Loans per 1000 housing units" and "In foreclosure per 1000 units". If you look up at the top, you can toggle between Subprime and Alt-A Loans. The default map color codes by state. If you click on the state you can see the exact number for the state. You can also zoom and see what is going on at a county or zip code level.


*update*
The map requires flash and doens't render on all browsers. So instead of having a flash window pop up every time someone comes to the blog I moved the map to another page. If you click on the below image the interactive map should pop up in a new window.

Posted by escapeso at 06:33 PM | Permalink | Comments (1) | TrackBacks (0)

Date 30 YR 15 YR 5 YR ARM 1 YR Arm March 13 6.13 5.6 5.58 5.14 March 20 5.87 5.27 5.56 5.15 March 27 5.85 5.34 5.67 5.24

So in the context of the last few years what are mortgage rates doing. Here is a graph of the 30 year mortgage graphed since 2005. With the exception of a sharp dip in mortgage rates last month, the 30 year rate is the lowest it has been since 2005.

If you want to look at more mortgage rate trends we have a tool over here that graphs mortgage interest rates.

Posted by escapeso at 09:15 PM | Permalink | Comments (0) | TrackBacks (0)

So we have all heard some different solutions to the current mortgage crisis. At a campaign rally yesterday in Orange County California McCain came up with something that is pretty unique. 0 percent mortgages. You didn't misread that. If that is what McCain is really thinking we can be sure he is not talking to people in the mortgage industry. Here is a link to his speech

http://www.johnmccain.com/Informing/News/Speeches/bea72b48-35ba-48cb-8cea-b3b68b9be7ee.htm

Here is the relevant part of his speech.

We should also convene a meeting of the nation's top mortgage lenders. Working together, they should pledge to provide maximum support and help to their cash-strapped, but credit worthy customers. They should pledge to do everything possible to keep families in their homes and businesses growing. Recall that immediately after September 11, 2001 General Motors stepped in to provide 0 percent financing as part of keeping the economy growing. We need a similar response by the mortgage lenders. They've been asking the government to help them out. I'm now calling upon them to help their customers, and their nation out. It's time to help American families.

The difference between General Motors and Mortgage Lenders is that General Motors is selling cars. So if they offer 0 percent interest they still make money on the car. Lenders on the other hand do not generally build the homes they are giving out loans for. So while 0 percent mortgages sounds pretty appealing to most potential borrowers (heck it sounds pretty appealing to me), I assume the lenders are not in love with the concept since they would quickly go out of business. Or I guess more accurately, taking away their primary source of income would cause lenders to go out of business faster than they currently are.

We can only assume that after this speech that his advisors pulled McCain aside and told him that 0 percent mortgages are not actually possible.

Posted by escapeso at 06:44 PM | Permalink | Comments (2) | TrackBacks (0)

The February Statistics are out for the Austin Real Estate Market. First let's look at the statistics for the entire market. Below are the stats by month for the last two years.

We had to alter the statistics because this month February had 29 days and last year it only had 28.
Compared to last year at this time, the number of homes on the market is up 24% compared to last year. The number of home sales is down by 13% which is similar to last month but better than the preceding 4 months. The Average Price compared to last year is basically flat (it is up 0.1%). What does all this mean? Basically the market is weaker than last year. But it doesn't seem to be getter worse like California and Florida. Instead it's holding steady at its new slower pace.

Next let's break out some different areas of the Austin real estate market. (Here is map of Austin with the different MLS areas)

The months of inventory describes how many months it would take to sell all the inventory on the market. Generally the lower the number the stronger the market ,and high numbers designate weak market. 6 months is generally regarded as the dividing line between a buyers and sellers market. As has been the case for the last few months, the East Austin Real Estate market still has a large amount of inventory. Basically when the market slowed down, the California investors fled the market and dumped a lot of inventory on the market.

I also broke out Lakeway/Lago Vista this month. As can be seen, this area is doing very poorly. There are currently 14.5 months of inventory. Areas like Lakeway/Lago Vista where builders built too much inventory are having a hard time.

Next up is Central Austin and the Suburbs. Central Austin is doing better than the suburbs. Why? The amount of houses in central Austin is fixed while the amount of houses in the suburbs keeps growing. Due to the laws of supply and demand, when the supply is fixed prices tend to appreciate during strong markets and hold their value better during weak real estate markets. Also in Austin, there is a lot of attraction to living central because there are a lot of amentities in downtown Austin.

Below is a further breakdown of the different central Austin MLS areas.

Next, I wanted to show what the multifamily market (duplexes, triplexes, and fourplexes etc) is doing in Austin.

Basically the multifamily market in Austin is on life support. It is having the same problem as East Austin real estate. When the California real estate market started tanking, investors from California started dumping their properties here on the market. But I am more confident about the multifamily market. Unlike East Austin, multifamily properties did not experience the huge appreciation in 2006 and 2007.

In contrast, over the last two years I had a hard time finding investment properties that had positive cashflow (rents are greater than the mortgage and other property expenses each month). But now with the California investors leaving, prices have come down. In addition, since rents went up in Austin along with mortgage interest rates coming down more investment properties with positive cashflow are showing up.

If anyone has any questions about any particular areas or a particular house feel free to contact us. Also if you want to search for properties currently on the market here is our Austin Home Search.

Posted by escapeso at 04:23 PM | Permalink | Comments (2) | TrackBacks (0)

So the mortgage industry has started blackballing certain zip codes which they feel are a risky investment. There have been some questions if this violates the redlining rules which where implemented in the 1960's to prevent banks from refusing to give out loans in minorityneighborhoods.

This time around, banks are not blackballing certain areas but the mortgage insurers. Mortgage insurers, which are required in cases where the borrower is putting down less than a 20 percent, have started flagging certain zip codes where they refuse to provide insurance. In some cases mortgage insurers have gone as far as blackballing the entire states of California, Florida, Arizona, Michigan, Ohio and Nevada.

While this will not limit all loans in these areas, it will limit people from getting loans that are putting down 3 percent down payments or people looking to buy second homes or investment properties. This certainly deals a serious blow to the areas affected and will offset any gains from the recent falling mortgage interest rates over the last 2 weeks. So far 9600 zip codes have been flagged. Most of the zip codes are in California, Phoenix and Florida.

Posted by escapeso at 09:25 PM | Permalink | Comments (4) | TrackBacks (0)

The January stats are out for the Austin real estate market. As has been the case for the last several months, the Austin market is slower than it was last year. Compared to this time last year, inventory is up 24%. Home sales are down 10%.

Overall the market seems to be doing about the same. The market doesn’t seem to be getting better or worse over the last few months. The decrease in sales (10%) compared to last year was the lowest year to year decrease since this summer, which is a positive sign. But overall I think we are still clearly in a buyers market. Below is a breakout of the statistics for the last few years.

Next let's look at the submarkets for Austin. The trends we have been seeing remain the same. The East Austin real estate market continues to have a lot of inventory on the market since the California investors left the market. The suburbs are also doing worse than the general market. West Central Austin is outperforming the general market.

For more stats here is a breakdown of the central Austin MLS areas. (Here is map of Austin showing the location of the different MLS areas

I have been getting a lot of questions about the Austin condo market. Below is a chart of sales for the last 2 years. Basically the amount of inventory on the market has increased but sales have not. In January 2006 we had 131 sales and 955 Active Listings. In January 2008 we had 121 sales so about the same as 2 years ago, but we had 1676 condos on the market. So it looks like central Austin is outperforming the suburbs and houses are outperforming condos.

I wrote a question and answer section for Decembers Austin real estate blog. Most of these points remain the same. The most important is I still think it's a bad time to flip because the market is slow and it's hard to flip profitably if it takes 6 months to sell a property. I also think it's a good time to buy and hold because buyers can buy homes and investment properties for less and interest rates are low. In 10 years people are generally happy when they buy in a down market.

As always if anyone has a question about a particular property please feel free to contact us. Also in addition to all the stats if you are interested in looking at homes currently on the market you can use our search of the Austin MLS.

Posted by escapeso at 11:44 PM | Permalink | Comments (1) | TrackBacks (0)

The December stats are out for the Austin Real Estate market. Last month we saw very few pendings, which we thought might foreshadow less sales this month. That turned out to be the case. The number of sales dropped 16 percent compared to December 2006. The number of actives increased by 21 percent. The months of inventory is at 5 months. Typically anything below 6 months means we are in a sellers’ market. Despite Austin being under that benchmark, the Austin market is definitely a buyers’ market. Below is a further breakdown of Austin real estate statistics for the last 3 years.

The average and median prices are both up, but I think this is a little misleading. When the subprime mess happened, it mostly affected homes under $200k. So basically, since less of those homes are selling, the average and median prices are being pushed up.

So when are we going to go back to being an up (aka sellers’) market? According to the National Association of Realtors (NAR), it will probably be soon. Maybe tomorrow, if not later today. But they are always saying that, so it would be best to ignore them. Recently I have been asked some of the same questions from people, so before we look at the statistics for different submarkets of Austin, I wanted to write down a few of the basic questions I have been receiving lately and my answers.

Q: Exactly how much is the Austin market going to appreciate over the next X months/years?
A: I have no idea. I can’t really see into the future. I am a realtor, not a godlike super-natural deity. I wish I was a super-natural deity because it would look better on my business card. I would also probably be cooler at block parties.

Q: When is the exact date when the Austin real estate market is going to go from an up market to a down market?
A: This is pretty much the same as the above answer. It could have been last week, it could be next week, it could be 5 months from now. I don’t know. I imagine when the national real estate market improves (which has been in a funk for awhile) the Austin market will improve. Basically the fundamentals of Austin are good we are just being dragged down by the national market.

Q: Is Austin going to experience a 30% to 50% dip?
A: Again I can’t see the future but this seems pretty unlikely. California saw huge appreciation rates (bubble) for several years. Austin on the other hand has had pretty mild appreciation for the last several years. see graphic

Q: Is this a good time to flip?
A: No. When you need to sell in 3 months, if you get lucky & the market improves, that is great. But if the market is moving slower, it could take a long time to sell. And if you get a low offer, you will be faced with the choice of accepting a lower offer or making more mortgage payments on your vacant house. Not really an appealing prospect.

Q: Is this a good time to buy and hold?
A: People always don’t want to buy in a bad market. But ideally you want to buy in down markets and sell in up markets. And right now we are in a down market. If you combine the fact that prices are lower, sellers are more willing to negotiate, and interest rates are low, the market is starting to look pretty interesting. For instance if we look at houses that are South of Ben White about 10 minutes to downtown, we see a few properties for sale around $125k. If you use our real estate calculator (plug in 2.5% for the tax rate and a 10% down payment), you end up with a mortgage payment of $950.

Q: Can I offer 100k for a 200k house?
A: Yes. You can offer whatever you want. But the chance you will get the house is around 0%. The sold to list price in November was the lowest in the last 3 years since sellers are becoming more flexible. But the list to sold in November was 95.8% not 50%. We are seeing some deals coming in higher and lower than 95.8% but not 50% unless there is something wrong (ie a list price that is totally unreasonable).

Q: I want to buy a house in Leander/ Round Rock/ middle of nowhere. I see a lot of building out there. Does that mean I can expect values to increase?
A: No. If you think about the laws of supply and demand, the supply increasing is not good for market value. Buying real estate far out is bad. The fact that they are building more just makes it worse. Even if demand were to increase, the fact that builders would just build more houses to satisfy that demand basically sucks the wind out of your home increasing in value. The benefit of buying central is that the supply is fixed.

Q: I heard the market is down but rents seem to be up. Am I missing something?
A: Nope. Rents are up. Basically in down markets more people rent. And right now a lot of people are forced to rent because they can't get home loans due to the mortgage issues. Rents will probably not go down unless people start to leave Austin, which is not happening.

Q: I saw a house and they said the market value is 200k but they are going to sell it to me for 160k. How excited should I be? Super excited or super-super excited. I can’t decide.
A: I have been seeing the words ‘below market value’ thrown around by sellers a little bit recently. You should basically ignore this unless you are setting down with someone other than the seller looking at a CMA based on recent solds. Recently I saw a house where the seller was selling for $140k and the market value was stated as $175k. Great. The problem is that the house was listed on the MLS at $150k for 3 months and no one bought it. Basically if no one was willing to buy it for $150k after 3 months, that means it’s not worth $150k and certainly not worth $175k. We are seeing some good deals out there but obviously don't take the sellers statements at face value.

Q: What is the meaning to life?
A: Umm… Something about eating an apple a day. Kids are the future? I don’t know. Boggle? Okay, maybe no one really asks me that.

Ok enough questions. Let’s look at the break downs for some of the different submarkets of the Austin real estate market. Before we get into it, I want to define months of inventory (MOI) on the market. Basically it means the number of months it would take to sell off all the homes on the market based on the current actives and the amount of sales. The lower the number, the strong the market.

Overall, the market months of inventory increased from 4.79 in November to 5 in December. The suburbs are still doing worse (5.24) than the overall market. I expect this to continue.

As we have been saying for the last few months east Austin still has a lot of properties on the market. This was caused by California investors pulling out of the Austin market, and they were more heavily concentrated in east Austin. And while the market in east Austin is still oversaturated, it’s actually starting to show signs of improvement. The months of inventory increased but it increased less than the overall market. Not a huge improvement but still a positive sign.

Central Austin had the lowest number for months of inventory on the market in November (4.03 months). And in December it was the only submarket to actually see a decrease in months of inventory, going down to 3.9 months. Overall, central is being affected by the slow down (last year the MOI was 2.2), but it seems to be holding up better than the suburbs or east Austin. And part of the reason is that the supply is fixed. They can’t build any more houses in central Austin unlike east Austin (which has a lot of tracts of vacant land) and the suburbs.

Ok its 3am in the morning. I am going to bed. Hopefully I won’t dream of real estate. I have been doing that recently, which I think is a sign that I am way too obsessed with my job.

As always, if you have any specific questions about the market or a particular house, feel free to ask. Also if you are interested in looking at homes currently on the market you can use our Austin homes search.

Posted by escapeso at 03:12 PM | Permalink | Comments (3) | TrackBacks (0)

The stateman came out with a map which color codes the different areas of the Austin real estate market based on appreciation. The below map shows something that I have been talking about in several blogs. Namely the benefit of buying real estate close to the city center instead of farther out in the suburbs. The areas in green are those that had the highest appreciation over the last year.

http://www.escapesomewhere.com/blogim/mls-map.JPG

Why does real estate in the central city generally do better? Basically the supply is fixed so when demand goes up prices increase. In contrast in the suburbs when demand goes up builders simply build more houses. Below is the interactive map so you can click around and look at the exact appreciation statistics for different areas of the Austin real estate market. If you click on the "Percent change in home median price" an interactive color coded map comes up based on real estate price appreciation.

One thing you might notice is there is a red dot in the middle which represents downtown. Downtown Austin only had one house sell so the statistics for downtown are pretty meaningless. I know some of you have your own blogs. If you want to post the interactive map here is a link with just the map.

http://www.escapesomewhere.com/Austin-Real-Estate-Map-1207.html

Posted by escapeso at 05:34 AM | Permalink | Comments (2) | TrackBacks (0)