WARNING: This is a long post, but if you are at all statistics-oriented, I think you’ll find it worthwhile.
In an effort to put the market ups and downs of the past couple of years in perspective, I have added a Market Dashboard page to my website (www.AustinMarketDashboard.com). This is an approach to explaining market conditions that I have found very helpful with many clients over the past couple of years. I keep two versions of this “dashboard” updated on a monthly basis — the long-term view that I posted today (going back to January 1990) and a five-year view.
I started today with the long-term view because it provides the most complete historical perspective. I originally assembled this chart because I had so many clients and prospects trying to “time the market” and asking, “When will we see the bottom?” The truth is that the only way to recognize a market bottom is when you can look back at it 6 or 12 months in the past. However, history can provide some hints.
Begin with the “Odds Of Selling” graph in the middle of the page. That chart shows the percentage of active listings that sold in each of the almost 240 months shown. The average over the entire period was 22%. During that time the Austin market saw four market bottoms before this cycle. The most concise indicator in each case was when the “odds of selling” dipped to about 10% of active listings. We did that again in January 2009, and last month we were back up to 19%.
Referring to the “Average Sale Prices” chart, during each of the previous peak markets, prices moved above the long-term trendline. During each of the market valleys, prices dipped below the trendline. In the “Market Activity” chart, you can see how listing inventory was pulled down during the peak periods and how it grew during times of market weakness. Nonetheless, there is no mistaking the long-term direction of Austin-area real estate values.
My consistent advice to my clients has always been: (1) buy within your means, (2) plan to stay at least 3 to 5 years, and (3) manage your life so that you can pick your time to sell. Since precise market timing is virtually impossible, and prices over the long run are going up anyway, don’t worry about exactly where we are in the market cycle. If you want to buy a house and you find the right one, then the time is right! My advice about “picking your time to sell” does not contradict that. It simply indicates that I can provide you a market analysis at any point in time that will tell you what your house is worth. If that value is attractive to you, then sell! If it’s not, then wait.
Note that in 2003 and 2004 we did a “double dip.” Markets can be complicated things, and with all the wild cards in our economy at this time it’s impossible to predict with certainty what the next twelve months will look like. Nonetheless, Central Texas has remained a fairly “sane” real estate market, and over almost any 5-year period property owners have gained equity. My services include detailed market analysis — for sellers and for buyers. If you’re thinking about a move, let me know and I’ll give you the best information available so you can make informed decisions.