Austin’s real estate market remains a significant bright spot among many U.S. metro areas that continue to struggle. I have written many times over the past year about the health of the Austin/Central Texas economy. I have also pointed out that we are not without challenges, and that difficulties in other cities and states affect us here. Nonetheless, I trust this recap will be informative, and helpful as you consider the current market position of your Central Texas home, or your plans to purchase a home.
First, compare monthly sales in each of the past three years (visible in longer term context at www.AustinMarketDashboard.com). Obviously, all of 2008 and the first eight months of 2009 were substantially below the same periods in 2007. Since most economists agree that the “Great Recession” began in 4Q ’07, that makes sense. Note, however, that by September 2009 monthly residential sales were nearly equal to those in 2007. They were even slightly higher by October 2009.
Next, the chart below shows average monthly listing inventory for our metro area increased 6% from December 2008 through December 2009, while unit sales increased just 2%.
Obviously, if you’re a seller in this market, you would have preferred that sales growth outpaced inventory growth, but compared to what markets in California, Arizona, Nevada, Florida, and Michigan experienced over the same period, this was a strong performance. On the other hand, buyers in our market have not generally held the strong position that bargain hunters in those states have found.
This chart shows a 10% decline in how long listing inventory would last based on the pace of sales each month. Significantly, the time on market — i.e., average days on market — did not vary much over the past year, staying between 75 days and 90 days with rare exceptions. Sellers in the “problem” markets around the country would be extremely happy to see homes moving in an average of 90 days. Note that the “months of inventory” calculation uses only 30 days of sales, so month-to-month variations can be exaggerated.
So how does the market look today? Here’s a snapshot using three months’ sales, which smooths the “months of inventory” calculation somewhat:
Finally, note this summary of monthly inventory and average days on market:
This chart shows 9,092 active listings, and a total of 4,391 closed sales over the past three months — 1,463 per month on average. At that pace, current listing inventory would last 6.2 months. Statistically, these are “balanced” market conditions in which neither buyer nor seller holds a strong advantage. A total of 1,866 homes under contract (30-40 days’ “yes” decisions), indicates that demand has remained fairly stable or strengthened slightly through the holidays.
One more chart clearly shows the results of this market strength in the most important term to most buyers and sellers — sale price:
The Central Texas real estate market definitely went through a period of “above the trend line” growth in 2006 and 2007, but notice the dramatic migration toward higher prices from 2004 (blue bars) to 2009 (gray bars) in the chart above, even with the recession. As further indication of market balance, note the relatively small discounts (sale price vs. list price) reported over the past 90 days: sale prices averaged 98.4% of list price for properties that sold the fastest down to 95.6% for those that took 120 days or more to sell.
As I have told you in previous market updates and more frequently on my blog, these “average” conditions hide significant variations within our overall market. Some neighborhoods and market segments are textbook “seller’s markets,” with homes selling very quickly at nearly full price (if not higher). Other segments have a year or more of listing inventory — true “buyer’s markets,” where really motivated sellers must make signficant concessions to be successful. If you’re thinking of buying or selling, let’s talk about your situation and the specific market segment that applies. I’m always happy to consult with you about the actual market conditions you need to be aware of, and how best to pursue your objectives.
About Bill Morris, Realtor
Many years of business experience (high tech, client service, business organization and start-up, including almost 20 years in real estate) tell me that service is the key to success and I look forward to serving you. I represent both buyers and sellers throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs. Learn more about my background and experience, my commitment to my clients, my profession, and to the real estate industry at CentralTexasHomeSearch.com.
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