Even as chaotic market conditions still dominate press reports about real estate nationally, the Austin/Central Texas residential market continues to demonstrate fundamental strength. Sales volume is up for five consecutive months, and average and median home values have appreciated all year. Local and regional economic results and expectations are promising. The real housing crisis remains concentrated in five states. Austin’s ultimate market growth still depends on national recovery from the recession and the housing downturn, but there is plenty of reason for optimism based on our local market activity.
First, this month’s snapshot, covering Single Family Homes, Condominiums, and Townhouses in the Austin Metropolitan area:
Active Listings: 9,021
Sold Last Month: 1,644
Months’s Supply At That Sales Pace: 5.5
Pending Contracts: 2,698
With 6 1/2 months’ inventory generally considered “normal,” our current situation tends to favor sellers. Moreover, the number of pending contracts represents about 1.6 times sales, indicating stable or slightly increased demand. As has been true for a long time in the Austin market, however, the average “months’ supply” is comprised of individual market segments with 3 to 4 months of inventory that strongly favor sellers while other segments languish with listing inventory that will last 12 to 18 months or longer — classic buyers’ markets.
Those snapshot figures will change as listing agents catch up with MLS updates from late July, but they are close enough to use as a barometer for now. Compare that market status with this view of the market using final data from June 2011:
Notice that 5.5 months’ supply now compares to a 7 month supply at the end of June. The market absorption rate is even more impressive:
On the surface, the trend since January 2011 looks like a seasonal rise similar to those we saw in 2009 and 2010, only to see the market dip again. This has been the most volatile market in many years and we could be disappointed again, but it is worth noting that this year’s growth in absorption has happened without the help of any homebuyer tax incentives. For the first time since 2007, the “odds of selling” exceeded 20% in June 2011. To put that in perspective, compare this year’s performance with other market cycles since 1990:
I see reason for optimism in that recent data.
As you might expect, market strength tends to reinforce sale prices, and we have see that this year as well:
Clearly, both average and median prices are up, continuing a very long-term trend in the Austin/Central Texas market. It is a fact that sales volume in our metro area is down very significantly from pre-recession levels, but even with that influence, and filtering out seasonality by using 12-month moving averages, the price trend is very encouraging:
Returning to monthly data, that price vs. demand trend isn’t as counterintuitive as it appears. Note these results since the bottom of the market cycle in Central Texas, and again consider the fact that this year’s sales growth is undistorted by tax incentives:
There is almost no doubt that the moving average sale price will dip next month because the highest-ever monthly average in July 2010 will fall out of the 12-month average. That distortion last year occurred in the first month after the last homebuyer tax credit program, when sales of entry level homes nearly stopped, allowing sales of higher priced homes to dominate the month’s activity.
If you have followed national and international economic news in recent weeks, you know that we still have at least several months of choppy market conditions ahead. Market behavior in the Austin area, however, remains encouraging. Population and employment continue to grow, apartment occupancy and market rents are up, and even new construction is showing a little new strength. More reasons that this is a great time to live in Austin, Texas!
The links below will display printable versions of both the long-term and short-term market dashboards:
Feel free to review this information at your leisure and let me know if you have any questions or just want to discuss the Austin real estate market. Of course, I’ll also be happy to talk about specific homes and market conditions in particular neighborhoods or market segments. Just give me a call.