Earlier today I posted an article that discussed the difference between Austin’s experience with the recession over the past few years, and the experiences of the hardest hit cities and states (Good info about the Austin housing market). Earlier this week I discussed my Austin Market Dashboard and noted that through July 2012 our area has had 14 consecutive months of year-over-year sales growth, and that prices had continued to trend upward through this challenging period.
This week Standard & Poor’s Case-Shiller index reported that their 20-city Price Index showed the first year-over-year increase since the summer of 2010. Now, one month does not make a trend, but this is great news — not only for the residents and homeowners in those cities that saw deep declines in their home values, but for everything that lasting improvements would mean there and in the U.S. economy at large.
Again, Austin’s experience has been very different: average sale prices were up from year-earlier levels in 17 months of the last 25 months, and 19 months showed annual increases in median prices:
As the American-Statesman article said, Austin’s historical price appreciation rate has been relatively modest, and that helped us to weather the housing downturn. Over the past couple of years aggregate price appreciation has been faster than the long-term trend, but the other factors that kept us from the tremendous boom-and-bust cycle seen elsewhere are still in place here. Austin has grown in spite of problems elsewhere, but that will not continue indefinitely. The U.S., Texas, and Austin need the entire housing sector to regain its footing. Let’s hope that June 2012 is the beginning of a new period of healthy growth.
Hi Bill, great blog. I found some interesting info. What’s your take on the inevitable price decline? and speculation on how soon it will happen? I understand there has been an interesting amount of people moving to Austin, but come on, those of us who went to UT and wished we could hang around Austin know there are not enough good paying jobs there.
Who’s buying all those million dollar condos downtown? and 3/2 fixeruper homes for +$500k? no way that market is sustainable, and in case it is, then we can all kiss the hip, weird, old Austin we knew good bye, cause it’s going to turn into a high-end trendy city where you need to earn big bucks to make it.. (i.e. LA, NY, MIA)
I’ll tell you what I see, I log in to Trulia or Zillow and I see a ton of $700k – $1.5M homes for sale ( of course they’re not worth that much) so I see people thinking this their opportunity to exit and sell their homes to an idiot that is willing to pay for it… I’m sorry but the City is not producing high-income jobs, it would be interesting to make a correlation table between average income increases and average home price increases to find out that there’s a crash coming up soon…
Thanks for your comments/questions. I actually don’t see anything “inevitable” about a general decline in Austin-area home prices:
(1) The population growth forecast is still getting stronger, and there are many well-paying jobs in the mix.
(2) There is a huge difference in “for sale” and “sold.” As of today, there are 5,730 active residential listings in the Austin Metro area with an average list price of $461,634 (weighted average of Active and Active-Contingent). The average sale price of homes that actually sold in the past six months was $279,624 — 39% lower than the average list price!
(3) The Housing Affordability Index for the Austin area was up substantially from 2006 to 2011. (I will share more details in an upcoming post.) When 2012 figures are in I won’t be surprised if we lost a little ground this year, but I am confident we will still be positioned very well in Texas and in comparison to the U.S. average.
(4) Using the same market snapshot I used to compare list prices and sale prices above, today’s listing inventory represents less than 3-months’ supply — the lowest level since early 2000. If the pent up need or desire to sell doesn’t draw enough sellers into the 2013 market that supply-and-demand environment may well push prices up somewhat, but the go-go market that led to the most recent housing crisis affected other places very differently than Austin — we saw just a 4% dip in the 12-month rolling average sale price here from the peak in February 2008 to the bottom in November 2009.
(5) Based on the market price distribution data you commented on originally, less than 10% of total sales are happening above $500,000, so that upper-end segment isn’t exerting undue influence on our “bread and butter” residential market.
Will there be ups and downs? Certainly. Are we vulnerable to economic disruptions from outside Central Texas? Absolutely. Will some areas and some neighborhoods do better than others? Of course. That said, though, I do not see any sign that we’re building a “bubble” here that will run out of control and lead to a generalized downturn.