The strength of Austin/Central Texas economy generally, and of our real estate market specifically, continue to roll on. There are signs that the national housing sector is gaining momentum as well, although the four states hit hardest by the 2007 downturn are still far below their pre-recession levels in terms of units sold and sale prices. As I commented in a previous post (Austin and Case-Shiller — How Do We Compare?), other major cities have recovered enough to match home values in 2003-2004. Meanwhile, Austin is seeing real growth. Here is a look at sale prices since before the housing crisis:
And using 12-month rolling averages to reduce seasonal effects, here is a look at both unit sales volume and average prices:
(Click all images to enlarge.)
The price appreciation rates shown in the inset in that chart are metro-area market averages. They do not apply to all homes in all neighborhoods. Some of it is a shift in the mix of newer, more expensive homes; some is due to rapid value growth in high-demand neighborhoods; and some is due to general increases in “baseline” property values. I will comment more on this in a separate post.
Much has been said recently about the Austin area being a “seller’s market,” meaning too few properties available for sale to too many buyers. The population growth forecast for the Austin metro area has recently been increased. Residential listing inventory remains limited:
I used the long-term view of this data to provide some perspective. Many other cities are still carrying market supply to last 10-12 months, some for multiple years. The most over-supplied conditions Austin has experienced in recent decades were during and after the savings and loan crisis in the late 1980s, when inventory approached 1 year on average. During the worst of the past five years, Austin’s market crept into buyer’s market territory, with about 7 1/2 months’ supply. Now we are approaching the lowest inventory level in more than 10 years.
Separately, I will write about the extreme variability of inventory and market velocity in our fast-moving area, even now. Not all areas, property types, and market segments match the broad average of market conditions. It is true, though, that taken together the overall Austin-area residential real estate market is now clearly a seller’s market.
Also using long-term data for context, look at this history of market absorption over the past 22-plus years:
I have explained before that market bottoms have consistently been signaled by “odds of selling” (unit sales ÷ listing inventory) reaching about 10%. The most recent cycle has obviously been more chaotic than previous ones, for reasons I won’t reiterate in this post. The important point in this chart now is that we have unambiguously turned the corner, and in June 2012 we approached the pace last seen in 2006, before the last market downturn.
Out of the 53 months between January 2007 and May 2011, we experienced 40 months in which unit sales were down from the same month a year earlier. As of October 2012, we have seen 17 months of year-over-year growth. Even in Austin, the past few years have been challenging but there is every reason to believe that 2013 will be a solid year in Austin real estate. Give me a call. Let’s talk about your plans and your needs, and how the coming market conditions will affect you.