Central Texas is a HOT residential real estate market! Ask almost anyone who has purchased a resale home this year (or tried to)! If you’re in the market to buy a home these days, don’t say “let’s go see it next weekend.” It may well be sold before you get there.
Very quick sales. Multiple offers. Bidding wars. We haven’t seen this kind of activity this consistently since 2006. If anything, this year may be even more frantic than that last boom before the recession. Here’s a graphic view of market activity since before the housing downturn:
For those who haven’t seen my Market Dashboard before, notice the horizontal blue line across the middle of the graph. That represents a 6-month supply of homes for sale — about what most analysts consider “balanced” market conditions. Lower inventory — especially below 4 months — is a “seller’s market.” Higher inventory — especially above 8 months — noticeably favors buyers.
At the end of 2006, our residential inventory bottomed at about 3 months’ supply. We have now been below that level for 4 consecutive months — December 2012 through March 2013. There is no doubt that April will look very much the same. Notice a slight uptick in the number of active listings from February to March. Notice too that sales turned up at the same time.
The really significant statistic for March 2013 was market absorption:
Across that 8-plus year period, 21% of all Active listings sold in an “average” month. In March 2013, it was twice that pace — 42%!!!
For a little historical perspective, we have exceeded that absorption rate in only one period over the past 23 years — generally from June 1999 to August 2000, the peak of the Dot-com Boom:
If you were here at that time, you remember the Dot-com Bust, followed by 9/11 and the Enron and Worldcom scandals. This time Austin is subject to less external forces that could cause the kind of downturn we saw in 2000. Moreover, this time there is no widespread real estate bubble around the country that puts all home values at risk.
To help you visualize that contrast, here is a look at average home values (12-month rolling average sale prices) compared to the Case Shiller Price Indices:
That’s what a housing bubble looks like! The Austin market gained the same ground in terms of home value from 2000 to 1Q 2013, but without the roller coaster ride the Case Shiller cities experienced. As I mentioned earlier, the bubble in other major markets is not showing signs of reinflating this time. That’s not to say that we couldn’t foul this up all on our own, but Central Texas has a pretty good record. Look again at the Austin-area price curve on the chart above.
As always, there are a few exceptions — specific areas or neighborhoods where home values are flat or even down a little, and market segments in which supply far exceeds demand. (Have you shopped Lot listings around the North Shore of Lake Travis?) Those exceptions are not disrupting a VERY fast-moving market, however.
As I have said for several months: If you plan to buy a home in the Austin area, now is the time. Get preapproved and be prepared for a little frustration, missing a couple of homes before you get up to the pace required to succeed in this market at this time. If you have thought of selling, it’s time for you to get serious, too. At some point, inventory will begin to gain on demand, at least some. There is no reason to think we’ll see a 6-month supply any time soon, but later this year some neighborhoods could well get more competitive for sellers than they are today.
If you’re interested in all the detail of the Austin Market Dashboard, here are printable versions:
Of course, I am always available to answer questions about our market, or about specific homes and neighborhoods. Call or text me at (512) 785-3345 or email me at firstname.lastname@example.org whenever I can be of service.