Actually, we’ve had much more than three calendar quarters of HOT market conditions in Central Texas, but I really want to comment on January – September 2014 here. Since it has been a long time since I made time to write, though, I’ll remind readers that are new to my market dashboard, that the Greater Austin residential real estate market has long been largely sheltered from the extremes of market cycles, at least in comparison to other major metropolitan areas around the U.S. (More on that in a separate post about the Case-Shiller index.) Two quick metrics:
(1) Listing inventories have stayed low for many years:
Note that even at the “worst” of the housing downturn, the Austin area peaked at about 7 1/2 months’ inventory. Buyers’ market? Sure. Extreme? Absolutely not.
(2) Although “hard times” have pressed average prices below the long-term price appreciation trend, real pain has been generally short-lived:
Moreover, when inventories have built and prices have fallen, those issues have essentially been extremely localized, confined mostly to small areas of the city and metro area, and even to specific neighborhoods/subdivisions.
With that bit of historical context, consider where we are now. Listing inventory has been below 3 months for 22 consecutive months. Analysts have generally considered 6 to 6 1/2 months’ supply to represent “balanced” market conditions. The last time the Austin area had that much supply was in July 2011! Some observers have begun recently to suggest that maybe 5 months’ inventory is now “normal” for our area, but we have been below even that level since November 2011!
Extremely limited resale supply and home builders still in catch-up mode, combined with an estimated 110 net new Austinites arriving every day, have resulted in a frustrating time for home buyers — multiple offers, bidding wars, and for many the unfortunate experience of making offers for several homes before finally being successful buyers. The almost-3 months of inventory obscures the fact that many areas and neighborhoods measure market time in days.
For example, listings sold in Hyde Park, north of the UT campus, averaged 47 days on market during the first three quarters of this year, but 48% of them sold in 5 days or less! In Wells Branch, in far north Austin, the average sale took 12 days, and almost two-thirds of all sold listings were on the market for less than a week! At the other end of town, a large area in south Austin with hundreds of sales, between William Cannon Drive and Slaughter Lane, averaged 18 days on market, with a median of 5 days! By any definition, much of Central Texas has been HOT!!!
As another measure of market velocity, here’s a look at the percentage of active listings sold each month:
In 4 of the past 18 months, more than half of all available listings were sold, and in 15 of those 18 months, more than 40% of active listings sold. (Important note: That is all single family homes, condominiums, and townhouses in the 5-county metropolitan area, not just the city of Austin.)
Final figures for October will be available later this month. Anecdotally, many real estate agents indicate that the market “feels” somewhat calmer, but I have been involved in several multiple offer situations in recent weeks. In Austin and Central Texas at this time, “slower” definitely does NOT mean “slow.”