The Austin metro area has become a famous real estate market over the past couple of years — hot, hot, hot!!!
Multiple offers and very quick sales are frustrating for prospective buyers, many of whom make offers for several homes before successfully getting one under contract. These market conditions can also be discouraging to would-be sellers who want to make a move within the area, but don’t want to sell without knowing where they will move and when.
Obviously that imbalance of supply and demand is also driving sale prices upward. That is most noticeable the closer you get to Central Austin, but close-in suburbs are also very fast-moving. Estimates still seem to be that we’re gaining about 110 net new Austinites (metro) per day, and that that will continue for a long time to come. As I have commented separately, this growth is driven by real economic demand, job growth, and income increases, so these market conditions will likely remain our “normal” for a while yet.
There are market areas and segments, though, that are not enjoying the fast pace. One of those has been housing on and near the Highland Lakes — Lake Travis specifically, for the purposes of this post. (Other lakes farther upstream are not as well covered by the Austin/Central Texas MLS (ACTRIS®), so I’ll leave that analysis to others who specialize there. Of the Highland Lakes only two — Lake Buchanan and Lake Travis — have historically been allowed to fluctuate in elevation, allowing the others to remain “constant level.” During recent years of drought, those two lakes have suffered.
One metric to compare is “days to sell.” These charts show compare the Austin metro area to lake-area properties:
Notice the differences in the scales of those graphs. The median “days to sell” across the metro area in the first half of 2015 was down to 13 days, compared to 47 days in the Lake Travis area generally, 65 days for homes with views of Lake Travis, and 93 days for homes with Lake Travis frontage.
Another indicator of relative market health is the number of expired listings. For this measure I focused on the worst of the drought years:
In 2012, 2013, and 2014, listings for homes with frontage on Lake Travis were 3 times as likely to “fail to sell” as the median across the metro area! After the wettest May in history, Lake Travis returned to almost normal levels, and sales accelerated in June. Even with that change, though, Lake Travis frontage listings were 2.4 times as likely to expire as the metro area generally.
As you might expect, those measures of market velocity predict issues related to property values:
That chart is a little messier than the other two because it is based on monthly sales prices for the last 5 1/2 years (dotted lines). To identify longer term trends I added 12-month moving averages (bold lines). The trend for the metropolitan area (green line) from 2012 through June 2015 is clear and uninterrupted. In contrast, lake area properties and even those with lake views have been essentially flat. On the other hand, notice the steep drop in sales values at the beginning of 2011, when it became clear how severe the drought was, and another steep decline from mid-2014 through mid-2015.
It’s impossible to know whether some renewed strength in June 2015 is the beginning of a trend, but it is clear that the drought has had significant impact on sale-ability and property values on and near Lake Travis. We have settled into another very dry pattern over the past month now, so time will tell ….