An Interesting Conversation

So, I was in the office of a colleague of mine today and we were talking about our businesses, the market, real estate in general. I had asked him what types of clients he was working with at the moment, what those clients' opinions were of the market and where THEY perceived the Austin market going in the next year. He said that most of his buyer clients were confident that this was, indeed, a VERY good time to buy and were not hesitant to move forward. We also talked about other buyers who we both had come in contact with, who were afraid to buy, because they were waiting it out to "time the market" or "wait until it hit bottom". These are very popular catch phrases right now, especially if you pay attention to all of the national media outlets (cable news networks, financial magazines, national newspapers). It has created a sense of fear that has far reaching effects in the marketplace...here in Austin it has, in fact, been a case of perception becoming reality (at least for MANY potential buyers). My fellow agent showed me an email that a buyer he is working with had just sent him a few minutes before. She is an investor (who happens to be from Manhattan, where real estate has fallen mightily) and she had sent a very brief message which basically said "I'm going to wait for a while because I think the real estate market is going to correct another 30%". I looked at him and told him that was crazy talk (that's when he told me where she lives, so it made more sense to me then), that he should let her know that OUR property values are going to be rising again soon, that even last year property values only dipped 1% city-wide, and that our current Austin market is an OPPORTUNITY for savvy investors (as I always say...you make your money on the buy, not the sell). Well, that got me to thinking: I have studied the Austin numbers from a macro perspective (city wide numbers), but what if I were to delve into the numbers for SPECIFIC areas and see exactly what happened in 2008 versus 2007. Here we go:
The first area that popped into my head to research was the area nearest downtown, which includes some popular neighborhoods like Tarrytown, Clarkesville, Pemberton Heights, and Westlake. So I searched for all the single family homes (no condos, townhomes, lofts, etc.) in areas 1B and 8E which had sold in all of 2007 and then did the same search for all of 2008. When I compared the statistics, there were a few surprises and a few things that I had expected to see. As expected, the number of homes sold in 2008 dropped by almost 35% (ok, ok...yes I expected a drop, but 35%! YIKES!!!) from the previous year. However, there were three very important statistical categories that were very encouraging. The median Sold Price per Square Foot (SP/SqFt) increased from $253.48 in 2007 to $267.03 in 2008, a 5% increase! I like to use median numbers, because they throw out the ridiculously high and ridiculously low numbers that can skew the data. The second statistic that surprised me was the Days On the Market (DOM). The median DOM increased from 32 days on the market in 2007 to 41 DOM in 2008. Now, some might say that this is a significant (25%) increase, but come on...41 DAYS ON THE MARKET!!! That is a VERY reasonable amount if time to sell a home; if I could guarantee my sellers that their home would sell in 41 days, I would list every home that I interviewed for. The last statistic that was somewhat encouraging was the ratio of Sold Price (SP) to List Price (LP). If a home sold for the exact listing price, that ratio would be 100%, if a $100,000 home sold for $95,000, then that ratio would be 95%, and so on. In 2007, the median SP/LP ratio was 97.5%...in 2008, that ratio fell (less than 1%) to 96.7%. Again, these are VERY encouraging numbers, when you consider the fact that our market (as mentioned in a previous posting) is WELL below the national median home price already. I will continue to look at trends, statistics, and numbers to keep you in the loop!! Please feel free to call, text, or email me with any questions.

Austin Appears On Numerous "Best Of" Lists

Austin has long been a city whose residents are its biggest fans. Many residents come here to go to school or for a new job, and NEVER LEAVE. Well, Austin is no longer a well-kept secret. Dozens of national media outlets put Austin at or near the top of their lists of best cities. Here is a sampling:
An October Forbes article placed Austin at the top of its Best Bang For The Buck City list. The article cited various economic factors, housing affordability, and future growth projections as reasons Austin garnered the top spot. Check out the article here: http://www.forbes.com/2008/10/10/cities-buck-economy-forbeslife-cx_ab_1010realestate.html
Kiplinger ranked Austin number 6 of its Best Cities To Live, Work, and Play list. The list is compliled based on strength of the economy, employment, cost of living, and activities available to residents. Take a look at the list:
http://www.kiplinger.com/money/bestcities/
Popular Science cited Austin as the Number 10 City on its list of America's 50 Greenest Cities. The article examined four categories to compile its list, Electricity, Transportation, Green Living, and Recycling. Click the link to read the article:
http://www.popsci.com/environment/article/2008-02/americas-50-greenest-cities?page=1
Austin even tops one of the more curious Best Of lists, America's Best City For Dating. According to Sperling's site, BestPlaces.net, Austin is the best place to "play the dating game". Check out the article here:
http://www.bestplaces.net/docs/studies/DatingCities.aspx
Money Magazine ranks Round Rock number 7 on its list of Best Cities To Live In. Here is the link to the article:
http://money.cnn.com/magazines/moneymag/bplive/2008/snapshots/PL4863500.html

The Austin Real Estate Market-2008 Recap

It's obvious that 2008 was a tough year for real estate, both on the national and the local level. However, Austin didn't suffer NEARLY as much as the vast majority of markets in the U.S. This is a function of several factors. Austin real estate did not see the HUGE jumps in value that most U.S. markets did over the past several years, so values here did not need nearly as large a 'correction'. Also, the local Austin economy has been fairly consistent (if not strong) and growth is expected in the near future...Austin has averaged 3% population growth per year since 2000, which works out to about 40,000 new residents in 2009, according the Austin Chamber of Commerce. The median home price in Austin in 2008 was $183,700 (according to the Austin Chamber of Commerce), a MIND-BLOWING $44,000 lower than the 2008 median U.S. home price of $228,000. Given the quality of life in Austin, the climate, the diversity in the economy, and the city's reputation as a great place to live, I think that these numbers translate into one simple fact: Austin real estate is a bargain and a great investment for the future.
Ok, that's the good news. Now let's talk a little bit about the not-so-good. Every price category in Austin saw double digit decreases in the number of units sold in 2008 from the previous year:


PRICE RANGE-------2007 SALES-----2008 SALES-------% CHG

$0 - $80,000_________1,165___________906________-22.2%

$80,001 - $100,000____1,121___________798________-28.8%

$100,001 - $150,000___7,257__________5,334________-26.5%

$150,001 - $200,000___6,936__________5,625________-18.9%

$200,001 - $250,000___3,782__________3,243________-14.3%

$250,001 - $300,000___2,584__________2,120________-18.0%

$300,001 - $400,000___2,813__________2,340________-16.8%

$400,001 - $500,000___1,394__________1,006________-27.8%

$500,001 - $650,000____912___________695_________-23.8%

$650,001 - $800,000____423___________300_________-29.1%

$800,001 - $1,000,000___263___________198_________-24.7%

$1,000,001 +__________344___________239_________-30.5%

*Courtesy of the Austin Board of Realtors


While these numbers certainly are not encouraging, there IS some statistical data that indicates the fact that the Austin market is not as bad as many believe. Despite the dramatic decreases in the number of homes sold, the average sales price of a home in Austin only dropped by 1.01%. In addition, if we examine the months of inventory (this is the amount of time it would take, using current days on the market statistics, to every home on the market at that point) for each price category under $300,000, we see that each category has UNDER 6 months of inventory, which is considered a seller's market. There is no doubt that this GOOD news is masked by the large difference in units sold, but keep in mind, those 2007 numbers were significantly inflated by a mortgage industry run amok, lending money to under-qualified borrowers. So what does all this mean??? Simple...it's not as bad as it seems (at least, in the price ranges under $300,000).
Please feel free to comment. More to come.....