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.