The slideshow below encompasses sales and inventory trends for the last 24 months in Central Austin. You may view data trends by neighborhood here
Sales volume has declined between 30 and 50% nearly across the board compared to last year, though more affordable areas such as Allandale, Mueller and Circle C are fairing significantly better than high priced areas such as Westlake and Tarrytown.
Sales prices are down on average 12% in the central neighborhoods, but again it varies by area. Allendale is up roughly 8%, while other areas are down in price. We have recently seen multiple offer transactions in Circle C, Mueller and Allandale. We believe the greatest opportunity for a “deal” lies in the areas where sales volume has declined the most and inventory is highest. This is particularly true for segments such as the $750,000+ market.
It is important to note underlying factors that skew parts of the data: 78703 (Tarrytown, Clarksville, Brykerwoods) shows a median price increase of 9% compared to two years ago. What is important to note is that the sales price to list price ratio has decreased significantly to around 84%, and 78703 has a high concentration of million dollar real estate. In other words, pricing has not really increased, but in fact homes that would have been listed for $1,000,000 are selling for $840,000. Buyers are getting big discounts off the list price of expensive homes, and hence it appears prices are rising (due to the high priced sales), but in fact prices have realistically declined 15% or so in the area.
The good news: Inventory peaked nearly across the board last winter and is on the decline. The one exception is downtown, which I believe will take more time to stabilize with multiple condo projects under construction. It’s too soon to tell if Austin’s inventory will increase again this winter, but new listings have tapered dramatically this spring. Hence, it’s possible the worst could be over for the Austin real estate market, but we’ll have to wait until this winter to know for sure. None the less, I predict Austin’s market will bottom this year if it hasn’t already. Job growth is beginning to rebound and layoffs are beginning to taper.
I’m still convinced that this is the year to buy because pricing has fallen to post 9/11 values (circa Tech Bust in 2001-2002), interest rates are the lowest on record in 45 years and the $8,000 tax credit is a great incentive for first time buyers. And at some point interest rates have to increase. It may be a while, even a year or more before it happens, but it’s inevitable that the Fed will have to raise rates in the future to curb inflation.
To prove my point, we’ll perform some quick math on a $250,000 loan:
30 year fixed @ 4.75% = $1,304/month
30 year fixed @ 6.0% = $1,499/month
For comparison, if your payment was $1,499 as shown above, at 4.75% the payment would cover $288,000. The buyer can purchase a property that costs $38,000 more for the same monthly payment. That’s 15% more house for the money.
If you have to sell, staging and proper pricing are key in this market. A property may have 50 others competing against it in the same price range, so you must position yourself to be in the buyer’s top three choices, and then prepare to find a way to entice the offer. Well positioned properties are doing just that, and we’ve seen several multiple offer situations within the last two months in areas including Westlake, Hyde Park and Mueller.
