Our market analysis this month shows inventory continues to decrease across the board in Central Austin, and prices appear to have stabilized, and even increased in some submarkets in Austin. Low interest rates and the $8,000 First Time Home Buyer Tax Credit have combined with a general perception that home prices have bottomed out in Austin overall. Most transactions we are seeing are first time buyers and “move up’s”. While many move up’s have a difficult time accepting that their house may be worth less than at the peak of the market in 2007, most are excited to make up that discount and then some on the purchase of a more expensive home, all while trading down to a lower interest rate. A perfect example was a client that recently sold their existing home and purchased a new one which cost 14% more, but after locking a lower interest rate their monthly PITI only increased by $20.
The summer season, however, is the busiest time of year for Austin real estate, and so the tell tale sign of a recovery will be to watch what happens later this year. We are anticipating a busier than usual fall and winter season as the $8,000 Tax Credit deadline approaches December 1st. It’s possible the government may extend that deadline, but if they opt to extend it likely occur at the last minute.
And so that brings us to the market segments. As usual, lower prices directly correlate with lower inventory. If there is any question whether the Home Buyer Tax Credit is working, look no further than South Austin (10N and 10S), between Ben White and Slaughter. There, the median home price hovers around $177,000 and the inventory is an extraordinarily low 2.3 months. Buyers looking in this area practically have to submit an offer the day a home comes on the market. But buyer’s confidence that prices AND interest rates are “as low as they’ll go” are showing effects across all strata of Austin’s housing market. Westlake and Old West Austin (Tarrytown, Clarksville, Brykerwoods), the most expensive pockets of Austin, continue to have the most inventory with over 9.5 months available, however this is a significant decrease from last winter. Tarrytown, for example, sold more million dollar homes in May than in January, February and March combined. Great discount buying opportunities still reside in the luxury home market for well qualified buyers over $500,000.
Circle C continues to be a strong performer due to its relative affordability and proximity to downtown and major employers such as AMD. Sales have sharply increased in Steiner, although transactions in the Jumbo Mortgage realm (loans greater than $417,000) continue to have difficulty passing underwriting, and we have seen many homes undergo a multiple offer bidding war, only to fall out of escrow because the buyer could not get the loan approved. Days on Market continue to
Mueller and Allandale are both on fire. The numbers for Windsor Park and Mueller don’t tell the whole story. Builders such as David Weekly are rapidly selling homes with little to no incentives, so much so that recently they only have had 1 or 2 homes available at any given time. Compared to last winter when a buyer could have their choice of 15 -20 move-in ready homes, there is a drastic difference. Allandale has very little available and good listings are seeing multiple offers within days coming on market.
The condo sector continues to remain healthy overall, although the downtown market will likely see price declines in projects under construction as those buildings are opened for residents and the additional units are absorbed through 2010 and 2011. The Shore recently established, however, that a large contingent of buyers remains for downtown condos when there is a perception of a great value. By lowering prices and offering builder closeout specials, the Shore successfully sold over 50 units in less than 2 months.
Overall, I still believe the worst is past us, and local job growth will be the determining factor in whether home prices remain level or begin to appreciate over the next 24 months.
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