What is a ‘normal’ market? Where are the screaming deals?
The number 1 road block to home sales that we are seeing right now is fear that leads to the conviction that you can only buy something half price. Here’s the trouble with this mind-set: If you are buying in Austin, there are no half price homes! If there were, trust me, they would be sold in a matter of hours to those of us watching like hawks for new listings.
There are half price homes available, just not in Austin. Here’s why: where there’s a boom, there’s a bust to follow. Where was the boom? Los Angeles, Palm Beach, Phoenix, Las Vegas… not Austin. So where is the bust? Los Angeles, Palm Beach, Phoenix, Las Vegas… not Austin. The exception to this rule is places like Detroit where, just like in the old days, a town dependent on a factory goes bust when that factory goes bust. Unlike Detroit, Austin is dependent not only on one industry, but several. Our market no longer busts when Dell has major layoffs because there are other growing industries that can pick up the slack.
This is why our growth rate remains strong and why Austin consistently ranks strongest among all of the Nation’s cities in top ten lists and other rankings for financial, economic, and market strength.
So does Austin compare, really? Let’s take a major indicator for the health of Austin’s real estate market, months of inventory – the amount of time that it will take to sell off our current inventory of homes. With our strong, consistent job and growth rates, Austin usually has an average months of inventory figure around 3-4, representing a seller’s market. In Austin, we are used to the security of this seller’s market. When our inventory dips lower, homes are harder to find, you are likely to need to put an offer in on a home the day it is listed and for top dollar (like we saw in 2006). Over 2007, 2007, and 2009, our months of inventory figure has been climbing. This means that, compared to our local average, it is more of a buyer’s market as homes sit and some sellers are under pressure to negotiate low. But…
To see an updated, interactive version of this chart, visit http://AustinHome.Pro/Statistics
Let me explain why things aren’t really as bad as they seem. “Housing researchers consider a 6 to 6.5 months supply of homes for sale to represent a balanced housing market”*, or a neutral market — neither a buyer’s or seller’s market. Last month, March of 2009, Austin just reached 6.5 months of housing inventory, up from 6.1 in Feburary 2009 and 5.7 in January 2009. In March of 2008, we had 6.1 months of inventory and in March of 2007 we had 3.4.
So the real story is that we are still FAR below the national figures for months of inventory that can be as high as 10 (a real Buyer’s market!) and most importantly, they are steady even during this time of uncertianty — because of Austin’s (still) very strong economic and job growth rates.
As far as pricing goes, see the chart above. The orange lines represent the median home sales price in the Austin-Round Rock mentro area and the blue line reprsents teh Average home sales price. Both figures are still holding very steady. In fact, take a look at how our median home salse price is stacking up next to the national and state figures over the past year:
To see an updated, interactive version of this chart, visit http://AustinHome.Pro/Statistics
The moral of the story is, as Douglas Adams put it best, “DON’T PANIC!”. Go about your lives, buy or sell a home if you need or want to, and don’t over-think or out-smart yourself based on the pessimism and drama the news is selling you. Be informed, I highly recommend my charts and figures over those you may find on other sites like Zillow because my data comes from a far greater and more accurate pool of information compiled by experts in our area, not in a far away state. We are in a neutral market, not a buyer’s or seller’s market. The only trouble is, we in Austin have grown very accustomed to living in an agressive seller’s market.
*This quote is from the April 2009 issue of Tierra Granda, Journal of the Real Estate Center at Texas A&M University
