Closings dropped in the RN area from August 2009 as anticipated from last month’s report. This drop was more substantial than July’s drop; but this was anticipated. Most of this drop is from three effects of the TAX CREDIT program.
1) The closings from the tax credit program ended in June, so naturally there would be an anticipated drop in sales for a few months thereafter.
2) We are competing with last years’ sales that were involved the tax credit program, thus we have lost buyers now that bought earlier.
3) Tax credit programs on home sales usually have a short term positive effect, but may not have an overall effect (as far as home sales)
a. Many of the sales that were created from the program were from sales that most likely would have occurred at a later date….being either months or a year or two. Thus, this can distort figures when such a program ends, as sales that would have occurred in late spring to summer of this year were pushed up as much as a year because of this program. Thus, it is understandable that these buyers would leave a void in sales when the time period in which they would normally have bought occurs. We are now in that period.
River North Area Market Report CLICK HERE
Though we will be competing in the upcoming months with last year’s tax credit program the negative effect of taking buyers that would have bought at a later date will diminish with time. Thus, we would likely see improved closing results in the coming months. Should the government renew the program, as is being discussed, numbers will improve and re-create this distortion for next year.
So how do we tell if the real estate market is improving or not. Inventory levels are remaining level (year to year), so we can see the market is not really getting worse or there would be more homes on the market. I look closely at “months of inventory”. This tells the true picture of what the market actually is. 4 to 6 or 7 is considered by economist as a “normal” market. Below that would be a “sellers” market and above that a “buyer” market. As you can see on the linked report, many lower price points are entering a “normal” market even with reduced sales from the previous year. Higher end homes still remain high.
The most notable change we have seen is an increase in traffic in late August. This is odd and shocking as late August is normally the slowest two weeks of the year. We shall see in September if this is just a fluke or if confidence is truly increasing and this traffic turns shoppers to buyers.
At this point we are still seeing the market as flat, with buyers waiting on confidence improvement. This will occur with increased job creation. We are seeing job creation in Austin, and God willing, this will continue in the area….and hopefully, one day, throughout the rest of the country. It’s all about jobs. The market will move when it wants to move, not when economists say it will. It usually occurs when no one is expecting it.
River Place Country Club has sent in an application to change the club area from residential to commercial (retail/office). Information on this can be found at the following link; then, put in the application number noted. No details are noted yet, nor has a hearing date been posted.
City of Austin Application page for River Place Country Club CLICK HERE
C14-2010-0145
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