With all the bad press about foreclosures and crashing real estate markets, I thought you might want to see how the Lubbock and surrounding area real estate market is fairing.
First, let's look at the residential market in Lubbock. These statistics are derived from the Lubbock MLS and are accurate except for some new construction that is not listed on the MLS. Following is a chart showing available data on current active listings on the MLS:
Age # of homes Avg price/ sq ft Avg DOM
2002-2007 440 93.63 89
1997-2001 178 81.02 104
1987-1996 144 79.33 86
1986- 1,098 61.38 83
* DOM is days on market
The current situation indicates a 6.5 months supply of inventory. To give some point of reference, it is helpful to review the market dynamics from the last 24 months. In August of 2005, we had a 2.5 months supply of inventory with late 2006 and early 2007 having the largest number of homes on the market with an 11.9 months supply of inventory. In the period between May 1, 2005 and September 1, 2005, 2,191 homes sold at an average price of $114,615.00 in August 2005. From May 1, 2007 until September 1, 2007, 2185 homes sold at an average price of $134,628.00 in August 2007. There is no doubt that we are in a buyer's market, but there is certainly no indication that we are outside the range of fairly normal cyclical activity. I believe we have more new construction available than normal which puts pressure on the resale market, especially given that many of those homes are very competitively priced. As a disclaimer, I don't have a ready resource of information about new construction given that many of these homes are not marketed through the MLS system. This comment is just my personal observation of the number of new subdivisions that are going in.
The multifamily market is trying to rebound from 18 months of falling rent rates due to an overbuilt situation. It appears we have bottomed out and started to recover. There have been some very attractive deals on some three to five year old properties that will probably prove to be very good investments. Most of the multifamily properties for sale are indicating a 5% to 7.5% cap rate, which is not outstanding, but if we are approaching a time where rent rates recover to the levels we saw in 2002-2003, these properties will again have very nice cap rates and good cash flows which will cause prices to escalate. The average price for multi-family properties in August 2005 was $165,240.00 and the average price in August 2007 was $106,119.00. It is always tricky trying to figure out what the next 12 to 24 months will bring, but for investors with a strategy of long term buy and hold, this appears to be a good time to purchase some of these discounted properties.
I am seeing an enormous amount of interest in farm land. Most of that interest is in land with good to excellent irrigation water,
but there is interest in dryland as well. The price tolerance for most of the interested parties is $1,200.00 to $1,400.00 per
acre for irrigated and $400.00 to $500.00 for dryland. This fall will probably be a very good a time to sell farm land. The interest in Dairy
permitted property is beginning to rejuvenate as well. Milk prices have risen dramatically and hopefully dairymen will start to expand again.
If you have specific needs or questions, please give me a call or I would be glad to meet you to discuss your situation. It is always
my pleasure to help you anyway that I can.