Market Trends in Austin Texas -- Goodbye Buyers' Market
While year-end reports from Moody’s and Case-Shiller project that home values in the country are likely to drop another 3-5 percent in 2012, Austin Texas quietly slipped into a sellers’ market in November 2011.
After inventory of homes for sale reached a high of 7.4 months in May, there was a steep decline in the supply to 4.4 months by the end of 2011.This 40.5 percent decline over seven months set a new record for Austin, and a strong indication of its market strength. The actual volume of available homes dropped from 11140 in May to 7339 in December (−34%), while corresponding sales dropped from 1977 in May to 1634 in December (−17%).
The last time Austin was in a sellers’ market was in April 2008, and thereafter the sub-prime loans debacle reared its head. With skyrocketing foreclosures and homeowner defaults, property values plummeted. This resulted in a 42 month hiatus during which time Austin alternated between a neutral and buyers’ market. The months’ inventory chart below is a comprehensive overview of market trends in Austin over the past 12 years.
Months’ inventory indicates how long (months) it would take to absorb all homes currently listed for sale, provided no new homes are added, and is based on current listings and a twelve month moving average of sales. It is an important early warning indicator of a changing market, and while it varies from city to city, historically Austin’s housing market appears to have the following characteristics:
1.5 - 3.5 months = Hot Sellers’ Market
3.6 - 5.4 months = Sellers’ Market
5.5 - 6.5 months = Neutral Market
6.6 - 7.9 months = Buyers’ Market
8.0 - 9.0 months = Hot Buyers’ Market
As the name implies, a buyers’ market favors buyers because inventory (supply) is high, giving buyers plenty of homes to choose from. However, such opportunities do not come often in Austin. Historically, over the past 10 years, Austin has been in a buyers’ market for only 26 months:
2003: 7 months (tech bust)
2009: 5 months (sub-prime loans crisis)
2010: 9 months (recession)
2011: 5 months (recession)
According to the Federal Housing Finance Agency (FHFA), based on data available up to the third quarter of 2011, home values in Austin during the past 12 months declined 1.60 percent. Texas declined 1.64, and USA 3.74 percent. However, over the past five years Austin home values appreciated 9.95 percent, Texas gained 3.91 percent, and USA as a whole lost 18.56 percent.
Job growth is a major driving force of the real estate market, and an unemployment rate of 6.6 percent and current months’ inventory of 4.4 bodes well for Austin in 2012. Comparatively, unemployment in Texas is 8.1, and USA 8.5 percent.
Despite the growing strength of Austin's real estate market, bank owned properties are still selling at 30 to 40 percent discount, as banks try to unload their "shadow inventory". While these are not always prime properties, investors are snapping them up and renting them out. The rental market in Austin is very strong, with occupancy at historical highs. This is a niche market we specialize in, and have many options for investing in such income generating properties. Contact us for more information.
A Report on Market Trends in Austin Texas is updated at: PiraniProperties.com by the 15th of every month. Take advantage of our database of information for an analysis of property values specific to your home or subdivision.Contact Nash Pirani at 512-657-2901.
After inventory of homes for sale reached a high of 7.4 months in May, there was a steep decline in the supply to 4.4 months by the end of 2011.This 40.5 percent decline over seven months set a new record for Austin, and a strong indication of its market strength. The actual volume of available homes dropped from 11140 in May to 7339 in December (−34%), while corresponding sales dropped from 1977 in May to 1634 in December (−17%).
The last time Austin was in a sellers’ market was in April 2008, and thereafter the sub-prime loans debacle reared its head. With skyrocketing foreclosures and homeowner defaults, property values plummeted. This resulted in a 42 month hiatus during which time Austin alternated between a neutral and buyers’ market. The months’ inventory chart below is a comprehensive overview of market trends in Austin over the past 12 years.
Months’ inventory indicates how long (months) it would take to absorb all homes currently listed for sale, provided no new homes are added, and is based on current listings and a twelve month moving average of sales. It is an important early warning indicator of a changing market, and while it varies from city to city, historically Austin’s housing market appears to have the following characteristics:
1.5 - 3.5 months = Hot Sellers’ Market
3.6 - 5.4 months = Sellers’ Market
5.5 - 6.5 months = Neutral Market
6.6 - 7.9 months = Buyers’ Market
8.0 - 9.0 months = Hot Buyers’ Market
As the name implies, a buyers’ market favors buyers because inventory (supply) is high, giving buyers plenty of homes to choose from. However, such opportunities do not come often in Austin. Historically, over the past 10 years, Austin has been in a buyers’ market for only 26 months:
2003: 7 months (tech bust)
2009: 5 months (sub-prime loans crisis)
2010: 9 months (recession)
2011: 5 months (recession)
According to the Federal Housing Finance Agency (FHFA), based on data available up to the third quarter of 2011, home values in Austin during the past 12 months declined 1.60 percent. Texas declined 1.64, and USA 3.74 percent. However, over the past five years Austin home values appreciated 9.95 percent, Texas gained 3.91 percent, and USA as a whole lost 18.56 percent.
Job growth is a major driving force of the real estate market, and an unemployment rate of 6.6 percent and current months’ inventory of 4.4 bodes well for Austin in 2012. Comparatively, unemployment in Texas is 8.1, and USA 8.5 percent.
Despite the growing strength of Austin's real estate market, bank owned properties are still selling at 30 to 40 percent discount, as banks try to unload their "shadow inventory". While these are not always prime properties, investors are snapping them up and renting them out. The rental market in Austin is very strong, with occupancy at historical highs. This is a niche market we specialize in, and have many options for investing in such income generating properties. Contact us for more information.
A Report on Market Trends in Austin Texas is updated at: PiraniProperties.com by the 15th of every month. Take advantage of our database of information for an analysis of property values specific to your home or subdivision.Contact Nash Pirani at 512-657-2901.
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