Austin Texas Real Estate Stats and Graphs – 2008 Year in Review

2008 year in reviewThe collapse of the Austin real estate market … NOTI’m reflecting on the past year of stories being told of devastation, doom and gloom, foreclosures, and depression. Perhaps that is the story we hear from California, but the reality I experience in Texas is vastly different than that. As the numbers will show you, we did not experience the massive depreciation in prices in Austin. We did not have 3 homes per block enter foreclosure with the banks. Our homes are not worth 40% less this year than last year. Austin is….not that.With that, let’s focus on what Austin is. Austin is affected by the global economic situation. Real estate sales prices have fluctuated. Our average sales price in December for residential Austin home sales was $246,761 compared to $251,232 just one year ago….that is a 1.81% decrease in average sales price. There were over 20,000 single family home sales in 2008 compared to 25,184 in 2007. That is a 24% decrease in the number of home sales. We averaged 9,847 homes on the market in any given month compared to 8,647 in 2007. The average number of days to sell a house increased to 72 from 63 in 2007. Sellers were able to sell their homes for 95% of the asking price in 2008 compared to 97% in 2007. Is your head full of numbers and statistics now? These numbers are facts that cannot be disputed….but what do they really mean?The meaning and relevance of these numbers depend on your situation – they mean different things to different people. The following graphs and my interpretations are designed to help you apply these facts to your personal situation.Sold to List Price This is a new graph that I have introduced into our monthly reports, as I think it adds an opportunity to evaluate the market from another perspective. This graph shows us how much a home sold for in relation to what the sellers asked for the home. In other words, when a seller markets their home for $100,000 and it sells for $95,000, we say that it sold for 95% of the list price. Historically in Austin, homes have sold for about 97.25% of the original asking price. This past year, that average was about 95.5% and we ended the year with a 94% sold to list price percentage. What does this mean and how is it relevant to you? In November 2008 my wife, Krisstina Wise, wrote an insightful article on the phenomena that has caused this situation. As she discusses in ‘Are You Still Living in a Bubble’, sellers consistently overpriced their homes in 2008. Austin real estate agents failed to consult with their sellers to price their Austin homes at market value. Economics dictate that consumers will only pay fair market value for a product. So, homes are being listed too high, buyers are agressively negotiating and getting market value and the list to sale price percentage reflects this.As a side note, while citywide Austin real estate agents had an average of 95.5% list to sale price, the GoodLife Team average was 97.6%. By understanding the market and consulting with our sellers they are able to price their homes competitively, sell faster, and come much closer to their asking price in negotiations.Sales Closed by Month In my October 2008 blog posting I discussed how buyer speculation about the national economy and the subprime lending debacle effected the first half of 2008 and led to a 20% reduction in home sales for that time period compared to 2007. Approaching the summer months we saw the typical seasonal spike in home sales and in my October posting I predicted a sharp decrease in the number of sales through the winter, continuing to track the seasonality of real estate. True to my prediction, home sales did decrease sharply in October and November with a typical spike in December.What does this mean and how is it relevant to you? What this means is that Austin did succumb to the national economic decline and the media hype about the ‘national real estate market’ (even though there is no such thing as a ‘national’ market). We have experienced a sharp decline in real estate sales for 2008, yet have not been subjected to the mass hysteria caused by an inordinate number of foreclosures in our market.As we have been noting all year, if you are selling your home, be prepared to compete for less buyers in the marketplace, and have a very thorough sales and marketing strategy to attract the buyers to your home over the competition. If you are buying a home, you will have more homes to choose from and can anticipate sellers to offer more incentives to purchase their home over the competition. Bottom line: this is a great market to be acquiring properties: whether it is your first home, a move-up, or investment portfolio, now is the time to buy. Average Sales Price and Active Listings When analyzing and interpreting real estate statistics, the facts must be looked at within the framework of economic fundamentals. Several factors come into play: supply (the number of homes on the market), demand (the number of willing and able buyers), the price (which responds to the laws of supply and demand) and time (how long homes have been on the market, which will be effected by price, supply and demand).In Austin, we have maintained a high supply of homes for sale and experienced a decrease in the number of willing and able buyers (demand). In order to maintain equilibrium in the marketplace, one of 3 things must happen (or there can be a combination of these): 1. prices can decrease to a point that buyers will absorb the supply of the homes, 2. demand must increase at the current price levels to absorb the supply of homes, or 3. supply of homes for sale must shift to find the equilibrium, keeping demand and pricing steadyIn Austin, our average sales price has been relatively steady in 2008. The supply of homes for sale (active listings) increased drastically through July and then took a steep decline for the remaining 6 months of the year. Demand (the number of sales in Austin) followed the supply curve, which leaves us with the following assessment: demand increased for the first 6 months of the year, and supply of homes for sale followed suit (thereby keeping the price steady). In the following 6 months of the year, demand decreased and supply shifted to accommodate the demand, thereby keeping pricing steady.What does this mean and how is it relevant to you? Get real. It is time to understand the fundamentals of what is going on in the marketplace with respect to the laws of supply and demand. Realize that homes are commodities, like stocks … and market value is what a willing and able buyer is willing and able to pay for your home.If you are selling a house in this market, know that you must be very competitive with respect to pricing, marketing, advertising, staging, selling, negotiating and closing on your house. Gone are the days when you could simply perform the ‘5-step marketing program’, or take the 5 steps from your front door to place a ‘for sale’ sign in your yard. To sell a house in this market, it takes knowledge and expertise from competent professionals. Hire experts to help you, or your home may be sitting on the market for months and you may likely get less money for your home. To learn how to create demand for your home and sell your home quickly, please study our online document how to get the most money for your home – by creating demand.If you are buying a house in Austin, get prequalified with competent lending professionals who have knowledge of what it takes to close a loan in this ever tightening market and hire an Austin real estate firm that specializes in market research and negotiation strategies. Get good help, or you may get to closing and realize that you may not have a loan to help you buy a house that you are paying too much money for.Summation If you are a picky buyer, looking for ‘just the right Austin home’ or considering the pros and cons of adding on vs. buying a new home, this is the very best time to be on the hunt. To search all the listings on the market and to build a customized search for all of Austin and the surrounding areas, check out the custom home search tool on our website. If you are interested in the urban Austin corridor, downtown living, and to see all of the downtown high rise condos and developments, be sure to check out our new interactive maps on our main page.The data provided to create these graphs are available to you by subscription to our monthly update service. Please email us info@goodlifeteam.com to receive your monthly update.