The Inhabit Index for 2007

The December numbers are in and the Inhabit Index should be back on schedule with the upcoming review of January. Looking back at 2007 we cleary saw a Seller’s market from January towards the end of July.  By October and November, the overall market creeped into the buyer’s territory.

Hindsight is particularly revealing when it comes to trends; because if you notice on the index, the market began its shift in early spring of 2007. This points to the degree of difficulty—and in my view the impossibilty—of timing the real estate market since most analysts rely on historical data. That is not to say, you can’t forecast and make predictions about what’s ahead, but the exact timing of it all is purely speculative and can drive you crazy if you let it.

During the spring and even late into last summer multiple offers were quite common throughout the city. Some homes were selling for more than list price, and in certain neighborhoods, they were sold within a week on the market—my personal best came in August with a listing under contract within 16 hours of putting it on the market. So, even in August the market was shifting, but not many took notice—and even still, they may not have believed the numbers if the were paying attention to the index. Homes were selling, and very quickly.

So fast forward to December, the Index decreased another 4 percentage points. All signs—with the exception of rising prices—are clearly indicating Austin is a buyer’s market. I expect things will remain that way into the second quarter of 2008. Granted, summer is always the peak season, so it isn’t surprising the rate of sale has decreased during the past winter months. But from the graph above you can see the market has definitely cooled relative to 2005 and 2006, yet prices are currently stable.

As I always mention though, keep an eye on the areas that rank among the lower end of the Inhabit Index for consecutive months. Due to the large supply of homes in those areas, sellers will likely be forced to decide between lowering the price or withdrawing from the market. So, watch for price adjustments in those areas.