Inhabit Index for January 2008

27 02 2008
january-2008.jpg

Looking back at January, the index rose 5 percentage points to 15%. Current market conditions are still favoring buyers throughout the Austin metro area.  The inventory of homes on the market has grown to nearly 7 months; I expect a further increase as we approach the heat of the selling season. The good news is that new construction starts are down, which should help mitigate an oversupply.

So if my prediction for a growing inventory holds true, any future increase would give Austin buyers a larger pool of homes from which to choose. Advantage buyer. However, knowing that, many buyers and sellers are waiting it out in anticipation of such a development. I wouldn’t advise either side to continue with such a strategy.

Ok. I know what you’re thinking. But before you pass that last sentence off as biased-Realtor fodder, you might want to seriously consider it, lest you find yourself in this scenario put forth in a recent Time magazine article.

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NY Times Article on the Austin Real Estate Market: A Backcountry City with Manna from Heaven?

21 02 2008
Lady Bird Lake

This goes to show you, not all news is bad. But as John Stewart aptly stated [referring to mainstream reporting] last night in a humorous interview with Larry King, “at this point, unfortunately, you have to judge each piece of [news] material. There are very few [news] organizations left that have a credibility savings account that they can draw on anymore.”

So while this piece comes as a breath of fresh air in the long chain of doom and gloom national market reports, I caution readers from reading too much into the headlines [both positive and negative] simply because the national media says it’s so. If you are buying or selling in Austin, study the market and more importantly the neighborhood and street in which you are looking, then make your assertions about the market.

That being said, I did agree with much of what the article had to say, minus the characterization of Austin as a backcountry city. It has its quirks, no doubt. But for a city that doubles in population every 15 to 20 years and has the number 1 projected GMP growth for the entire US [32% over the next  5 years],backcountry it is not. The secret is out, Austin continues to be a destination. 

Here’s the NY Times article:

February 15, 2008
Some Cities are Spared the Slide in Housing 
By Clifford Kraus and Ron Nixon
Correction Appended

AUSTIN, Tex. — The real estate market these days is a tale of two Americas, and one of them is not doing too badly.

In the America of big-city housing markets, especially on the coasts and in the struggling industrial Midwest, the huge run-up in values in recent years has given way to big drops in prices and sales volume. Millions of people owe more than their houses are worth. 

But in the other America, specifically in cities like Austin; Grand Forks, N.D.; Yakima, Wash.; and Salem, Ore., the available evidence suggests the real estate market is holding up. Prices there never boomed as crazily as they did in the big cities, and now, even though volume is down almost everywhere, prices in many of these towns are firm or rising.

Consider the experience of one Austin resident, Dan Clark. Forced by a job change to put his house here on the market, he wondered whether he would get anything like the $385,000 he paid for it a year ago. He was floored when the second potential buyer to look at the place snapped it up for $429,000. “Manna from heaven,” he said.

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The Inhabit Index for 2007

6 02 2008
December 2007 Inhabit Index

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.

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The INHABIT INDEX for November 2007

17 01 2008

Inhabit Index for November 2007

The November 2007 stats have finally arrived—a year later. The stats were delayed for nearly a month due to a recent overhaul of the MLS software by the Austin Board of Realtors. The transition to the new MLS has been anything but smooth, so hopefully the December stats will arrive on time and I can share my December index early next week.

The index for the greater Austin market decreased by 5 percentage points from October to November. Remember, this graph is a high level view of the broader market. Below you’ll find a more local view and be able to discern if particular MLS areas are in a buyer’s or seller’s market.  November’s shift to 16% suggests market conditions have become more and more favorable to many Austin buyers. This is due to a large supply of active listings on the market and mortgage interest rates below 6%—though today’s report on core inflation will likely cause mortgage rates to increase in the days ahead.

Here’s the break down by MLS areas.

Related Post :: The INHABIT INDEX: How to Know When It’s a Buyer’s or Seller’s Market.

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INHABIT INDEX for October 2007

27 11 2007

The October stats are in for the Austin real estate market. My market report contains over 50 pages of data compiled from the Austin MLS. I am happy to share the full report with anyone that loves to analyze the numbers at length, just send me a quick email. But for brevity, here is the latest look at the INHABIT INDEX for single-family homes.

As I mentioned in an earlier post, the INHABIT INDEX is a tool I developed to easily gauge if overall market conditions are favoring the buyer or seller in the Austin area. If you want to know how the index is calculated check out The INHABIT INDEX: How to Know When It’s a Buyer’s or Seller’s Market

Up 4% from the previous month, the index increased as a result of more pending sales and a reduction in active listings. More pending sales translates into more homes going under contract, but the reduction in active listings can also be attributed to listings expiring or being withdrawn from the market.

Sellers should remain aware, we are still in the buyer’s zone (< 30%). Although the rate of sales increased in October, there are still a record number of available properties on the market from which buyers may choose. In fact, the current inventory is at a three year high. Bottom line, homes are still selling in Austin (some very quickly), but buyers now have a large inventory of homes to choose from and are not wasting any time by looking at homes that are in questionable condition or even slightly overpriced.

Want to know where your area or neighborhood ranks on the INHABIT INDEX? Here’s a list (and map) of how the Austin MLS areas are performing.

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The INHABIT INDEX: How to Know When It’s a Buyer’s or Seller’s Market?

22 10 2007

 

First it’s important to know the definition of both market conditions. In a sincere attempt to avoid insulting anyone’s intelligence, a buyer’s market is characterized by supply outpacing demand. In other words, there are too many homes on the market for the number of buyers. Typically, we see the following in a buyer’s market: 

  1. Flexibility in negotiating price.
  2. Added seller concessions (closing costs, repairs, etc.)

Conversely, a seller’s market is characterized by an insufficient level of supply for the ready, willing and able buyers. In a seller’s market, it’s common to see this happening: 

  1. Multiple offers.
  2. Shortened time on the market.

Regardless of when or where you want to move, generally the market is trending in one of two directions defined above. Yet, it is possible for the market to be stagnating in transition, which is all the more reason buyers and sellers need to anticipate which way the market will move. More specifically, you should have a clear understanding for which direction the particular neighborhood that you’re searching or selling in is trending. The real estate market is not monolithic. Some neighborhoods outperform others (see below).

Markets constantly fluctuate. Unfortunately, by the time we read about it in the paper, it’s already history. So apart from negotiating transactions on a regular basis how can you remain informed and know if Austin is presently a buyer’s or seller’s market? How can you know which way things are headed? (faint drum roll) ….Behold, the INHABIT INDEX. I developed and routinely update this index for my clients to easily gauge how supply and demand is faring in the Austin, Texas real estate market. Here’s how it works.

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