Austin Home Sales Surge in November, Luxury Homes Sluggish...

According to the MLS report by ABOR, the volume of Austin-area home sales continues to surge, increasing 58 percent in November 2009 compared to November of the previous year. This large jump in year-over-year in home sales is the largest of its kind in more than ten years. In November, there were a total of 1,576 homes sales, contributing $377,603,296 to the local economy. Again the median home price was lower than 2008 levels, the median home price in November 2009 was $179,000, a two percent decrease from the same November 2008. In the face of increasing volume, the Austin real estate market is seeing a decrease in home inventory. The Real Estate Center at Texas A&M University cites 6.5 months of inventory as a balanced market, meaning demand for homes is evenly balanced with inventory of homes for sale. At approximately 5.4 months of inventory for November 2009, demand for homes in the Austin real estate market is slightly outpacing inventory. We continue to see information showing inventory levels dropping. As we have discussed in previous blog entries the reduction in inventory and lots will cause a shortage of product and, we anticipate, a rise in prices. I would also like to mention the reduction in median sale price and its functional relation to the market. Every month in 2009 has shown a reduction in the median sales price in the Austin area. Generally speaking the price of Austin homes have remained stable and steady and property values have held firm. The foreclosure problems that have plagued much of the United States has really been a non-issue for the Austin area. Certainly there are areas in Austin that have been affected by foreclosures more than others. One such such segment, the upper price ranges, have had great difficulty this past year. In 2009 the ability to secure financing, on any level, was difficult. The banking industry recoiled as a result of the economic turmoil in 2008 and 2009. During this period of time it became excruciatingly difficult to secure jumbo financing and many banking institutions suspended these programs altogether. The unavailability of financing coupled with cautious/fearful consumers and less opulent lifestyles drastically reduced the activity in the upper price ranges. At the same time new tax credits and generous (and artificially low) interest rates caused a surge in the first-time home buyer price ranges. These buyers, often young, were not as concerned about a lag in the market or burdened with selling a home of their own. Many chose to buy in or near the bottom of the market. Because of their actions they not only bought well priced homes, but they took advantage of low interest rates and tax credits. The surge in the number of sales in the entry level price ranges coupled with a sharp reduction in the luxury market caused a reduction in average and median home prices in Austin . There are still screaming deals out there, (many of these in the upper price ranges or distressed assets) but take solace in the fact the Austin real estate market has been and continues to be very stable.