No, not really, but that was a search term that came through on this site’s Google Analytics account yesterday, really check it out in this screen shot.  It got me thinking that people buying a home in Austin must be experiencing some of the struggles with the fast moving market and the low inventory of houses for sale.  I wrote about the declining inventory issue in my assessment of the March market data, and some of the predictions I made are now actually happening.  Obviously there is a little buyer frustration out there with not being able to find a home they like.  I’ve personally seen older inventory coming off the market and people deciding to buy fixer-upper properties.  If a house is worth 500K fixed up and needs 75K worth of work, people are now willing to pay 425K and come out even on the equity.  Previously they might only be willing to pay 375K – 400K as they felt they deserved a little equity for doing the work.  At the end of the day they will probably come out ok, because if the market continues on this pace, the next prediction I made – prices are likely to increase –  will start to happen.

But let’s get back to the Google search term – is every property in Austin pending?  Well obviously no, but it appears about half of them are.  Taking a snapshot from today’s MLS database here is what we see for single family homes:

Northwest Austin (MLS Areas 1A, 1N, & NW): Of 501 Active and Pending listings, 252 are Pending

Central Austin (MLS Areas 1B, 2, & 4): Of 458 Active & Pending Listings, 202 are Pending

South/Central Austin (MLS Areas 6 & 7): Of 144 Active & Pending Listings 62 are Pending

So not quite half of the properties from this sampling of Austin MLS areas are pending, at this point in time.  Keep in mind this is just a snapshot, every day new listings come on the market, and the pending ones move to a sold status.

If you are a prospective buyer looking for a home in Austin, the best thing you can do it set up a custom search with email alerts so you get notified when a new listing that meets your criteria comes on the market.  It’s quick and easy to do, you can do it here on this site and if you need any help setting up your search just let us know, we’re available to help.

Selling a home can be quite challenging at times, causing sellers to question what they can do to make the sale occur more quickly. Service providers such as home stagers, organizers, and professional clutter eliminators can all offer assistance, but many sellers are also considering the art of Feng Shui, through consulting services or as a do-it-yourself technique. Feng Shui offers some universal principles that can benefit in selling a home, whether you subscribe to tenants from the form or compass school, or prefer the eight mansion Bagua theory, so utilize the ones that work best in your home. The overall goal is to create “positive chi” or energy flow in each room of your home.

Locally, many Austin real estate agents utilize the services of Sebastian Barret St. Troy with Austin Market Ready Services.  Sebastian applies Feng Shui principals, along with a blend of various disciplines, processes and techniques that work together to transform a home so it presents well and appeals to the targeted buyer.

This quote from A Guide to Quality, Taste & Style, by Tim Gunn, can help you understand how something as seemingly insignificant as a closet can affect you and your potential buyer. “Closets are where we hide things: skeletons, forbidden loves, terrible birthday gifts we couldn’t return. It is for this reason that deciding what to wear while staring into those murky depths can be not just daunting, but emotionally exhausting as well.”  Using Feng Shui techniques, you can clear the clutter, along with the negative memories and energy, creating a home that will sell more easily.  On that note, let’s move to 5 real tips that will give you positive emotional energy while readying your home for sale.

• #1 Open the windows and doors. Let a breeze blow through your home to clear the negative energy and refresh you as you begin your work.
• #2 Step outdoors onto your walkway, the entrance of your home. What do you see first when you walk into your home?  Clear any cobwebs and dust and make sure nothing is blocking the entrance. If you have to step over something, remove it.
• #3 Add energy with greenery. Whether an indoor or outdoor plant, make sure your home feels vibrant through adding plant energy. You can do this through exterior landscaping, by adding fresh flowers to the entry, or with the addition of indoor plants.
• #4 Add positive energy through art and movement through proper mirror placement. There are tons of books that can guide you through this step, however, remember that the goal is to reflect positivity and not overwhelm or create clutter in your home for sale.
• #5 Clear the clutter. Cull what you don’t need and create a “spa feel” throughout your home in all rooms. Counters should be free of objects and papers, furniture should be placed to allow for ease of movement. Any obstacles to interior door entrances should be moved.

While these tips may not offer a “cure all” to getting your home sold, they can definitely point you in the right direction.  Take a look on Amazon.com and get a few books on Feng Shui to increase your knowledge.  As you do, take care to notice your landscaping and apply some shine and good chi to your Home for Sale sign, too.

The S&P Case-Schiller Home Price Index is a widely used measure that tracks housing prices nationwide and breaks it them down by metropolitan area.  Recent data through February, released on Tuesday 4/24 shows nationally home prices have continued to decline, another 3.6%.  The pace of decline is slowing, but for many the data was somewhat disappointing that we aren’t yet seeing a turnaround.

But here’s the often overlooked shortcoming of the Case-Schiller index; it is a 3 month moving average which means the data for February includes December, January and February closed sales. Let’s then point out that a closed sale typically takes place 30-60 days after an accepted offer, so the February numbers we’re seeing in late April have a component of them that contain prices going as far back as October 2011.  If you count the months, at the point in time we get this data we’re actually closer to October 2012 than we are to October 2011.

The folks at Trulia have developed a way to measure the changes in home prices in a more current and real time fashion.  Recognizing asking prices are a leading indicator of sales prices, they created the Trulia Price Monitor which tracks asking prices across the top 100 metropolitan areas in the United States.  The monthly data is released the first week of the month, for the month prior so you get a pretty real time measurement measuring the month over month three month moving average, and its seasonally adjusted to account for spring time pricing when looking at data from winter months.

How well does it work since it is only asking prices vs. actual sold prices?  Well, when they shift it two months and put it up against the Case-Schiller index it shows a very similar trend.  And now for the good news, nationally the Trulia Price Monitor is up 1.4% in March and in Austin real estate asking prices are up 2.2%. This is supported by what we’ve already seen, with February and March median sales numbers in Austin increasing.

For people actively looking to buy a home in Austin, they’d attest to the fact that prices seem to be on the rise.  My take is the Trulia Price Monitor is going to be an important tool to watch in order to stay up with real time trends in home prices.

The March 2012 Austin real estate market data from the Austin Board of Realtors was released to members today. For the most part, the trends of the past few months are continuing – Austin area home sales and median prices are increasing, inventory on a seasonal basis is decreasing. Here are some highlights:

• Single family home sales up 15% over March 2011, the 10th straight month of increased sales.
• The median price for single family homes was $200,000 which is UP 8% from March 2011.
• There were 2331 pending single family home sales, up 16% from March 2011.
• There are 7274 active single family homes on the market, down 21% from March 2011.
• There were 3350 new single family home listings, down 4% from March 2011.

As I’ve been predicting in this blog, home prices are continuing to increase. In February they turned positive for the first time going +3% year over year. Now for March they are +8% year over year so the increase in median price – is increasing. Overall home sales at +15% is ery similar to February which was +16%.

But for me the key take away from these statistics, is we are not seeing an easing of the reduced inventory issues, some may even start to call it a shortage. Although there are more homes on the market, on a seasonal basis Active Listings for March at -21% is very similar to February which was -20%, and we should not lose sight of the fact that those are big drops.

Pending listings went from being +25% in February to +16% in March. So on a seasonal basis, pending contracts are dropping even though sales for the month increased. One could speculate this is a sign of some economic uncertainty, but the Austin economy and job market is so solid, I actually think it is a little buyer frustration in that they aren’t finding the houses they want to buy, at least at the prices they want to buy them at.

Combine this with the fact that new listings in March are -4% vs. +9% in February, that’s a 13% swing. This tells me that despite the news that the market is hot and many houses are selling in less than 15 days, potential home sellers are not coming back in to the market as fast as is probably needed in order to keep a healthy balance, we may be headed for a pretty good housing supply shortage.

The inventory issue is further supported by the Months of Inventory statistic. In February there were 4.2 months of inventory, 1.5 months less than the previous year. In March there were 4.4 months of inventory – yes that’s more but it was 1.8 months less than the previous year so on a seasonal basis it is less and the trend is decreasing supply.

If we keep seeing decreasing seasonal supply numbers a several things may start to happen:

• Prices go up as buyers start competing harder for the quality homes that are available.
• Older inventory homes start to sell more as buyers make feature concessions, or decide to take on updating and fixer upper projects.
• Sales slow down or stagnate as buyer frustration in choices based on quality and price results in decisions to hold off on purchases.

In my opinion its much better to have a balanced supply of inventory which admittedly helps sales volume for us real estate professionals. But from a consumer perspective having more supply of homes leaves people feeling much better about their choices and ultimately the home purchase itself. It reduces frustration and stress involved when competing for a home or feeling like they are buying something they have to put a lot of work in to.

I’ll end this blog with a public service announcement: Attn: Considering selling a home in Austin? WE NEED HOUSES.  Please contact an Austin realtor as soon as possible.

It’s not just resale homes, new home builders in Austin are seeing the pickup in the Austin real estate market as well.  Recently released data shows builders started work on 20% more new homes in the first three months of this year vs. the same time period last year.  Builders such as Milestone and Streetman are reporting double digit increases in sales for the first several months of this year vs. last year.  The increase in sales is being attributed to the strong job creation and population growth in the region.  But the good news comes at a price – literally – many builders have already raised their prices and expectations are the costs of new home will continue to go up.

Read more about this subject at the Austin American Statesman.

The Austin Area has the 2^nd Fastest Growth Rate in the US according to a recent data from census population estimates.  Between April 2010 and July 2011 the Austin metropolitan area added 67,230 people which is equals a 3.9% growth rate.  Migration accounted for 65% of the net population increase.

What’s that mean, people are moving to Austin, and staying here, and starting families etc. etc.  What it means for Austin real estate is increased demand, whether it is more people buying a home in Austin or renters, people are moving to Austin for lifestyle, jobs and retirement.  This growth will continue to support the underlying values of Austin real estate, throughout the metropolitan area.  Whether you are an individual homeowner, or invest in Austin real estate, you should feel confident about the stability of your real estate values in Austin.

You can read more about this recent data at the Austin American Statesman.

How Fast is the Austin Real Estate Market Moving?

A couple of times in the past week I’ve been asked how fast houses in Austin are selling.  People thinking about selling their homes in Austin want to know what a realistic time frame to expect to get their home sold in.

The typical measurement for how fast a real estate market is moving is the Months Supply of Inventory statistic.  Across the Austin area, the most recent data from February 2012 shows a 32% drop from February 2011, from 6.2 months to 4.2 months.  However, there is quite a bit of variability by price bracket; houses $125,000 and less saw a 48.3% decline in months of inventory, while houses priced between $450,000 and $750,000 only saw a 15.9% decline in months of inventory.

Here’s the problem with the Months Supply of Inventory statistic, it’s a moving target based on a rolling average of pending sales from the past 12 months.  So if pending sales in Austin are changing rapidly in the current environment, the Months Supply of Inventory stat makes it hard to get a feel for how fast the market is moving, other than it is picking up at a pretty healthy pace.

In order to get a current snapshot and feel for the market, I pulled data from MLS areas 1A, 1N, and NW on April 3^rd.  Combined these three areas represent most of what people consider to be Northwest Austin homes; spanning West of Mopac and north of 2222 up to Parmer Lane, and across Highway 360 up the Highway 183 corridor to where it crosses Highway 620.

As of April 3^rd there were 440 houses in an Active and Pending statuses.  Of those 440 northwest Austin houses, 240 were for sale and 201 were pending.  Here is a detail breakdown:

240 Active Homes for Sale

65 (27%) have been on the market 15 days or less

50 (21%) have been on the market 15-30 days

48 (20%) have been on the market 30-60 days

77 (32%) have been on the market 60 days or more

201 Pending Homes for Sale

116 (58%) went pending in 15 days or less

20 (10%) went pending in 15-30 days

29 (14%) went pending in 30-60 days

36 (18%) went pending in 60 days or more

Did you catch that – in italics – as of the date of this snapshot 58% of the houses in northwest Austin that are pending sale, went under contract in 15 days or less!  Nearly 70%  went under contract in less than 30 days. I would say that’s a pretty fast moving market.

That’s why only 27% of active homes have been on the market 15 days or less, the good ones go off the market quickly. You might also note that 52% of active properties have been on the market for 30 days or more.  Those sellers should not feel good about being in that majority – it is called old inventory buildup.  Sellers in that 30-60 day time frame have a good chance of heading to the 60+ time frame unless they do something to make the house more attractive to potential buyers.  Most likely that means lowering the price because although the market is moving fast, on the heels of the housing crisis and great recession home buyers in Austin are cautious about over-paying for a home regardless of how much they like the house.

There’s no two ways about it, the Austin real estate market is picking up, there are a lot of buyers out there and although more houses are coming on the market, the overall supply of homes for sale in Austin is low compared to past years.

But even though the Austin real estate market is heating up, it is still critical to price your house in Austin correctly when putting it on the market.  Take a look at this example:

This past week I was working with some clients looking for a home in Austin.  We we’re going to look at 3 houses, turned out to be 2 (read on for why).  They we’re all very nice homes of comparable size, bedrooms, baths, in the same neighborhood and school district that many consider to be one of the best in the Austin area.

Property 1: Seemed to be priced a little high relative to the comparables.  It had been on the market for about 14 days.

Property 2: Priced almost the same as Property 1, but was a little bigger house so on a $/sq. ft. basis seemed like a more market based price.  It had been on the market for about 14 days as well.

Property 3: Priced somewhat less than Property 1 and Property 2, actually appeared to be right in line with the market.  It had been on the market for 2 days.

Well, we never quite got to Property 3 because when I called to schedule the showing I was informed they had already had 6 offers, all of which were over asking price and they we’re about to go under contract with one of them.  Six offers in two days!!

Property 2 turned out to back up to a busy street such that you could not have a conversation in the back yard due to the road noise.  The reality on homes that are on a main street, or back to one is the sellers probably paid a less than typical price for the area when they bought it, and will have to price it accordingly if they want to sell it.

And Property 1 was well received but buyers have concerns the sellers won’t come down ~10% to where they believe the fair market value is.

Now, it is not as if Property 1 & 2 have been on the market an excessively long time and you can say with assurance they are over-priced.  But relative to Property 3 they have been on the market 7 times as long in a market where properties priced well are getting six over asking price offers.  To me that sounds like market value for your home taking care of itself.

With custom search and automatic email alerts, when a house gets listed buyers get emails the same day.  If a house looks like a good house and is priced right there will be a lot of showing activity in a very short time period, and as evidenced by our story above, probably several offers.

As a seller, you need to ask yourself what your objectives are and the time frame in which you want to sell.  Holding out for a higher price in reality means holding out for a buyer to come along who thinks your home is the absolute perfect home for them AND is not as concerned about market value.  There are a lot less of those types of home buyers these days.  Even though the market is picking up, with the real estate troubles of the past 3-4 years still top of mind, most buyers are very are very concerned with market value and don’t want to make an over market purchase.  So they put their emotions in check even when they find a house they really like.

This week there were several very positive reports regarding Austin’s jobs economy which explains how the Austin real estate market has held up over the past several years, and gives a good indicator of where it is going.  I’ve written before about how the jobs market in Austin has contributed to real estate stability in the region.  Let’s take a look at what we saw this week:

• Austin #1 in Nation for Job Creation Since 2004
• Texas #1 for Private Sector Employment Gains Since 2008
• Austin #2 for Urban Population Growth

With reports like that is it any wonder the Austin real estate market held up well during the downturn of the past several years.  Here is why, a key component of what demographers call “household formation” is related to job creation.  During the great recession of 2007 – 2009 when unemployment soared, household formation in the United States declined.  Young adults moved back in with parents, families moved in with grandparents, there were even stories of divorced couples still living together for economic reasons.

But when people have jobs, the exact opposite happens and household formation increases.  Beyond getting out of your parents, grandparents or ex’s house; when younger people have steady jobs they are more likely to move in to that phase of their life where they ditch the roommate, and/or get married, have a family and…..buy a house.  Regardless of whether someone is getting married or just going out on their own, the result is a household formation which leads to demand in the real estate markets whether it be for as a tenant in an apartment or a family buying a home in Austin.

So Austin real estate has held up extremely well over the past several years, the data shows us why.  With a healthy jobs market, and the regular stream of news that companies big and small are choosing to start up and re-locate to Austin, homeowners should feel very confident in the long term stability and opportunity for appreciation of their homes in Austin.

The city of Austin is at it again, finding it’s way on to some of the best top 10 lists around.  This week Austin has been rated as the #2 real estate investment market by realtor.com, the website from the National Association of Realtors.  The data sited homes in the Austin area selling at two times the national rate, and a median list price of $229,500 that is 12% higher than a year ago as strong indicators for the potential for price growth.

But here is the real reason why Austin real estate is a great market for investors – The Austin jobs market is in great shape and poised for continued growth.  Take a look at this chart from the Bureau of Labor Statistics.  The Austin metropolitan area ranked #2 in the nation for percentage increase in job growth this year.

It’s a simple equation, with jobs comes demand for housing.  There is a lot of positive momentum in the Austin jobs market, including the recent announcement that Apple will add to its current operations here with plans to build a $304 million dollar campus and hire an additional 3600 people.  Major investments like this from emploers like Apple, trickes down in to job growth for construction, retail and service industries providing a diversified and healthy employment base – which as mentioned will continue to drive the demand for housing.

The Austin real estate market is getting hot, and prices are starting to increase, but we’ve not yet seen and accelerated run up in prices.  With relatively low interest rates and reasonable prices, right now is an excellent time to buy investment property in Austin.  The current rent to price ratios make the numbers work for most investors, and the upside is a solid bet on the long term future of for growth in the Austin area.

The February 2012 Austin real estate market data reports from the Austin Board or Realtors were released to members today.  The trend continues to be one of a real estate market that is heating up – in fact it’s probably time to call it hot.  Here are some highlights:

• Single family home sales up 16% over Feb 2011, the 9th straight month of increased sales.
• The median price for single family homes was $195,000 which is UP 3% from Feb 2011.
• There were 1926 pending single family home sales, up 25% from Feb 2011.
• There are 6862 active single family homes on the market, down 20% from Feb 2011.
• There were 2538 new single family home listings, up 9% from Feb 2011.

The trend of increased sales continues and is gaining steam rapidly.  As I’ve been predicting in this blog, due to the increased number of buyers in the market and the decreased supply it was just a matter of time until we started to see prices of houses in Austin start going up, and sure enough the downward median price trend has reversed and is now up.  It appears as this trend is going to continue and home buyer demand continues to grow at a faster pace than the supply of houses coming on the market.  The good news is the new listings are up a healthy 9% as well, so this tells me the sellers are starting to get the message that it’s a good time to sell your house and more are coming in to the market.  Hopefully this trend accelerates as we get further in to the spring selling season and it helps to meet some of the increased buyer demand in the marketplace.

The Austin real estate market is still very much a “right price/right product” driven market as buyer demand is there, but with the real estate troubles of the past few years still fresh in their minds the buyers are not rushing to buy just anything.  They are being very discerning with respect to the price and quality of the houses they are buying.  They are taking time to evaluate things like the interior finish outs, age of major appliances and AC systems etc.  Austin homes that are of good quality and priced right are selling very quickly, often with multiple offers.  But if a house is over-priced and/or of sub-par quality they are taking somewhat longer to sell.

If you are buying a home in Austin, you need to be prepared to move quickly because when quality houses go on the market they go under contract quickly. It’s a necessity to set up a custom search with new listing email alerts so you become aware of new listings the day they hit the market – set up a custom search with daily listing alerts here.  You should also work with an agent that makes him or herself available to go look at houses on short notice – and yes, we are absolutely making ourselves available for our clients to get in and see homes on short notice.

How’s that for an event based keyword title? – but really this is fantastic news for people who live in southwest Austin.  That news is that city leaders are in the final stages of planning and approving a series of pedestrian and bike bridges that will link southwest Austin from the Mopac and 360 interchange in to downtown Austin via Zilker Park.  And in the process, it will clear the way to add an additional vehicle lane to southbound Mopac in that area which will help ease traffic congestion on the busy thoroughfare.

This project is a major enhancement to the livability of homes in southwest Austin.  Residents of these areas of Austin will no longer have to share space with motorists on a freeway in order to go on a bike ride to and through Zilker Park.  Instead of loading the kids and the bikes in to the car for the short drive to Zilker and a ride on the Lady Bird Lake hike and bike trail, they’ll be able to take off straight from home.  And for those who live in southwest Austin that work downtown and prefer to commute by bike, these bridges will be major improvement to the accessibility and safety of commuting by bike.

Austin city leaders deserve some kudos on this one.  Safer bike and pedestrian friendly access to Zilker Park and downtown only enhances the livability of southwest Austin and eases traffic and access routes during major events like Austin City Limits Festival.  And in the process adding an additional lane on a major freeway like Mopac at a key interchange improves the commute of people who travel through that south by southwest interchange on a daily basis.

Read more about these plans at this article on the Austin American Statesman.

Last week Corelogic published its 2011 4^th quarter negative equity report, detailing the percentage of homes that are upside down or underwater on their mortgage – the situation that occurs when home owners owe more on their mortgage loan than the home is worth.

The report breaks down negative equity by metro area, and homes in the Austin area had 10.6% of mortgaged properties with negative equity.  Statewide in Texas negative equity was 10.2%.

So why is this a good thing you ask?  Because compared with most other states of significant size, the Austin and Texas housing equity position is in great shape.  The only state of similar population size to Texas that is in better shape is New York at 6.4%.  Take a look at these negative equity numbers from other states around the country:

• Virginia:               23.0% Underwater
• Ohio:                     23.9% Underwater
• Maryland:           24.3% Underwater
• Idaho:                   25.0% Underwater
• California:            29.9% Underwater
• Michigan:            34.7% Underwater
• Florida:                 44.2% Underwater
• Arizona:               48.3% underwater
• Nevada:               68.1% Underwater

Holy short sale batman – that’s a lot of negative equity to overcome before housing in those markets returns to equilibrium.  But guess what – it’s starting to happen, take a look at this article on how the Phoenix Arizona housing market is picking up steam.

So if places like Phoenix Arizona, one of the hardest hit housing markets of the great recession, are coming back to life then in a city like Austin where…

• 38% less of our homes are underwater
• The housing market is heating up
• The inventory of homes available has been declining
• The job market is strong and
• SXSW kicks off this week and it seems that half the people who come to Austin for SXSW never actually leave

…then you don’t need a PhD in real estate economics to know that the housing market in Austin is on very stable ground, and poised to take off.  It probably won’t be too long before that 10.6% number starts shrink dramatically.

There are is no shortage of families that live in the homes in Northwest Hills and the surrounding areas.  Being a member of one of those families myself, I’m well aware that sometimes it can be a bit of a challenge to find a safe and convenient place to let the kids run around and get their play-scape fixes.  According to this article in the Austin American Statesman, a somewhat unknown and un-developed county park that is a hidden gem in the heart of Northwest Hills may be turned over to the city and be getting an upgrade.

Allen Park is one of those places thousands of people drive by on Balcones Drive every day and don’t even know it is there.  The ~ 10 acre park is bordered by Balcones Drive just south of Hart Lane, but is primarily accessible from Westside drive just south of Hart Lane.  Tucked in among houses in Northwest Hills and surrounding commercial buildings on Balcones, its location with views of downtown is considered prime real estate –  check out the location.

Discussions about potential upgrades for the park include access from Balcones drive, additional parking and yes, a play-scape for the kids.  Even though we’re in tight economic times, from my perspective this is a no brainer.  A centrally located park, with beautiful city views and amenities for the kids would be a incredible value added addition to the Northwest Hills neighborhood.

Fun Fact Friday: Austin a Top City for Electric Cars, BBQ, Tech Jobs & Sushi

We all know Austin probably makes more Top 10 lists than any other city in America, but what a diversity of top rankings Austin had in the past few days.  Austin was rated a top city for electric cars, took the number 5 spot for best barbecue cities in America,  was the #2 hot spot in the United States for tech start up jobs and Paul Qui of sushi restaurant Uchiko won first place on Top Chef: Texas.

So on this beautiful 80 degree early March day, after you cut out early from your tech job and hop in your electric car are you heading over for some sushi & happy hour or is it time to go chow down on some barbecue and beer?

There’s more good news for the Austin real estate market.  Last week Austin’s favorite economist Angelos Angelou came out with his forecast that 45,000 jobs will be added to the Austin metro area in 2012 & 2013 – more than doubling the job growth from the past few years.

As I’ve mentioned before in this blog post about jobs in Austin, no single factor is more important to the stability of real estate in Austin than the jobs market.  A strong jobs market means more people can qualify to buy a home in Austin and the rental market for Austin investment properties will remain strong we continue on this growth pattern in Central Texas.

It’s somewhat ironic I am writing this on the same day that the Standard & Poor’s/Case-Schiller index came out showing national housing prices ended 2011 at their lowest levels since 2002.

However, given this bullish employment forecast for Austin, combined with the current inventory shortage of houses for sale in Austin that I wrote about last week, and what already appears to be a hot housing market, which way do you think home prices in Austin are headed in the future?

Does anybody remember this chart from their Economics 101 class?

Photo Credit: Dennis Mueller on Flickr

We should consider ourselves fortunate that the Austin metropolitan did a good job of weathering the economic downturn of the past several years, and is now well positioned to come out of it pretty strong.  We live in an area that many people consider to be one of the best real estate markets in the country.

There is quite a bit of opportunity for people buying a home in Austin right now.  Rates are at record lows and home prices for the most part are reasonable.  However, due to the tight inventory, the hard part can be to actually find the right home.  The key for Austin home buyers, is to be familiar with the market and in a position to act quickly when the home you want comes on the market.  It’s highly recommended to set up a custom search with automatic listing alerts so when a house that meets your criteria comes on the market, you know about it right away.  It’s also important to get pre-qualified for a home purchase so when you do find a house in Austin you want to buy, you are in a position to quickly write an offer on it.

The Austin Board of Realtors released its January 2012 Austin market data reports to member realtors yesterday.  There are some very positive signs for the Austin housing market, here are some highlights:

• Single family home sales up 10% over Jan 2011, the 8^th straight month of increased sales.
• The median price for single family homes was $176,550 which is down 7% from Jan 2011.
• There were 1638 pending single family home sales, up 16% from Jan 2011.

Sales are up and prices are down? Makes sense if you think about it, 12-18 months ago the market was slow.  Over the past year and a half, prices have adjusted down and demand has come back in to the market and we’re now on an 8 month trend of year over year increases in sales.

But for me, the real story here is the current inventory levels, because that is going to dictate what we see in terms of unit sales and prices as we move in to the busier spring and summer home buying season.  Inventory of single family homes at 6557 units is down 19% from Jan 2011.  There were 2226 new listings in January which is down 6% from last January.  Combine that with the 16% increase in pending January sales mentioned above, and that tells me that unless the listing agents have been some very busy beavers – year over year inventory in February 2012 is going to continue to decline – even with the extra leap year day for them to take listings.

In certain sub markets this inventory trend is even stronger, and it’s starting to reflect in price:

In MLS area 1A which covers Northwest Hills area homes, inventory is down almost 40%, new listings are down over 7%, sales are up over 44%.  With numbers like this it’s no surprise the median price for 1A bucks the area wide trend and is actually up 2.2%.

In MLS area 1N which covers a good amount of the Northwest Austin houses for sale, inventory is down 40%, new listings are up over 12%, sales are up 125%, and sure enough median price is up 10.7%

It appears we are at a bit of an inflection point in the return of a healthy housing market.  Buyer demand is coming back as evidenced by the overall increased sales numbers and some really strong increases in certain sub markets.  But if the supply of houses for sale in Austin continues to decline, this could slow down sales as buyers will become frustrated by the limited choices or competition for the quality houses that come on the market.

If you’ve been thinking about selling a home in Austin, it is probably a pretty good time, although holding off for a few months may be financially beneficial if the supply stays low and competition among buyers really heats up.  Regardless, for sellers looking to move up, or empty nesters looking to downsize, 2012 should be a good year to do it as it appears you’ll be able to sell your house in Austin fairly quickly, and interest rates for buying a home are still really low.

For people buying a home in Austin, you need to be prepared to move quickly because when quality houses go on the market they go under contract quickly.  We’ve already been seeing this, a few weeks ago I posted a blog about houses going off the market before buyers could even go see them.  If you don’t already have a custom search with listing alerts set up that’s the first thing you should do – register to do it here.  Furthermore, I’m advising all my buyer clients to move their listing alert frequency to daily alerts from weekly, and making myself as available on short notice to go look at new houses that come on the market that they are interested in.

Although there are a number of variables that can affect the values of real estate in Austin or any metropolitan area, in my opinion the single biggest factor that affects real estate values is the health of the jobs market .  Here’s why: A healthy employment market means more people can qualify for and afford to buy homes and that equals more demand for homes which helps to hold up or increase values.  And even if people choose not to buy, the fact of the matter is they are still employed and need a place to live which creates stability and increases rates in the rental markets.  A strong rental market equates to stability in Austin real estate as well because it supports values in apartment buildings and residential investment properties in Austin.

And along those lines, we had a bunch of positive news last week about the Austin jobs economy. Austin economist Angelos Angelou is predicting a great 2012 in the housing, real estate, video games and clean tech industries.  This coming off a 2011 where there were20,100 jobs added, beating his prediction of 18,500.  In addition to this the Austin Business Journal reported Austin had the nation’s sixth highest retail job growth adding 2,700 jobs in 2011 and was number 29 for manufacturing job growth adding 1100 jobs.  Austin has a very healthy and diversified jobs market, across all industries and income levels. This news should be very re-assuring for Austin home owners and people buying a home in Austin as this job growth will contribute to a stable Austin real estate market.

On three occasions in the past week, I had clients express interest in new Austin listings they got an email alert on from a custom search we have set up for them.  When we went to schedule a showing, within a few days of it being listed, we were informed the house was already under contract.  Wow – three times this happened in one week, pretty unusual anytime but especially this time of year.

So it got me thinking, is the Austin housing market heating up?  Let’s take a look at some data from the Austin Board of Realtors.  Data for January is not available yet, but as of 12/31/2011 the available supply of properties across Austin was 7,758 units, representing a 22.5% decrease from the 10,005 available a year earlier on 12/31/2010.  That’s a pretty meaningful drop in supply. In MLS area 1A which comprises a lot of the Northwest Hills Area Homes, supply had dropped 39.4% from 137 units to 83 units.  In MLS area 1N which covers a lot of Northwest Austin Homes supply had dropped 38.8% from 170 units to 104 units.  Those are some pretty large drops in supply compared to the same time last year.  This is a result of 7 months of year over year increases in sales, with less housing coming on the market.  It means less choices for buyers and in theory more competition for the well priced quality homes in Austin.

But it doesn’t mean the market is heating up unless there are buyers out there competing for the homes.  I pulled some real time data out of MLS to get a feel for that.  Of the 27 houses listed in area 1A since Jan 10 (about the past 30 days) 8 of them or about 30% are already in a pending contract status, and all of those 8 went pending in 7 days or less from hitting the market.  In area 1N, of the 54 houses listed in the past 30 days, 17 of them or just over 30% are already pending contract, and they all went pending in 11 days or less from hitting the market.

In my opinion, this seems like in fact the Austin real estate market is picking up. If you’re think of selling a house in Austin, and I told you 30% of the houses go pending in 11 days or less I think you would be pretty encouraged.  But remember, they key is to have it priced appropriately and in good condition.  If you are looking to buy a home in Austin, when you see a house you like, that appears to be priced right and in good condition – I would advise taking a look at it as soon as you can.  Setting up a custom search and getting automatic email alerts for new listings that meet your criteria is a good idea so you know about a potential home when it hits the market.  Did I mention you can do that on this website – to get started, click here to register.

Q: Does getting the real estate rebate mean I have to find the house myself?

A: Absolutely not, we are a full service Austin Real Estate company.  We’ll help you find a home, answer your questions, provide comparable market data, submit an offer, negotiate the contract, and see the process all the way through from inspection to closing.  We’re able to offer the 30% buyers’ agent rebate because technology has made the process of helping people find and buy homes much more efficient.

Read More: About why we offer real estate rebates

Q: How much will my rebate be?

A: That depends on the commission paid.  We rebate 30% of the gross commission paid to the buyer’s agent, including any incentives or bonuses.  Commissions are not fixed, but most of the time sellers offer to pay 3% of the sales price.  So if the house is $350,000, a 3% gross commission is $10,500 and we rebate $3,150 to buyer(s) we represent.

Q: When will I get my rebate?

A:  After the purchase of the home closes and funds, the title company will send us a check or wire us funds for the gross commission.  Once we receive the check/funds we process a rebate check that we send to you within 2-3 business days.

Q: Can I apply the rebate to my closing costs instead?

A: In most cases no. Most lenders will not allow the rebate to be used towards the funds required for down payment and closing costs. Those funds have to come from your current documented bank account assets, not the real estate rebate.  In a situation where you are paying cash for the home, we may be able to credit the rebate towards your closing costs.

Q: Is there any way I can get more than a 30% rebate?

A: We do offer some additional rebate benefits for certain groups – Active Duty Military & Reservists, Veterans, Teachers, Firefighters and Law Enforcement.  We also have a program that supports local schools through DonorsChoose.org that you can participate in.  You can donate part of your rebate and we will match your donation up to 3% of the gross commission in your name.

Q: How can you afford to offer this rebate when most other agents/brokers won’t?

A: It’s simple, technology has made the cost of working with buyers come down; and we run an efficient operation.  We’re an independent Austin real estate brokerage with no franchise fees or splits, we use efficient cost effective technology to serve our clients, and we keep our overhead low – no big expensive fancy offices.

Read More: About 360 Real Estate | A blog post about our rebate concept

Q: If I want to use you to buy a home and get the rebate what do I need to do?

A:  Contact us however it is convenient for you.  Call us at 512-410-7350 and we’ll answer any home buying questions you have and/or help get you set up with a custom home search.  You can register for free on our website and browse Austin real estate listings; and save your favorite properties and searches.  Or you can send us an email and we’ll get back to you by email with an answer to your inquiry.  However you want to work with us, you can EXPECT us to be responsive and provide great service.

Some background about how the concept for the company was developed.

It was sometime in 2007 when I started getting calls that went something like this. “Hey Ted, we found a home we want to buy online – already saw it at an open house – and we love it.  Can you help us with the market comparables, contract negotiation and inspection through closing process?  And since we already found the house on our own, will you give us some of the commission back? It sure would help out with the moving expenses.”

Seems like a pretty reasonable request doesn’t it?  Since a good portion of a buyers’ agent work was to actually help find the clients a home, if that had already been done by the buyer why not rebate some of the commission back them reflecting the reduced work load. Since giving a real estate commission rebate is allowed in Texas, there aren’t any legal or ethical issues in doing it.

What was really going on….

What these requests really were was an indication of what was happening online.  Sites like Zillow, Trulia, Realtor.com and locally AustinHomeSearch.com were rapidly gaining traction and consumers were using them to find houses and get a feel for prices in different neighborhoods.

About the same time most local realtor boards and big brokerages were moving to web based/software as a service listing and IDX (internet data exchange) systems. These systems allowed realtors to provide much more data about their listings in terms of more pictures, virtual tours, extended descriptions etc.

This data, syndicated out across the web put a lot of information about houses for sale at consumers’ fingertips.  Add to that advances in satellite map and street view technology from Google and Bing and home buyers have a good portion of the information they need about a house readily available to them. Prospective home buyers can get a really good feel for what a house looks like, where it is – is it a corner lot, does it back to a busy street, what the neighborhood looks like, and other critical data like tax assessments and schools.

If the customers are asking for it…

Maybe this is the way a lot of people want to buy houses now.  In fact it is.  A National Association of Realtors (NAR) study says 89% of home buyers now use the internet for information when starting their home search.  We’ll go out on a limb and speculate that in tech savvy Central Texas, close to 100% of people buying a home in Austin use the internet for their home search.  Additional data from NAR shows 66% of internet searching home buyers drove by or viewed a home they saw online and 41% of buyers first found their home on the internet.

Giving a rebate makes sense…

If you think about it, it makes a lot of sense.  There aren’t very many things that haven’t become more efficient and less expensive as a result of technology.  You can buys stocks online for $10/trade, and booking travel is much more efficient online than using a travel agent or calling around to hotels and airlines.  And it’s not as if online services are limited and leave you on your own to figure it out.  Last time we checked eTrade had an abundance of online resources and Travelocity provided comparison shopping and reviews.

Yet, with all the advancements it technology being used in real estate, it seems like many real estate brokerages and agents still charge 3% on each side of the transaction (3% for the seller’s agent, 3% for the buyer’s agent).

How we do it at 360 Real Estate….

We charge you less than 6%.  We give a 30% rebate to home buyers we represent, and charge 2% for the seller’s side when listing a home for sale (still 3% to the buyers for 5% total).  We’re able to do this because:

1. We are an independent real estate brokerage covering the Austin, TX metro area. We don’t have any franchise fees or commission splits going to “the house” – no pun intended.
2. We use efficient technology. Online tools used to search and find homes are now readily available at a reasonable cost. We think we have a nice looking functional website, but we’ll let you know we didn’t spend tens of thousands of dollars having it designed and custom applications developed.
3. We keep our overhead low. These days real estate work is either online or in the field – at the houses buyers want to buy, and sellers want to sell.  There is no need for, and we don’t have big expensive fancy offices with plush furniture, espresso machines, and our sign on the side of the building.
4. We know you (our customer) will be more efficient to.  How do we know this?  If you are on this site you didn’t find us from a mass post card mail out, shopping cart advertisement, glossy magazine ad, or a building sign off the freeway ….because we don’t do that type of inefficient traditional marketing. Odds are you found us online, which means you are likely browsing for houses online and will probably do a lot of the home search and review online.

And we say go to it, on this site you can browse homes by map, zip code, address, schools or a number of other criteria.  And you can save your favorite houses or get email alerts for new listings that meet the criteria of your saved custom searches.  If you need help or have any questions call or email us.  Remember, we’re a full service brokerage and here to help, so if you want to see some houses or have questions just let us know how we can be of assistance.