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The Austin Real Estate Market still has legs!

Big question!  How much longer will this incredible real estate market hold on in Central Texas?  Real estate happens in cycles, and sometimes we can look to the past to divine the future.  The chart you see is a snapshot of the Austin real estate market, month over month, from 1994 to August 2014.  I have said that looking to the past to make sound real estate decisions is like driving a car down the highway and only looking in the rear view mirror to steer. You will eventually crash; but, even if you are looking forward, you should use that rear view mirror to help make sound decisions on the road.

In the chart I track monthly units sold and months of inventory available (thanks, Texas A&M Real Estate Center for the data).  Basic economics says that, when supply (inventory) is down and demand (units sold) is up, we will see high prices.  In this chart we can see a pattern over the last two cycles showing a convergence of  units sold and inventory that signals a hot market and then that same convergence reversed, signaling a slowing down of the market.  This pattern has repeated itself  in the late 90s and early 2000s and again in 2005 and 2008.  Most recently, in October 2012, we saw this convergence again signaling a strong real estate market in Central Texas.

Here is the interesting part:  As you can see on the chart, the reverse convergence is nowhere in sight; and this could signal a  more drawn-out cycle than we have seen in the past.  I will continue to monitor this pattern  and update the chart as data is released.

 

John McClellan
Branch Manager
Supreme Lending – Austin Texas
John.McClellan@SupremeLending.com
512-279-1150
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