Austin’s home market in October 2010 – Don’t jump off the 360 bridge (yet)!
My favorite mortgage banker has a saying: “If it doesn’t bleed, it doesn’t lead.” This line always makes me chuckle at first, particularly because I love to poke fun at newspapers and the news stories that they use to sell papers. When Austin’s market is neutral/flat, our local paper has been particularly guilty of reprinting gruesome real estate stories from around the country, with only 8-point font disclosure of where the reprint is from at the end of the article.
Today, they don’t have to reprint from Sacramento! Our October stats have been compiled and formatted by the Austin Board of Realtors and released to the world. For some reason, this process takes 19 days every month, but that is a different gripe altogether. Unit sales are down 31 percent from October of last year.
I have to take much caution in my explanations of market stats so that I don’t appear to be a cheerleader. While the news uses doom to sell papers or to get us to tune in at 10 to learn what we may be poisoning ourselves with, realtors are notorious for the opposite strategy of cheering the good news as they (I myself included) make our livings selling houses. Why do I not want to appear as a cheerleader? Credibility. My clients appreciate an educated look at the market, “reality,” if you will. I find that I sell more houses when buyers know the facts of the market; in turn, they tend to hold off when they are unable to sort thought the massive amount of seemingly conflicting doom and the cheers.
So, with that being said, let me not say that I have cheerful news but that, at least, confidently tell you that there is no need to jump off the 360 bridge. Take a look at this chart used in this morning’s newspaper article. The chart on the right tells the whole story. Last October and November were huge months for unit sales. We thought that the federal buyer’s tax credit was going to run through the end of November. These are significantly “boosted” months last year that are used for the year-over-year comparison–November even more so than October. Prepare yourself for the headline on December 19, 2010 – “AUSTIN HOME SALES DOWN 47%.” It’s going to scare a lot of people, but you will know why. Last November was a huge month.
The takeaway is that you can see on this same chart that December of last year fell back to being a normal month. We will probably see headlines on January 19, 2011, like “AUSTIN HOME SALES UP 3%”; or just maybe it’ll be back to something like “VALUES PLUMMET IN NEIGHBORHOODS WITHIN 5 MILES OF THE ZOO,” Sacramento Zoo, that is!
Sellers who make their negotiating decisions based upon the temperature of the sentiment in the mainstream media should be at their softest between now and January 19, 2011. Good luck and have fun!
Kevin Bown
Goodwin Partners, Inc.
11149 Research Blvd. #100
Austin, TX 78759
(512) 658-2419
(512) 346-4873 fax
{ 7 comments… read them below or add one }
Number sales don’t mean much unless you are a realtor and make a living on transactions. Prices are everything and realtors spend little time dissecting price data. Of all data points, price contains the most information. All other info (inventory, momentum, jobs, volume) are components of price.
I would like to see 5 or ten years of data on Austin by MLS area. These guys started doing it:
http://www.escapesomewhere.com/mlsareaprices.html
… but quit when the numbers started looking bad.
This guy is trying…
http://billmorrisrealtor.wordpress.com/2010/11/18/hows-the-market-in-your-part-of-town/#comment-319
What’s missing is 12 month moving averages to smooth out seasonality, and number of sales for each period.
Would you publish this data?
Here’s a great example of the kind of info buyers need:
rereport.com
I have a chart that goes back to 1990 and compares units and median price on a monthly basis.
I think it needs to be annual for that many years unless you fit some kind of trend line to it. You have this by MLS area? I’m interested in 8E, 8W, and W maybe.
I emailed you the chart
Mr. Bubble,
Thanks for commenting. I find that number of sales is very important, not just to Realtors. “Consider the source” is good for you to mention (and is actually the point of the article about media motivations). My income is about 50% Brokerage and 50% as a principal in real estate ownership, so I do care personally about what direction prices are headed in and not just simply in sales volume.
I find that sales volume is closely related to “demand” when using the old “supply vs. demand” filter to look at a market. Supply/demand works surprisingly well to predict short term price pressures, both up and down, in real estate.
Consumer confidence is also a very real force in residential real estate. People’s perception of “The Market” (which is really: supply, demand and perception of price increases and decreases) causes them to act differently in their purchases and sales. My belief, expressed in the article, is that this can be an extremely useful tool should you attempt to “time the market”.
Good news, the data you seek is somewhat public and we can send you the monthly reports by area. The bad news is that the smallest division of the data is down to MLS area.
When I buy and sell my own property, or represent clients in their transactions, I sort back into historical trends of not only the MLS area, but most importantly I will sort for similar year build and square footage. In your target areas you would want to normalize for lot size too. The reason that this is so important, is that 8E, for example, may have some months where the average sale is built in 2000 and is 3500 sqft, while the following month may have average sales built in 1995 and at 3000 sqft. This would indicate an average price decrease in 8E, month over month, however may be unrelated to the “going price” of homes in 8E as far as the information you are seeking.
What’s worse, is that these changes in characteristics of an average home in an MLS area, can be anomalies, or can be long trends as in increasing average home sizes.
Drop me an email with your best email address and I’ll get you the raw data stats tables to analyze going back about 10 years. (same offer to any other readers).
Kevin
kevin.bown@goodwintx.com
I have a chart that goes back to 1990 and compares units and median price on a monthly basis.
@Kevin Brown.
I may be wrong but I think that the chap above is saying that volume is one thing when it comes to determining the direction of the market.
Buyers want to know which way prices are headed in an area they are interested in. $ increase/decrease analysis over time helps to see what is going on.