Monday, June 20, 2011

Austin home prices rise, sales down

Austin home prices rise, sales down - Read the article on Austin Business Journal and below you will find how I interprete the information based on my local knowledge.

First the article says average sales prices are up by 4%.  This does not mean that a home is going to sell for 4% more, it just means that the average sales transaction is for 4% more.  What we have seen is the price of the same home will be selling for less than the same home last year.  We have seen some upward movement in the downtown condo's, but most of the time we have seen the same house selling for less money than the prior year.  What we see is that those who qualify for a mortgage are spending slightly more, but getting way more house.  If you are in the market for a house, now is a better time to buy than last year because prices are lower and so are interest rates.

Second, there are fewer homes on the market, and they are staying on the market for longer than one year ago.  To me this looks like the sellers are sitting out and not even offering their house for sale even though there is less competition.  I believe sellers are on the sideline because they want to see higher prices before they will sell.  This number (81 days) is moving in a better direction for sellers but most would consider any number less than 90 days fairly good by historical standards.  I summarize this by saying prices are down, but homes are selling.

Third, the last paragraph of the article is very important, though the way it is written it looks like a footnote.  Rents are up 4% on average.  This may cause more sellers to sit on the sideline, if they can get more for rent than a year ago, and a home would sell for less, then they may just put a tenant in the home rather than sell it.  For rental homes the biggest variance from the norm is the downtown condo market.  We have seen downtown rents rise 20% over last year due to a scarcity of rental inventory.  In the outlying suburbs we have not seen a significant increase in rents, but since the prices of homes are down right now is a more attractive market to buy a single family rental home as an investment.

Let me know if you have additional questions on the Austin market.  Email me direct at KMartin@ONEprop.com

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