Here are the statistics for single-family home sales in Austin, TX for December, 2009:

We finished 2009 with a very good December, as seen below:

1. Listings dropped by 441 units (down 5%) when compared to Dec/2008;
2. We sold 68 more homes (up 5%);
3. Our inventory (# of months to sell all current listings at current sales rate) dropped to 5.9 (down 10%);
4. Median prices were up by $11,500, or 6%;
5. Average prices increased by $14,347 (also up 6%).

So, how did the 2009 Austin real estate market fare, given the recession and uncertainty last year?

1. Our listings continued to drop which puts upward pressure on home prices (the old supply and demand theory).
2. While our Pendings were up by an average of 22% for the year, they didn’t all translate into sales.  This was due, in part, to some tightened lending underwriting and the enactment of the HVCC rule in May which caused some appraisal problems.
3. Sales were down by 5%, or an average of 92 per month.  While this doesn’t look like good news, I believe this is a testament of the strength of the Austin real estate market during a very difficult recession year.
4. Inventory was up by 2%.  However, using the definition of a 5-7 month inventory equaling a market in equilibrium shows Austin is not out of line with our total listings on hand.
5. Median price down by $1,622 per home…a drop of only 0.9%.  Again, while this looks like a negative, I find it incredible that we can survive a year of great uncertainty in our national economy and only have our median price drop by less than 1%.  Austin continues to outperform nearly all of the cities in the Case-Shiller Home Price Index.
6. Average prices dropped by $3,766 (only -1.5%).  See comments above in number 5.
7. Days on market increased by 8, or 10.6%.  Sellers who had their home in good condition and priced right simply had to wait a little longer to get their home sold.

Austin’s home prices never had the unreasonable jumps seen in some areas of the nation during the past decade.  There were parts of California, Las Vegas, Arizona and Florida that had annual price appreciation of 20+%.  Our single-digit increases over the past 10 years—by contrast—are why our prices haven’t fallen precipitously either.  On a state level, California and Florida home prices went through the roof in 2003-2005, only to fall dramatically the past few years.  Texas, by contrast, has had a fairly steady appreciation throughout the past 10 years, so we aren’t having the price correction seen by a large part of the nation.

Happy New Year!  I hope you had a great holiday season and that 2010 is off to a great start for you and your family.

This is a good time to make an assessment of what you want to accomplish this year.  The Grocery List for Life provides some helpful ideas to organize your thoughts and reach your goals and to generally feel better about things.  How about changing some of your habits to live a longer life?  Here is the best calculator I’ve ever seen that evaluates over 30 categories affecting longevity:  http://www.sonnyradio.com/realage3.swf.

For financial issues, Scott Burns—a personal finance author for 33 years—gives some great observations and wisdom in Another decade, another demonstration of timeless truths.  He mentions various patterns and rules to life and calls this article his “CliffsNotes from the past 5,000 columns”.

Have you filled your home with memories, packing room after room with objects that have some connection to their past but no purpose to the future?  Perhaps you should take steps to Rid Your House of Memory Clutter so you don’t let stuff from the past mess up the present.Do your 2010 plans include getting a job, or a better job?  

Or maybe you have a friend or family member who needs a job?  The Secret to Finding a Job When ‘There Are No Jobs’, written by Richard Nelson Bolles—the author of “What Color is Your Parachute?”—discusses five popular job-search strategies that do not work and five that do.

How about owning a home…is that in your near future?  The first 4 months of this year will be a fantastic time to buy given the $8,000 income tax credit for 1^st time buyers and the $6,500 for existing homeowners who replace their home (both types need an executed contract by 4/30/10) along with our historically low mortgage rates.  Those considering the purchase of a home will need to consider how their credit score looks.  Your Credit Score - The Magic Number Explained is a great article that explains how it works and how a better score can give you a cheaper total cost for a car or home.  It even includes a quiz for a quick estimate of how lenders are likely to rate your credit.  If you need a good mortgage broker and/or credit repair company, please contact me and I’ll refer some good ones to you.

Or, are you thinking about staying in your present home for several more years and are considering some remodeling?  The chart here:  http://www.remodeling.hw.net/2009/costvsvalue/division/west-south-central/city/austin–tx.aspx shows the average payback—specific to Austin—for several remodeling projects you might be contemplating.  One word of caution:  as you can see, all but one will return less than their cost when it comes time for you to resell, so these should not generally be considered as a money-maker for you.  Do those things that make your current home more livable for your particular situation.  If those changes happen to increase the resale value of your home, then you are fortunate.  [side note: By far, the two most cost-effective and impactful things a seller can do are general cleanup/decluttering and fresh paint…especially if they do their own painting]. 

The volume of Austin-area home sales continues to surge, increasing a whopping 58% over November, 2008’s numbers and represented our 3^rd month in a row (and only months of 2009) that showed increases over 2008’s numbers.  “This is the largest increase in year-over-year homes sales the Austin market has seen in more than ten years,” explained Jay Gohil, chairman of the Austin Board of REALTORS®.

In addition, 6 out of the 7 categories (above) that I track each month were in positive territory:

1.      Listings down 7%, which portends improving prices (supply and demand theory);

2.      Pendings up 7%.  While this is the 4^th month in a row of increases in this category, it is also the lowest, which might forecast smaller than expected December sales figures;

3.      Inventory down to a 5.4 month supply (41% lower than Nov/08) and averaging 5.9 months for all of 2009.  There are differences of opinions regarding the definition of a balanced market—some believe that less than 6 months is a seller’s market/over 6 months is a buyer’s market and others believe that less than 5 is a seller’s/over 7 is a buyer’s/5-7 is a balanced market (this is the one I use).  However, 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. By virtually all definitions, November sales reflected a seller’s market—at least for one month.

4.      Average sales price went up by 2% and is only down by about 2% for all of 2009, when compared to 2008 figures.  The strength of the Austin real estate market is confirmed by this statistic given such a small drop in prices in a recession year.

5.      Days on market dropped 5%.  Our third month in a row (and the only months of 2009) of decline or neutral change in this category.

“Don’t get too comfortable with who you are at any given time—you may miss the opportunity to become who you want to be.”  Jon Bon Jovi

Another incredible month in home sales for our area as seen by all the green above:

1. Pendings were up by 47% over Oct/2008.  This portends a strong November for sales since those under contract will likely close in November.  The uptick we’ve seen the past 2 months is no doubt aided by the original deadline for the $8,000 1^st-time buyer income tax credit that was set to expire on 11/30/09.  The recent extension of this credit (and the addition of a $6,500 one for some current homeowners) for sales with contracts by 4/30/2010 should give us a much stronger than average winter selling season.
2. Sales were up by 38%.  Now, you may be thinking this would be understandable considering the financial market meltdown during fall, 2008.  However, when you consider that it takes an average of 30-45 days to close a home, most, if not all of the sales last year were under contract before the meltdown that began in late September.
3. Listings dropped by 10%.  Lower inventory leads to higher prices due to the old adage of supply and demand.
4. Months of inventory dropped by 35%.  The general rule of thumb is 5-7 months of inventory is a market in equilibrium, less than 5 months is a seller’s market (ie-rising prices) and over 7 months is a buyer’s market (ie-falling prices).  Therefore, single-family home sales in Austin reached into a bona fide sellers market in October…pretty amazing considering the nationwide recession and many major U.S. cities in poor financial shape.  Even more impressive is the turnaround we’ve had given that we were in a buyers market just 12 months ago with 7.5 months of home inventory.
5. Days on market dropped by 3%….the FIRST month of this year it has dropped when compared to 2008.

Our only negatives were that the median price dropped by 5% and the average price dropped by 2% in October.  However, those are down this year by an average of only 1.4% and 2.6% respectively so, once again, data proves Austin is one of the best, if not the best real estate market of similar-sized cities in the country.

As I’ve mentioned in previous newsletters, it is only a matter of time before mortgage interest rates start creeping back up.  It wouldn’t surprise me if the rates are a full 1% higher this time next year.  Why would this happen?  Because home loan rates are based on MBS (Mortgage Backed Securities – bundles of home mortgages typically sold to investors) sales - so when the Fed agreed to be a big buyer, it helped provide a market and helped keep MBS prices high and home loan rates low.  But, the Fed is now slowing the purchase of these MBS.

So as the Fed’s program wraps up and eventually stops buying these MBS, home loan rates are quite likely to be on the rise. So while rates are still very good, they may not be for long. Let’s be sure to talk if you haven’t yet explored how the current rate environment might benefit you or someone you know.  If you know anyone who is looking to buy a home, please have them contact me.  

With the factors below, the next 5 months may be the best we will see in years to buy a home:

1. Extension of the $8,000 income tax credit for 1^st time home buyers (haven’t owned a home in past 3 years) to 4/30/09 to have a contract…must close by 6/30/09;
2. Introduction of a new $6,500 income tax credit for existing homeowners who’ve lived in their home for 5 continuous years out of the past 8 and want to buy a replacement home;
3. Historically low mortgage rates;
4. Softening home prices

Here are a few articles to catch you up about local developments (click blue hyperlink to read article):

1. Waller plan envisions a more inviting downtown creek.  One of my favorite projects that has been talked about for decades…to create a setting similar to the San Antonio River Walk.  Though smaller in scale, this project could really enhance our already popular downtown area.
2. Retail center planned in Northwest Austin.  Across 620 from Concordia University, this $70 million dollar project with nearly 300,000sf would have retail, dining and entertainment.  And, it would be the 1^st major retail project announced in nearly 3 years for our region.
3. Developer plans two subdivisions near Avery Ranch.  Avery Station (near the upcoming Capital Metro Light Rail Lakeline Station) will have about 700 homes on 177 acres priced between $190-450,000.  Pearson Place (just east of Avery Ranch) which will have 392 homes on 196 acres and include some apartments and townhouses.  A third development, Cortina Creek, will be off Hwy 183 just south of the 183/183A split in Leander.
4. Fight brewing over East Riverside development.  Height restrictions causing a stir for development on the south side of Lady Bird Lake.
5. Technology center could expand scientific research in Round Rock.  This technology center—to develop new technologies, medicines and scientific products—would be based near the ever-expanding area where Austin Community College, Texas State University, Seton Medical Center and Texas A&M Health Science Center are located.  The center would function as an “accelerator” for businesses in middle and late phases of product development.
6. Citizens work with city to plan future development.  Mixed-use development along the busy Anderson Lane corridor between Mopac and Burnet Road is getting the input of area neighborhood associations.
7. Austinites fear for future of neighborhood plans.  Along the same lines, the City of Austin is working on a new comprehensive plan to replace the 1979 Austin Tomorrow Plan.  There are concerns among neighborhood groups in the core areas of Austin that the original neighborhood plans from the ATP will be swept away and have a negative impact on their communities.
8. Coming soon - Part II of the Domain.  This 600,000sf expansion is the biggest retail project under construction in Austin and will include Dillards, Gold Class Cinema (upscale movie theatre with $20 tickets), Dick’s Sporting Goods and a Westin Hotel.

Are you looking for things to do with your friends and family (or incoming guests) during the upcoming holidays?  Here is a list of some great things to do:  Events_CelebratetheSeason_09

Here is wishing you and your family safety for any travel you may take this Thanksgiving.  May your heart be filled with the true spirit of Thanksgiving today and always…

Here are last month’s single family home sales statistics for Austin:

Wow…check out the jump in Pendings (ie-have a contract but not closed) in April…up 46% from last year!  This is the 3^rd month in a row of increases over 2008:  March was up 37% and February was up 11%.  Year-to-date, we are up an average of over 20% in Pendings when compared to 2008 numbers.  Pendings are a great indicator of the future movement of a real estate market since they show sales activity that has occurred, but just not closed yet.

Other positive signs:

1. Listings dropped slightly which means few homes to choose from which typically results in higher prices down the road as buyer demand picks up.
2. The median price rose 1% over 2008 in April and is down less than 1% over last year’s numbers YTD.  Looking back over the past 6 months, we had 3 months in a row of declining median prices (Nov-Jan), but the past 3 months has seen 2 increases (Feb/Apr) and only 1 drop (Mar).  This could portend that we may be at or near the end of our short-lived buyers market.
3. While our inventory is up 20% over last April, we have closed the gap each month this year going from a 57% increase in Jan, to 42% in Feb, to 30% in Mar.  The Texas A&M Real Estate Center considers 6.5 months of inventory to be a balanced market, so our 6.2 months bodes well when you consider the national average is 10 months.
4. Our monthly sales have mirrored our inventory improvement with numbers falling less each month: Jan: -36%; Feb: -28%; Mar: -22%; and Apr: -18%.

The most important thing to consider in all of the above numbers is that I am comparing apples-to-apples when looking at the figures for a month this year when compared to the same month from last year.   Real estate sales follow what is known as a “bell curve” each year, starting low in Jan/Feb, rising during the spring, peaking in the summer months, and dropping as the year ends.   Therefore, when I compare the same month from different years, I can extract like-kind data to see trends.  I am not, for instance, comparing January of one year to June of another which could show market movement that is not valid.

More and more first-time buyers are entering the market which allows homeowners to move up to a larger home.  The recent change to allow first timers to tap into the $8,000 income tax credit funds at the closing table is spurring many of them to act now that would have waited.  With our still incredibly low mortgage rates, buyers are seeing this opportunity will not last forever.

Here are last month’s single family home sales statistics for Austin:

Green arrows have returned to our stats, which is great news.  Pendings, a forward-looking indicator, were up 11%, and our median and average prices were up 5.4% and 3.8%, respectively, over February 2008.  Sales continue to struggle, however, with a 28% decline of last year.  Even so, over 1,100 homes sold last month (almost 300 more than Jan/09) which proves the old adage that sellers who have their homes in good condition and priced correctly sell regardless of whether it is a buyer’s or seller’s market.

One of the questions I get a lot is when will the national real estate market bottom out?  According to this ABC News video: http://abcnews.go.com/Video/playerIndex?id=7157306, we may be there now.  Savvy overseas investors see real value in our real estate prices and some are even buying here sight unseen.  As I mentioned in a previous newsletter, we will only know we’ve hit bottom by looking in our rear view mirror.  Those buyers who understand the incredibly low prices nationally (and to a lesser extent with our softening prices in Austin) coupled with historically low mortgage rates will be the ones smiling in the future.  Add our predicted higher inflation rates in the coming years, and the prices paid today will look like once-in-a-lifetime bargains.

With the nationwide real estate market dominating the news over the past many months, you might be asking yourself “How will the Austin real estate market fare in 2009”?  Well, we made yet another list and were named #2 healthiest by Builder magazine out of 75 top national markets for 2009. 

  Two items of interest are that Austin was one of the few metro areas that saw median price increases in 2008 (2.7%) and we now generate more home building activity than Chicago which has 6 times more people!  Read The Healthiest Housing Markets for 2009 for the full story.Another article, Which cities will weather the downturn best, has Austin ranked #4 in our ability to weather the nationwide downturn.  A few other items I gleaned from the February, 2009 issue of the Austin Realtor magazine that mentions why our Austin economy will be buffered from the worst of the nation’s monetary troubles:

1. Austin ranks 10^th in the nation for job creation
2. Austin has a 5-month supply of homes vs. the nationwide average of 12 months
3. Austin has the fewest number of new homes under construction since 1990, so we don’t have the glut that many other metros have
4. We had a positive median price increase (as mentioned above) vs. the median nationwide price drop of 13.2%
5. Texas lenders made fewer risky loans than other parts of the country due, in part, to the Texas requirement of no home equity loans over 80% of the home’s value.  This protected homeowners from entering into situations where they owed more than their home is worth (vs. some states where a homeowner can borrow up to 110% of the homes value).

It’s hard to believe, but in just over 6 weeks, our 32-mile light rail system will begin operation—on March 30^th.  Capital Metro is finishing work on quiet zones, where there will be sufficient gates at road intersections to allow trains to run without blowing their horns, much to the relief of those living near these intersections.  To read more, see “Cap Metro, City of Austin work on train quiet zones”.    CapMetro has published a tentative schedule for the rail service: “Capital MetroRail Initial Schedules”.   Freight trains will still run on the route from 9pm to 4:30am.  To learn more about the rail service and upcoming open houses at the stations, click here: http://allsystemsgo.capmetro.org/capital-metrorail.shtml.

Here are last month’s single family home sales statistics for Austin:

Even though sales and average/median home prices were down again last month, there were some bright spots.  Listings were even with the prior year (after increasing nearly 14% YTD over 2007); Pendings were up 11%; and days on market was up—but only by about half of the 2008 average increase.  Another positive note about last year’s numbers is that the average of the Median price changes for all of 2008 resulted in a 2.7% increase and the Average price was down only .7%.  These are both evidence of Austin’s strong local economy when compared to the nation as a whole.

Pendings— a new category I added this month—reflects homes that have a contract, but have not closed yet.  Since it can take an average 30-45 days from contract to closing, this category provides a good indicator of the future movement in sales. For December, they were up 11% from December, 2007.

There has certainly been enough press the past few months about our national financial “meltdown” which has, understandably, caused stress and consternation among the public.  “Is this the next depression?” “Is this a good time to buy a home?” “Should I sell my home now, or wait?”  These are all valid questions that deserve a definitive answer, but unfortunately no one knows the answer.  We are going into somewhat uncharted waters since our current circumstances are different than the Great Depression, the 1973-1974 recession, or the stock market crash of October, 1987.

As I mentioned in my last newsletter, in November, 2008 Austin single-family homes saw the first decline in median home prices in 4 years.  Due to our strong local economy, low unemployment, local climate & area amenities, state/local government centers and a highly educated populace Austin has and continues to weather the financial storm much better than the vast majority of the nation.  It will be interesting to see what the December, 2008 numbers look like which I will have in my next newsletter.

I personally believe Austin will have some softening of our housing prices through the 2^nd, or maybe even the 3^rd quarter of this year….nothing major, just a minor correction.  The sooner the credit markets free up, the sooner Austin home prices will return to steady home appreciation rates.  

Nationally, I think it will take most of this year, and maybe the first part of 2010 for those areas hit hardest to recover.So, what do others think about the national economy and real estate picture?  Here are some articles from various sources that may shed some light on the issues:

1. 2009 Could Be Better Than You Think.  This will be a good year to invest in stocks and real estate; Americans will learn to live within their means; and our federal taxes won’t rise.
2. Get ready to buy in 2009.  Buyers waiting for “the bottom” to buy a home will likely find 2009 an excellent year to do so.  With incredibly low mortgage rates—not seen in nearly 50 years—anyone who buys their first home, moves up to a larger home, or wants to increase their real estate investment portfolio will find this a once-in-a-lifetime opportunity.  In addition, I contend that there is a lot of pent-up buyer demand that will surge as the financial situation eases, making it more difficult to “time the market” with rising home prices and mortgage rates.
3. Get ready for real estate rebound.  There are a number of factors that may signal a dramatic improvement over the next 12 months.
4. After icy ‘08, credit markets may be near thaw.  As I mentioned above, freeing up credit for home buyers is critical to getting us back on track.  While we won’t return to the “just-fog-a-mirror to get a loan” days, buyers WILL find it easier to get a mortgage than in recent months.  Look at it this way:  if 100% represents the normal historical amount of buyers who are eligible for a mortgage, then we rose to 120-140% over the norm the past few years. So we will simply be returning to the more normal 100% level this year which represents 25-30% less buyers, but we will be losing only those who shouldn’t have gotten one in the first place.
5. Bold Government Can Solve America s Housing Crisis.  The Chief Economist of the Real Estate Center at TX A&M University gives his prescription for what the new administration should be doing to solve the problems: 1) curtail the supply of new homes; 2) slow new foreclosures; 3) increase demand for homes; 4) reduce mortgage rates further.
6. When will the market recover.  This article discusses past performance of the stock market including how it fared when one political party replaces another in the White House and whether we are headed for another Great Depression.

What should you do to be prepared to endure the downturn?  Amid financial ruin, learn to shield yourself gives some tips to help your cope.