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Wednesday, December 05, 2007



Is business hurting? Yes, Austin appears to be doing well compared with the rest of the country, but the national media is doing us a service right now - keeping things grounded to avoid the huge price runups that happened on the coasts. Our ~10% appreciation (this year) doesn't look so bad compared to Cali, but compared to historical TX appreciation of ~3%, we are facing some issues.

Look at the Mueller redevelopment - all lots were gone fast and now there is news about available lots. This is a good thing for consumers; if they are priced out or prices rise too high, the fallout is far worse medicine than a slow down.

How many builders in Austin have shifted from building new homes in the <=$200k range to now close to $300k (for the same model). This kills move-up buyers or prevents locals from upgrading. The main source of buyers is then from migration. Austin is slowing - in the under $200k range, sales are down ~25%ish y-o-y. While it might not matter now, future growth comes from these homebuyers.

You recently had a post about builders in Houston cutting construction of homes <150k, what sort of long term affect is that going to have?

Dee Copeland

Thank you for the comment.

Business is doing very well! Most of the agents I know are swamped and hiring assistants. In fact, I have a lead buyer specialist position open as well as a listing coordinator spot.

I think my point is that Austin and Texas are not doing as bad as the rest of the U.S, but you don't hear about this as much. You have to make a smart decision in any market. If it's a buyer's market in a niche spot, plan for it. I had an extensive discussion with my friend in Switzerland and the people she know are blindly pulling their money out of the U.S. because they don't understand what's happening. She said it was a big problem.

Houston Builders were moving away from the $150k consumer range due to the lack of mortgages and started building in higher price ranges because they were selling well. Maria actually wrote that article and I commented on it. I think builders started focusing on the sub-150k range, so building in that range increased. When you back off, it looks like a decrease, but overall, it's around the same. I bet they realized that inventory is where it should be, so decided to move to where the money was.

Austin builders are starting to focus on lake areas and infill development. Prices keep increasing, but I also think this is simply because buyers who need affordable payments can't get loans anymore. Overall, our stats show demand in that $200-350k range. My investors and buyers are buying and selling homes or condos in the $200-400k range after carefully evaluating.

I welcome other opinions. Of course, I do not shade the truth for perceived gain. I rarely accept new investor clients and just put the info out there for discussion. These are just my thoughts on what I see and from people I talk to. It's always great to hear others.

Dee Copeland

I got a post on another blog where I syndicated this topic, so wanted to show that comment here:
To say that the there is not a real estate bubble is putting your head in the clouds. I do recognize that the Houston market has been more stable (relative to other markets), but c'mon inventory is at an all time high and prices will need to adjust downwards. There is more supply out there than qualified and willing buyers. Only realtors refuse to acknowledge this...since this impacts your profit. Also, I've heard plenty from other bloggers that prices in Austin have dropped 20-30%!!! Maybe instead of refusing to acknowledge this market, you try to make the most of it by injecting some realism into your approach.

I'm saying the overall market has slowed in terms of units sold, but not in top factors such as job growth, appreciation, and overall growth. Each real estate market is different and if you only look at units sold, you're missing the boat.

1. In West Austin, we have multiple offers. Same goes for many areas of Dallas. The worst areas are the ones that investors were speculating in during 2005 and 2006, like East Austin, which was 50-60% appreciation during the short period. Even now, many homes in East Austin are sold in 30 days if they're vintage or ultra-modern. The average days on market for the MLS area is less than 60-90.
2. The average days on market in Austin is currently 70 days. Dallas had 80 days on market IN DECEMBER, the slowest time of the year. How can we be in a "bust" when homes are selling in under 90 days? Is that what you call a bad market? IF so, I'm sure Californians and Floridians would disagree.
3. If there was a bust, why are prices still on the rise? The worst hit so far is the subprime markets I just did a market update in Dallas. Homes priced above $300k actually SAW AN INCREASE in sales!

If you don't live here and sell here, don't tell us our market is doomed. If you want to say it decreased from historic highs, ok. My buyers aren't getting contracts accepted due to multiple offers, so please call them and let them know that the market has slowed.

I also wanted to add that my main point on a lot of posts is that, despite the market, we should always have a CMA and avoid speculating. You can buy right in any market if you get your facts straight and make an offer based how motivated the seller is.

From my other post:
"...I sell real estate that people have to make money from. We have to buy well, evaluate, and sell at the right price. I'm currently helping some investors who got caught during the mortgage market shift and they're not fairing so well. They will probably break even despite being conservative. The speculators are losing their shirts and rightfully so. That's what happens when you gamble on the market."

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