The March MLS data is out. Below is a compilation of indices I created to track and, dare I say–forecast–the direction of the local market. If you follow the blog regularly, you’ll recognize the Inhabit Index near the bottom. But before we delve in, please note the images below depict general trends in the market. Without exception, there are various neighborhoods and price points that out/under-perform the broader market.

Price and Inventory

Prices dropped 4% this March compared to March 2008. The year-to-date figure is less than 2% decrease for single-family homes. Notably, prices and inventory levels have seen dramatic fluctuations over the past 6 months. And the trend line for prices suggests a slight decrease in prices ahead. The question many are asking still remains; how low will they go? Some predict a few percentage points, other say perhaps more. One large determinant will be the level of inventory or supply through the remainder of the year. As with the prices, the absorption rate has been teetering between 6 and 10 months on a monthly basis. For now, 6 represents a very balanced market. The national average is closer to 10 months.

Supply and Demand

While the current level of inventory is historically high for Austin, the rate at which homes are coming on the market is slowing. This will change as we head in to the summer selling season. Yet, the silver lining with respect to supply is the drastic reduction in new home starts. As the market shifted, developers and builders slashed planned projects, some due to tighter financing restrictions, others due to solvency issues. But believe it or not, some economists posit Central Texas will experience a housing shortage a few years from now, assuming population projections hold true. We’ll have to revisit that point at a later date. For now, fewer homes are selling given the larger inventory. In fact, 20% fewer homes sold in March 2009 compared to 2008, which was another 20 to 30% down from 2007. Last month there were roughly 9,700 homes on the market while only 1,421sold.

Months of Inventory (MOI)

Will Austin remain in the single-digit MOI range? Again, I think it all depends on what seller’s decide to do over the summer. Based on what I’m experiencing in the market right now, I sincerely believe demand levels will pick up stop sliding over the next quarter. But if seller’s regain their confidence and flood the market, or if another wave of mortgage default transpires, then a likely surge in inventory will adversely affect prices. 

Inhabit Index

The Inhabit Index is just shy of 20% for March–a nice little climb out of the sluggish winter months. Austin is still, unequivocally a buyer’s market though. Will we reach 30% on the city-wide index this summer. Probably not. But, there are nearly 20 MLS areas that are now in or flirting with the seller’s zone. So, don’t expect soft prices and motivated sellers everywhere you’re looking to buy. Most of these areas have an average sales price under $300,000. And with interest rates below 5% for some buyers, I expect many of the $150-250,000 areas to perform well this summer. Homes over $300,000 are still selling, they just take longer and need to be priced competitively.

This year started off a lot like 2008. Slow. Not a big surprise though, since many expect the recession to run its course through most of this year. Moreover, January and February are seasonally slower months. In Austin, the impact has left us with fewer homes selling and softening prices throughout the city. Here’s a quick look at how each sector fared this January compared to last: 

Property Type	Sales	% Chg	Avg Price	% Chg
Single Family	834	-36%	$231,158	-6%
Townhouse/Condo	80	-35%	$156,119	-22%
Multifamily	22	-49%	$232,677	21%
Commercial	13	-28%	$228,632	-57%
Residential Lease	1,093	28%	$1,278	2%
Commercial Lease	9	0%	$1,163	-30%

By most accounts, Austin remains a buyer’s market. But there are pockets where reality is a little different. These areas have remained affordable and are seeing healthy activity as a result. For example, just this week, a client I represent missed a house with multiple offers in Crestview. It wasn’t a short-sale or foreclosure. The home was priced at market, in fantastic condition and happened to be precisely in the client’s desired area–the necessary elements for any successful sale.

Now, I wouldn’t say my anecdote is sufficient evidence that we’ve reached the bottom. More than likely, it’s one of a few isolated cases happening in our market. The fact remains, current inventory continues to give buyers the advantage. And although it’s slowly leveling off, many sellers rather than significantly adjusting their price, are either letting the listing expire or withdrawing altogether.

Reasoned prudence is in every one’s interest right now, especially if there is any uncertainty with job security. That being said, renters, who have been working diligently to eliminate their revolving debt and save for a down paymenet should be rewarded nicely when they choose to purchase this spring and summer. They’ll also get a nice tax credit if they haven’t owned for three years prior.

Buyers and sellers who are preparing to make difficult real estate decisions, now more than ever, need a thorough market analysis before pulling the trigger. It’s never enough to rely on the headlines. Which is why we’re breaking the numbers down by MLS area to give clients a more informed view of local market conditions.

Find your area below…

 
Overall, prices in Austin appreciated by 2% last year. Not as big of a number as many hoped it would be. But all things considered, a positive number looks pretty good. Here are a few other things to note…

Not every area benefited this year. As the market continued its shift over the course of the year, inventory accumulated, especially in the high-end neighborhoods. Clearly, from the map, you can see exactly which areas outperformed the broader market. Many of the neighborhoods and MLS areas I expected to appreciate did so. Others, unfortunately, did not–1B (-7%).

Despite the desirable location and proximity to downtown, the area suffered, like much of west Austin, from the credit crunch. Early in the year, non-conforming loan guidelines tightened significantly in reaction to the sub-prime fallout. Currently, homes over $400,000 are taking nearly twice as long to sell when compared to $250,000 and below. Sellers are now adjusting their prices accordingly. To prove my point, I just received a notification for this $90,000 price reduction in Tarrytown, 1B.

Here’s a look at the price distribution of homes sold in December:

My deepest apologies for the long wait. I know you’re probably wondering what has been happening in the local real estate market. Well let’s get to it, shall we? December’s data will be available next month. I’ll refresh the index when the new numbers come out.

There is no denying Austin has been impacted by the ongoing recession and financial crises. Although we seem to be faring better than other cities, let’s not overlook the obvious. Many people are feeling pinched. Some realtors aren’t quite ready to swallow that pill and continue to sing a rosy tune, but we know it’s tough out there and we’re committed to seeing the shifting market through with you.

To get a better grasp of the full impact, it’s helpful to review the chart above against the backdrop of the volatility the US economy has experienced. Below is a timeline of key events that took place in 2008:

January 08: National Association of Realtors (NAR) announced that 2007 had the largest drop in existing home sales in 25 years, and the first price decline in many years. 

March 08: Dow Jones Industrial Average sinks to lowest level since 2006. Bears Stearns aquired by JP Morgan Chase with help of Fed.

June 08: Senate Banking Committee chair proposes housing bailout that would assist troubled subprime lending institutions

July 08: Major banks and financial institutions with exposure to high riskmortgage backed securities report losses of approx. $435 billion; President Bush signs Housing and Economic Recovery Act of 2008.

September 08: Federal take over of Fannie Mae and Freddie Mac; Lehman Brothers files for bankruptcy protection; Fed loans $85 billion to AIG.

October 08: Bush signs into law the Emergency Economic Stabilization Act creating $700 billion Troubled Assets Relief Program (TARP) to purchase failing bank assets; Dow caps its worst week ever with paper losses of $8.4 trillion from the market highs last year.

November 08: The Federal Reserve pledges $800 billion more to help revive the financial system; $600 billion will be used ot buy mortgage bonds issued or guaranteed by Fannie Mae, Freddie Mac, Ginnie Mae and Federal Home Loan Banks.

You can review the full timeline at the University of Iowa Center for Int’l. Finance and Development.

As the drama continues in Washington and on Wall Street, the most visible consequence for our real estate market has been a contraction in total number of homes sold and current rate of sale–measured by the Inhabit Index. The median price in Austin has fallen 3% compared to record highs in 2007. What we can glean from 2008 thus far is that Austin remains a buyer’s market, and has been since last Fall/Winter. 

The Inhabit Index has been fairly stable in light of the contraction. Much more so than 2007. Thankfully inventory has been shrinking on a monthly basis for the past few months. Buyers still have a healthy supply of homes to choose from and more sellers who are willing to make a deal. Some sellers, however have decided either to come off the market entirely or convert to renting.

Now that you’re caught up, here’s how each MLS area stacked up in November. The areas near the top of the list are still seeing healthy activity. Look for Austin to remain a buyer’s market throughout 2009, notwithsdanding a drastic economic turnaround.

Not sure which MLS area you’re in? Search the map.

Area	Area Name	Index(%)	Pending	Active	Est Days on Mkt
10S	10S	27.6	35	127	37
5E	5E	25.0	10	40	89
NW	Suburban Northwest	24.6	35	142	46
N	Suburban North	23.1	15	65	32
1A	1A	22.7	15	66	58
HU	Hutto ISD	22.4	44	196	70
10N	10N	20.6	13	63	44
7	7	20.6	7	34	55
2N	2N	20.5	16	78	52
2	2	19.8	19	96	54
CLN	Cedar Park/Leander North	19.5	70	359	60
1N	1N	18.5	23	124	53
PF	Pflugerville	17.9	73	408	59
GTE	Georgetown East	16.5	20	121	77
CLS	Cedar Park/Leander South	16.4	62	378	69
RRW	Round Rock West	16.0	63	393	59
9	9	16.0	4	25	99
SWW	Southwest West	15.8	27	171	53
HH	Hays County/Hays CSD	14.2	50	353	64
HS	San Marcos ISD	13.9	11	79	88
SC	Suburban South Central	12.5	11	88	93
SWE	Southwest East	12.2	23	188	52
3E	3E	12.0	9	75	98
W	Suburban West	11.9	16	134	101
RRE	Round Rock East	11.8	58	492	69
3	3	11.7	18	154	95
NE	Suburban Northeast	11.4	14	123	72
RN	River North	11.2	30	269	109
GTW	Georgetown West	10.9	50	459	109
4	4	10.5	14	133	86
SE	Suburban Southeast	8.3	5	60	60
HW	Wimberley ISD	8.2	12	147	121
LW	Lake West	8.0	6	75	268
HD	Dripping Springs ISD	8.0	21	264	122
8E	8E	7.8	8	102	106
6	6	7.7	8	104	99
1B	1B	7.6	14	185	142
8W	8W	7.6	10	141	118
5	5	6.9	13	188	120
LS	S. Travis Lake	6.9	45	652	160
LN	N. Travis Lake	4.6	11	237	198

 Related post: The Inhabit Index: How to know when it’s a buyer’s or seller’s market

Looking back at January, the index rose 5 percentage points to 15%. Current market conditions are still favoring buyers throughout the Austin metro area.  The inventory of homes on the market has grown to nearly 7 months; I expect a further increase as we approach the heat of the selling season. The good news is that new construction starts are down, which should help mitigate an oversupply.

So if my prediction for a growing inventory holds true, any future increase would give Austin buyers a larger pool of homes from which to choose. Advantage buyer. However, knowing that, many buyers and sellers are waiting it out in anticipation of such a development. I wouldn’t advise either side to continue with such a strategy.

Ok. I know what you’re thinking. But before you pass that last sentence off as biased-Realtor fodder, you might want to seriously consider it, lest you find yourself in this scenario put forth in a recent Time magazine article.

 Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at the recent rate of 5.5%. Monthly principal and interest come to $994.31 Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you’d have saved nothing [in your monthly payment].

Now, the scenario above assumes a price decrease of 10 percent. Currently, that isn’t applicable to Austin as we are one of the few remaining markets where prices are appreciating. So, my point is regardless of what home prices do in the coming months, the cost of money, specifically mortgage rates, will most likely go up. In fact they’re on their way up as we speak. Just last week, many people missed an opportunity to lock in when rates were around 5.25. Less than 3 or 4 days later they are over 6 percent and projected to keep going up in the days ahead.

 So what can a buyer take from my observations? 1) Prices are unlikely to fall as they are in other markets, all other things being equal. 2) Interest rates have nowhere to go but up.

And sellers? 1) Home prices are still appreciating in many neighborhoods throughout Austin. 2) But when interest rates increase, the money supply tightens and could translate in to fewer potential buyers. 3) If you intend to move-up, that is sell your current homes and subsequently purchase a larger home, you will likely pay more in price as well as interest. So anything that is gained by waiting may be offset by rising financing costs.

By no means am I promoting or advocating uninformed and hurried decisions on the part of buyers and sellers. I point out the above simply to illustrate the potential cost that will be paid by those who have to make a decision but are wavering in the process.

To help you make up your mind, here’s a more local view of which MLS areas are currently favoring buyers vs. sellers:

Related Post: The Inhabit Index: How to Know When It’s a Buyer’s or Seller’s Market

This goes to show you, not all news is bad. But as John Stewart aptly stated [referring to mainstream reporting] last night in a humorous interview with Larry King, “at this point, unfortunately, you have to judge each piece of [news] material. There are very few [news] organizations left that have a credibility savings account that they can draw on anymore.”

So while this piece comes as a breath of fresh air in the long chain of doom and gloom national market reports, I caution readers from reading too much into the headlines [both positive and negative] simply because the national media says it’s so. If you are buying or selling in Austin, study the market and more importantly the neighborhood and street in which you are looking, then make your assertions about the market.

That being said, I did agree with much of what the article had to say, minus the characterization of Austin as a backcountry city. It has its quirks, no doubt. But for a city that doubles in population every 15 to 20 years and has the number 1 projected GMP growth for the entire US [32% over the next  5 years],backcountry it is not. The secret is out, Austin continues to be a destination. 

Here’s the NY Times article:

February 15, 2008

Some Cities are Spared the Slide in Housing 

By Clifford Kraus and Ron Nixon

Correction Appended

AUSTIN, Tex. — The real estate market these days is a tale of two Americas, and one of them is not doing too badly.

In the America of big-city housing markets, especially on the coasts and in the struggling industrial Midwest, the huge run-up in values in recent years has given way to big drops in prices and sales volume. Millions of people owe more than their houses are worth. 

But in the other America, specifically in cities like Austin; Grand Forks, N.D.; Yakima, Wash.; and Salem, Ore., the available evidence suggests the real estate market is holding up. Prices there never boomed as crazily as they did in the big cities, and now, even though volume is down almost everywhere, prices in many of these towns are firm or rising.

Consider the experience of one Austin resident, Dan Clark. Forced by a job change to put his house here on the market, he wondered whether he would get anything like the $385,000 he paid for it a year ago. He was floored when the second potential buyer to look at the place snapped it up for $429,000. “Manna from heaven,” he said.

Many people are aware that a handful of big-city markets, like Manhattan and San Francisco, have largely resisted the real estate slide. It is less widely known that the same thing is true in scores of smaller markets.

“I would call them backcountry cities,” said Robert J. Shiller, an economist at Yale University and an expert on real estate markets who predicted the bursting of both the housing and stock market bubbles of recent years. “They are just going through normal growth, and they are out of the bubble picture.”

In figures released on Thursday covering 150 metropolitan areas, the National Association of Realtors said that median home prices were falling in 77 markets — but rising in 73.

Real estate statistics must be interpreted with caution, especially when sales volumes are declining, as they are all over the country. But an analysis by The New York Times of three distinct data sets — mortgage data from the government, sales figures from the Realtors’ group and courthouse records from a company called DataQuick — produced a list of 17 metropolitan areas where all three sources of information agree that prices were still rising as of late last year, the most recent figures available.

For another 43 cities, two data sets, from the Realtors and the government, suggested that prices were still rising late in the year. DataQuick could provide no information on those cities.

How long the situation will last is anyone’s guess. One possibility is that the smaller cities are just lagging behind the big ones in seeing prices fall. And if the economy weakens drastically, all bets are off. But for now, buyers in these towns seem to feel they are getting a lot of house for the money; sellers and brokers are realizing that they have, so far, dodged a bullet.

“When I read about the national real estate market, I feel fortunate I am in Austin,” said Shara Parker, a real estate agent who is happy she turned down a chance four years ago to relocate to Las Vegas, which was booming then and is sinking now. “Our highs are not as high and our lows are not as low.”

Economists say small and medium cities, especially those where land availability is not a constraint on growth, have done better than the nation as a whole because they have followed more traditional economic patterns. New-home prices in most of these places still reflect, more or less, the cost of the labor and materials used to build the houses, in addition to a profit margin.

“There are a lot of places where you didn’t have flipping of real estate,” said Steve Dennis, a business professor at the University of North Dakota. “Since you didn’t have the price appreciation, you don’t have the price correction.”

Generally, the markets that are showing strength do not have the bulging housing inventories of larger cities, because there was relatively little speculative building during the early part of this decade. Most of the towns have only modest exposure to the subprime loan crisis. And falling mortgage rates are buoying these markets.

Typically, their local economies are still producing new jobs and healthy income growth because of factors like rising crop prices (as in Bismarck, N.D.) or local oil booms (Midland, Tex.) or an influx of second-home buyers (Sun Valley, Idaho).

“In 2008, I see momentum growing in Middle America for prices to stabilize and increase, given the historic mortgage rates,” said Lawrence Yun, chief economist for the Realtors. But he added, “If we go into a recession, it’s possible some markets will reverse themselves.”

Austin is a good example of a real estate market that was slow and steady for years and now appears to be taking off. Austin’s high-tech industries are attracting well-heeled buyers from cities where real estate is far more expensive.

Sales prices for existing homes barely moved from 2001 to 2005, when the markets in a handful of superstar cities were on fire. But last year, the median price for a single family home rose 6.4 percent, to $185,000. It was the second consecutive strong year.

“I have to calm my buyer clients down,” said Mark Minchew, an Austin Realtor, “so they don’t pay too much.”

The fly in the ointment for these cities is declining sales volumes, which prompt some experts to argue that median prices are presenting an unduly rosy picture. If fewer houses sell, but the ones that do sell are at the high end of the range, that can skew median prices.

“In the markets that are doing better, lots of people are not selling their houses, so you don’t see the prices going down because they are not selling for a lower price,” said Todd Sinai, a real estate professor at the University of Pennsylvania. “The market is doing a lot worse than what the median prices would show.”

Still, in many of the cities where prices are strongest, local Realtors contend that volume drop-offs have been modest, just a few percentage points.

Mr. Clark is one Austin home seller with a happy tale. When a recruiter called him late last year with an enticing executive health care job in Fort Worth, Mr. Clark thought twice about trying to sell a house he had bought only a year before.

“I was concerned after my relocation package ran out I would have to carry either two mortgages or a mortgage and apartment rent,” he recalled. Instead he sold the house for a profit, and only $10,000 below his asking price. “A weight was taken off our shoulders,” he said.

Photo courtesy of: Hamron

The December numbers are in and the Inhabit Index should be back on schedule with the upcoming review of January. Looking back at 2007 we cleary saw a Seller’s market from January towards the end of July.  By October and November, the overall market creeped into the buyer’s territory.

Hindsight is particularly revealing when it comes to trends; because if you notice on the index, the market began its shift in early spring of 2007. This points to the degree of difficulty—and in my view the impossibilty—of timing the real estate market since most analysts rely on historical data. That is not to say, you can’t forecast and make predictions about what’s ahead, but the exact timing of it all is purely speculative and can drive you crazy if you let it.

During the spring and even late into last summer multiple offers were quite common throughout the city. Some homes were selling for more than list price, and in certain neighborhoods, they were sold within a week on the market—my personal best came in August with a listing under contract within 16 hours of putting it on the market. So, even in August the market was shifting, but not many took notice—and even still, they may not have believed the numbers if the were paying attention to the index. Homes were selling, and very quickly.

So fast forward to December, the Index decreased another 4 percentage points. All signs—with the exception of rising prices—are clearly indicating Austin is a buyer’s market. I expect things will remain that way into the second quarter of 2008. Granted, summer is always the peak season, so it isn’t surprising the rate of sale has decreased during the past winter months. But from the graph above you can see the market has definitely cooled relative to 2005 and 2006, yet prices are currently stable.

As I always mention though, keep an eye on the areas that rank among the lower end of the Inhabit Index for consecutive months. Due to the large supply of homes in those areas, sellers will likely be forced to decide between lowering the price or withdrawing from the market. So, watch for price adjustments in those areas.

The November 2007 stats have finally arrived—a year later. The stats were delayed for nearly a month due to a recent overhaul of the MLS software by the Austin Board of Realtors. The transition to the new MLS has been anything but smooth, so hopefully the December stats will arrive on time and I can share my December index early next week.

The index for the greater Austin market decreased by 5 percentage points from October to November. Remember, this graph is a high level view of the broader market. Below you’ll find a more local view and be able to discern if particular MLS areas are in a buyer’s or seller’s market.  November’s shift to 16% suggests market conditions have become more and more favorable to many Austin buyers. This is due to a large supply of active listings on the market and mortgage interest rates below 6%—though today’s report on core inflation will likely cause mortgage rates to increase in the days ahead.

Here’s the break down by MLS areas.

Related Post :: The INHABIT INDEX: How to Know When It’s a Buyer’s or Seller’s Market.

At the end of November there were only 6 areas within the Austin market that were still showing signs of a seller’s market. Most of these are suburban areas, with the exception of area 7, which includes Barton Hills neighborhood.  This is down from 12 areas in October. Even still, some make the case that a rate of sale (Inhabit Index) between 30 to 20 percent would favor the seller. This may be in certain neighborhoods, but anywhere in 30 to 20 range I consider a soft-seller’s market at the very best. Buyers are more likely to win concessions when negotiating in those areas.

However, it always comes back to the motivation of both the buyer and the seller; even in a buyer’s market an unmotivated seller trying to hold out for the right offer can be difficult to budge on the terms—especially since prices in Austin are stable and even increasing in many areas.

But I don’t expect many of those sellers to be in the market much longer as there are a lot more expired and withdrawn listings now than earlier in 2007. Yet for the long-term health of the real estate market, I hope the small percentage of current sellers that have been languishing on the market are motivated more by greed than an absence of equity. Time will surely tell, so check back for my next market conditions update.

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The October stats are in for the Austin real estate market. My market report contains over 50 pages of data compiled from the Austin MLS. I am happy to share the full report with anyone that loves to analyze the numbers at length, just send me a quick email. But for brevity, here is the latest look at the INHABIT INDEX for single-family homes.

As I mentioned in an earlier post, the INHABIT INDEX is a tool I developed to easily gauge if overall market conditions are favoring the buyer or seller in the Austin area. If you want to know how the index is calculated check out The INHABIT INDEX: How to Know When It’s a Buyer’s or Seller’s Market. 

Up 4% from the previous month, the index increased as a result of more pending sales and a reduction in active listings. More pending sales translates into more homes going under contract, but the reduction in active listings can also be attributed to listings expiring or being withdrawn from the market.

Sellers should remain aware, we are still in the buyer’s zone (< 30%). Although the rate of sales increased in October, there are still a record number of available properties on the market from which buyers may choose. In fact, the current inventory is at a three year high. Bottom line, homes are still selling in Austin (some very quickly), but buyers now have a large inventory of homes to choose from and are not wasting any time by looking at homes that are in questionable condition or even slightly overpriced.

Want to know where your area or neighborhood ranks on the INHABIT INDEX? Here’s a list (and map) of how the Austin MLS areas are performing.

< 30% → Buyer’s Zone

> 30% → Seller’s Zone

Buyer’s should keep an eye out for areas that consistently rank on the lower end of the Inhabit Index for an extended period of time as seller concessions and price adjustments should eventually take place. 

:: :: :: :: :: :: :: :: :: ::

First it’s important to know the definition of both market conditions. In a sincere attempt to avoid insulting anyone’s intelligence, a buyer’s market is characterized by supply outpacing demand. In other words, there are too many homes on the market for the number of buyers. Typically, we see the following in a buyer’s market: 

1. Flexibility in negotiating price.
2. Added seller concessions (closing costs, repairs, etc.)

Conversely, a seller’s market is characterized by an insufficient level of supply for the ready, willing and able buyers. In a seller’s market, it’s common to see this happening: 

1. Multiple offers.
2. Shortened time on the market.

Regardless of when or where you want to move, generally the market is trending in one of two directions defined above. Yet, it is possible for the market to be stagnating in transition, which is all the more reason buyers and sellers need to anticipate which way the market will move. More specifically, you should have a clear understanding for which direction the particular neighborhood that you’re searching or selling in is trending. The real estate market is not monolithic. Some neighborhoods outperform others (see below).

Markets constantly fluctuate. Unfortunately, by the time we read about it in the paper, it’s already history. So apart from negotiating transactions on a regular basis how can you remain informed and know if Austin is presently a buyer’s or seller’s market? How can you know which way things are headed? (faint drum roll) ….Behold, the INHABIT INDEX. I developed and routinely update this index for my clients to easily gauge how supply and demand is faring in the Austin, Texas real estate market. Here’s how it works.

Essentialy, the index illustrates the current rate of sales against the current level of inventory for single family homes. Home prices in Austin, and any other city, are simply a function of supply and demand. By studying the balance between the two variables it’s possible to first, determine if we’re in a buyer’s or seller’s market, and then be better suited to anticipate how future prices may be affected. 

For example, if the INHABIT INDEX value is greater than 30%, then market conditions will generally favor the seller. Otherwise, when the INHABIT INDEX is at a value less than 30%, market conditions will likely favor the buyer. Usually, when a soft market is saturated with too many listings or if a hot market is efficiently turning over inventory for an extended period of time, prices tend to adjust accordingly. Here’s the summary:

> 30%  → Seller’s Market

< 30% → Buyer’s Market

I use the chart up top as a bird’s eye view, and the latest MLS/ABoR data tells me Austin is now a buyer’s market. The index will give even more insight when I zoom in to a particular area or neighborhood. Buyers that are now ready to begin their home search still need to be aware certain neighborhoods may not have shifted into the buyer’s zone. For example, look at all of Austin compared to the hottest areas this September.

   Location         INHABIT INDEX     Est. Days on Mkt.

1. Austin                           17%                               60

2. MLS N                           43%                               33

3. MLS 10N                       34%                               34

4. MLS 10S                        33%                               30

MLS area N, 10N and 10S are above the 30% threshold (seller’s mkt) and are seeing a very short exposure time on the market. I belive much of the attraction to these areas can be attributed to their affordability (median prices $170,000-188,000).   As I mentioned above, the INHABIT INDEX is a tool that I provide my clients to help them easily gauge the overall market condition. Keep checking back as I routinely update it and will share my findings in future posts.

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