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.

No matter which side of the political aisle you hang your hat on, the recent economic stimulus package has left many still wondering, ”How will this help me?”

If you plan to buy or sell your primary residence this year, then look no further than page 202 of the 407 page American Recovery and Reinvestment Act of 2009. In order to encourage consumer demand in the housing market, a small portion of the $787 billion total–approximately $6 billion–will make it’s way to the pockets of home buyers in the form of a tax credit. 

Among many other things,  Congress approved some key changes to the First-Time Home Buyer Credit, which was initially authorized under the Housing and Economic Recovery Act of 2008.  And in record fashion, the IRS has already updated the tax Form 5405for you to take full advantage by filing for 2008 or 2009. Please consult with your CPA, tax attorney or other financial advisor to discuss your specific qualifications.

Who May Be Eligible:

You purchased a primary residence (main home) after April 8, 2008 and did not own a home for three years prior.

You purchase a primary residence before December 1, 2009 and do not own for three years prior to the purchase date.

Your modified adjusted gross income is $75,000 or less ($150,000 if married, filing jointly).

One of the most notable changes to the initial tax credit passed in 2008 is the waiver of the repayment schedule for homes that were purchased in 2009. Many have concluded, the whole notion of repayment was counterproductive for a demand-side incentive to stimulate home sales. Unfortunately, Congress didn’t retroactively extend the perk to all of those who made a qualified purchase in 2008.

For those looking to buy in 2009, the tax credit no longer works like an interest free loan, but rather potentially as an outright refund. Of course, as is often the case with U.S. tax law, one caveat remains: You must retain the home as your primary residence for 3 years, otherwise you’ll be required to repay the credit.

So technically, the expanded provision does more to loosen the attached string, but doesn’t sever it entirely. Regardless, I expect this to help many renters who have been positioning themselves to enter the market and find a great deal on their first home. And assuming they keep the home for three years or more, they’ll receive a nice gift from their Uncle Sam.

Below is a comparison of the modifications made to the previous tax credit…

Chart source: National Association of Realtors, 2009.

On March 30th, the Red Line will open for business. The Capital MetroRail, which spans 32 miles of existing freight tracks, will operate between Leander and Downtown. According to their schedule, the trip will take 57 minutes. This month, Capmetro held a few open houses at the future stations and platforms. I paid a visit to Crestview Station and adjacent Midtown Commons, a transit-oriented-development.

The paint was fresh, the ticket machine was shiny and the cabin had that new train smell. If you didn’t make it out, here’s a few of the features you can expect to find aboard the Swiss-manufactured trains.

• 200 passenger capacity
• ADA accessible
• Free Wifi service
• Bicycle racks
• Pull-down trays and tables
• Max speed 75mph

Since the MetroRail utilizes the same tracks as an operational freight line, the service will only run weekdays during mornings and afternoons in peak rush-hours. Will it ease traffic congestion and the carbon footprint for those brutal commutes to and from North Austin? We’ll find out in a month. But even if it doesn’t shave off a lot of time for the trip, I’d much rather pay the $1.50 to spend 57 minutes or less enjoying my coffee and reading the paper on the way to work, as opposed to inching down Mopac and shaking my fist at the car that just cut me off.

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…

Most homeowners have felt the urge to begin a home improvement project that will add value and visual appeal to their abode. This is especially true for the new or first-time homebuyer eager to channel their inner-design star and make the place their own. But somewhere, between unpacking boxes and shopping for paint colors, the enthusiasm fades. Deciding which project will add the most value at resale and visualizing the finished product can be overwhelming.

We recently began offering a new design service to help homeowners resolve  those difficult choices. Even if you haven’t purchased or sold your home with us in the past, our real estate and design consultants can help you prioritize your next project, no matter how big or small. We’ll meet to further develop your vision and inspiration, provide a realistic assessment of the potential impact on resale and value and lastly, we’ll create renderings to help you visualize the final product–all before you pick up the hammer or saw. 

The shots above and below are before and after renderings recently completed for a homeowner in North Austin. The client was searching for a game plan to attack the kitchen and informal dining area of the home, but was challenged by the task of deciding where exactly to begin. Even though this was a minor remodel/update, the client now has a clear path to pursue the project with confidence.

To learn more about this service, drop us a line.

 
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:

If you’ve driven the streets of south Austin, you’ve probably passed by this home. Lately, despite the “deep freeze,”  we’ve been in the landscaping and gardening mood at my house. So, while the temperature is keeping us from digging, I wanted to share a little inspiration and feature a local landscape design firm, Floribunda and some of their past work, Tokyo Modern.

If you’re planning to list your home on the market this spring or summer, you will not want to overlook the landscape. With the cooler temperatures, now is a great time to start working on the beds. And with so many other homes on the market, by spring you will need to execute the selling strategy with extreme precision. Among other things, we’re counseling our sellers on cost-effective ways to improve their curb appeal. Need more inspiration? Here’s a video interview, produced by KLRU, with the designer sharing his thoughts on the development of the project.

The architecture of the home is pretty rigid and cold, but the landscaping does well to soften the exterior. The lush, zoysia berm serves as a great visual buffer from the busy street to the front of the home. I also really like the bamboo muhly’s texture and color against the concrete planter. Your thoughts?

It’s a new year and time for a new topic. While perusing through these listings I kept wondering about the original owners:

Would they approve of the restorations?

What was pre-Mopac traffic in Austin like (1930-40s)?

Was life as simple as the architecture?

Here are a few more that caught my eye:

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

When is the last time you considered such a question? Sure you find it easy to walk up to your own front door without reservation. After all, it’s your home. But if you plan to sell soon, would a potential buyer find it just as easy or inviting? Apart from the proud-to-be-a-Texan star that adorns the entry and the old welcome-doormat that’s been greeting visitors for the past 5 years, what is it that creates your home’s curb appeal?

 I’ve been working diligently with my seller-clients lately to get their homes in the best showing condition as possible prior to going on the market. Some understand the importance of this step in the selling process, yet others don’t. Usually the ones that don’t end up taking much longer to sell. (The photo above represents the former group. These clients get it and the photo evidences the fact).

Curb appeal will ultimately determine the buyer’s first and last impressions. It’s the first thing they notice when they approach the front door from the street. And the last, because they usually leave the way they entered. So, if you get the first impression right, chances are it will be reinforced when a buyer leaves the home as well. Conversely, if the first impression is lacking, then you guessed it. They’ll be reminded of the fact upon leaving the home after a viewing.

One of my buyer-clients has said to me multiple times in the past week while viewing homes, “I really wanted to like that house. I really did.” Unfortunately the sellers missed their opportunity. In today’s market, sellers will need to leverage every tool possible to get their desired result. The best way to start is by asking the simple question, “does your curb appeal?”