Originally settled as a trading post in 1838, the Austin metropolitan area is now part of the I-35 growth corridor in central Texas. The Austin area enjoyed the largest increase in income in the state and was one of the fastest-growing cities during the 1990s, growing by nearly 50%.
Crash of 2001
With the stock market crash affecting our high tech employers, the local economy took a nose dive in the first quarter of 2001. Just prior to that, in late 2000, our market peaked with annual home price appreciation rates of approximately 14%. Then, for four years, we averaged flat or minimal (less than 2%) appreciation. In 2004, the number of Austin-area foreclosures hit an all-time high. We struggled in a definite Buyers’ Market, with a glut of properties on the market.
Good News in 2005
There has been a noticeable improvement in 2005, with increasing home values and decreasing inventory.
Existing home sales for 2005 (to date) increased 20% over 2004, and overall dollar volume increased 26%. The average sales price of homes in 2005 (to date) increased 4.6% over 2004 to $207,488.
Sales of existing houses set a record in August 2005, when 2,759 houses sold, up 28 percent from the year before and the largest single-month figure ever.
Goodbye Buyers’ Market
A standard measure of whether you are in a buyers’ or sellers’ market is to determine the “months inventory”. This determination is the number of months of inventory (homes) currently available for sale, given the current rate of sales. For example, if 1,000 homes are selling each month, and there are currently 4,000 homes for sale, that equates to a “4 months inventory”. Experts debate the numbers, but in general, 6+ months of inventory is a relative buyers’ market, and 3 months (or less) is a relative sellers’ market. In Austin, we averaged a 6.2 months inventory in 2004, and that has decreased in 2005 to 4.7 months.
Investor Heaven
Investor activity in the Austin-area housing market has increased in the past year, due in large part to West Coast homeowners and real estate investors seeking more stable and affordable alternatives to overheated housing markets in California, Arizona, Nevada, and Florida. Slightly more than 12 percent of the houses sold in Central Texas in the first half of 2005 were bought for investment purposes
Record Setting New Home Sales
In addition to sales of existing homes, new home builders have been selling at a quick pace. Annual housing starts and closings set a record in the 12-month period ending in September 2005, with starts up 21% over the previous year, and closings up 26%.
Central Texas builders also are building more expensive houses. Starts for houses priced at $250,000 or more increased 34 percent in the 12-month period compared with the previous year. Starts of homes priced higher than $500,000 were up about 130 percent.
Happy Home Buyers
And with more good news, in a 2005 survey conducted by J.D. Power and Associates, buyers of new homes in Central Texas reported the highest customer satisfaction levels in the nation! 30 markets were studied, and customer satisfaction was based on 10 factors, weighted according to importance to customers. Those factors were: warranty and customer service; home readiness; sales staff; construction manager; quality of workmanship and materials; price and value; physical design elements; builder's design center; recreational facilities; and location.
Affordable or Not?
Some studies show that Austin is one of the most expensive housing markets in Texas. However, judging by local incomes, our housing remains very affordable. One measure of housing affordability is the percentage of households in a give area that can afford a median-priced home. At the end of 2004, 61% of Austinites could afford a median-priced home, as compared to 49% of citizens in the remainder of the country.
- NUMBER1EXPERT™ 
