The bubble – everybody has talked about it. Is there a real estate bubble in Texas? In Austin? The “bubble” is isolated to several states and specific local areas on the east and west coast. Those are areas that have experienced more than an 25% increase in home prices during 2004 and 2005.
In Texas, home price appreciation has been more of a slow, but steady thing. During the first half of 2005 (and this is kind of startling), Texas was dead last in home price appreciation of all 50 states and D.C. Texas was at 4.7%, which was less than half the national average of 13.4%. In Austin, homes appreciated at a rate of 10% for 2005.
Fast forward to the end of the year in Austin. Home prices in Austin appreciated 17% in November and 12% in December. January, 2006 saw an appreciation rate of 6%. Keep in mind that I am talking about single-family homes, not condos, multi-family or townhouses. Appreciation for those units was also strong.
Let’s switch gears for a minute and talk about number of units sold and the revenue that was generated. In November of last year, there were 1,999 single-family homes sold, with an increase in revenue of 44% over the year before. December was even stronger with 2,019 homes selling and a revenue increase of 20%. Overall, 2005 saw 24,539 single-family homes sold, an 18% increase over 2004. The increase in revenue was an astonishing 25%.
So Austin has had a huge increase in single-family homes sold and a huge increase in revenue generated. However, we have done that without runaway price increases. Another significant thing to note is that while the number of homes sold increased, the number of active listings has dropped.
You can probably deduce from this that Austin will have a pretty healthy single-family home market in 2006. Builders will have a great year. Sellers of existing homes should do well as long as they are selling homes that are in good condition. There will still be some deals out there, but buyers are going to have to look harder and harder.
A strong economy. More jobs. Lots of new construction. Shrinking inventory, but not at an alarming rate. It all adds up to steady, but moderate appreciation.
Written February 7, 2006
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