There have been a great number of people defaulting on loans who perhaps should not have been able to obtain the loans in the first place. These are people with poor credit, little of no money to put down and challenges that made obtaining loans difficult. Some lenders wanted to make the loans anyway and got creative with their terms. Well, that backfired and many of those lenders are no longer in business. New restrictions put in place by most lenders simply denies many of these people the ability to get a loan. The consequence is a lot of lower priced homes just sitting on the market.
Although the Austin real estate market has been pretty hot over the last 12 months, there has been a slow down. We are feeling the same thing that the rest of the country is in the lower price ranges. We are also seeing something else affect our market – buyers who have houses to sell in other markets are having difficulty selling. If they need to sell before they buy, they won’t buy.
OK, I’ve addressed a slow-down in the lower end, but what about the high end? Read on…
Another interesting development in the Austin area is that builders went a little crazy with new home starts last year – even high-end builders. In the LS and LW MLS Areas, which basically covers most of the south shore of Lake Travis, there, we find these stats for homes priced over $500,000 built in 2006 or later: 198 Active listings, 6 Pending, 77 sold, 2 Contingency contracts, 10 Pending and taking back-ups.
Using the same criteria, but changing the minimum price to $999,999, we find this: 62 Active listings, 1 Pending, 17 Sold, 1 Active Contingent and Pending and taking back-ups. When I run the same search, but show year built of 2005 or earlier (indicating resale, not new), here are the results: 104 Active, 2 Pending, 79 Sold, 1 Active Contingent and 2 Pending taking back-ups.
So at the low end, meaning homes under $150,000, things have slowed because of the sub-prime problem. At the high end, things have slowed because of over-building. Having said that, keep in mind that the Austin real estate market is still healthy in general. There are still areas in which homes are selling very quickly and after getting multiple offers. Much of the middle price range market ($200,000-$400,000) is doing great.
So what’s up in other parts of the country? I have polled REALTORS® in other cities and this is what I have found: Boston is slow. They have been since their market peaked in late 2005. Prices are down because homes aren’t selling well. Charlotte, NC is healthy, seeing a 10% price increase in April over a year ago. Sacramento, CA is suffering in a big way, with prices down perhaps another 15% to 20%. Much of Florida is very slow, especially in areas that had huge growth of new condos over the last several years.
So what lies ahead? Come back every once in a while and read this blog.