Austin Real Estate Guy Blog

That's a bit scary, but I agree that the central parts of Austin are going to do better than outlying areas.  I also think that the lower priced homes will be strong.

I agree and think a lot of folks are waiting. Now isn't a good time to sell unless the seller is going to be aggressive. This would definitely be a reason for prices to be lower. Sell right or don't sell at all!

You may have misread the stats.  If avg price this year was $276,974, and avg price last year was $256,553, then that would be an INCREASE of 7.95%.  Verify that this year's avg sales price for August was $276,974.

It was July/August last year when we started to really notice that the Austin market was shifting. The big gaps we've seen in number of listings, number sold, etc. will start to level out as we move forward, since we will no longer be comparing a boom year to a slowdown year. Instead, "last year" is now moving into the down periods of a year ago, which means going forward it's going to look, from a stats perspective, as if things are improving.

Steve

Sam-  Per the source themselves they got the description wrong.  It was actually an increase of 7.95% not a decrease hense the 20k increase in average price YoY.  The numbers are correct.  Because of this appreciation Austin is now rated by many sources as one of the best places to buy in the US.  I feel for the folks who put their home buying plans on hold after the market shifted this time last year.  They could have made nearly 8% and that was in a down market.  Even brighter days are sure to be ahead for Austin real estate.

I guess you aren't following my point.  Clearly, one of your numbers is wrong, the question is, which number is off.  Is it the 7.95% or the avg. sales prices?  In other words, you can't have a decrease of 7.95% from $256,000 to $276,000.  Either your post is wrong, or Alamo's numbers are wrong.

Wow.  Austin is late to the game just like I predicted.  How much you want to bet that things get even slower next year?

Even with mortgage interest rates still quite low (my guess is we should be in the 8% range right now instead of 5.75 to 6%), we have too much inventory at prices that are too high.  

Well, the answer that everyone seems to like is the more affluent buyers are the only ones that are able to qualify.  The lower number of sales at higher prices moves the median/average numbers higher due to reduced effect of "starter" home sales.

Sam, this isn't an appreciation rate, it’s only a comparison of statistics year-over-year (yoy) with data points that are likely unique per year (i.e. these statistics don't look just at the same house selling every year).  Builders cutting prices on high-end homes could pull the number up (Toll is an excellent example, esp. out where you are - same house much cheaper ~$30-100k this year than last).  

Long-time owners dropping their price and selling can still push the statistics up yoy, even though they may have wanted $50k more when they were trying to sell last year but couldn't get a contract.  Phoenix looked a lot like Austin as its bubble burst - higher inventory, fewer sales and median/average prices moving higher.  Phoenix's trend of higher prices is starting to reverse, although they are still plagued with high inventory and low sales.

Even if you are pleased with Austin's situation, which I doubt many are (esp. Realtors - lower # of sales is not good, must have a buyer to match a seller), it is a short-sighted outlook.  If there are not many first-time buyers, who is going to buy the starter home and create move-up buying?  Without move-up buyers, Austin is betting on immigration into mid/high-end homes or continued building of starter communities farther out for starter buyers.

If Austin really has net migration numbers of +25k people per year, why do we have ~12.5k homes in inventory (which don't include all builder homes either)?  We should have an inventory of <= ~9-10k if everything was great.  Don't forget about the huge number of apartments and downtown condos under construction.

A while back I posted an article on this effect on my site:

http://uncommon-sense-blog.com/pivot/entry.php?id=101

The point is that averages (whether mean or median) are appropriate measures only when the set of items being averaged is consistent.  That's not the case here, as the housing slowdown has impacted homes at the low end far more than at the mid-high end.  In this scenario, averages can very easily move higher even though every single item comprising the average drops, simply because what's included in the average is changing.  The Case-Shiller numbers tend to remove this effect (to large degree), but unfortunately, Austin is not one of the cities tracked by CS.