Anyone who has been following this blog know that I have been fairly optimistic about the real estate market in Austin, but I am also trying to be realistic.  Some news came out recently that have caused me to have mixed feelings about the Austin real estate market for 2009.

The Austin American Statesman had an article in this morning's paper about housing starts declining in 2009 and the expectation that prices will drop.  The paper reported that El con Rude of Metro-study stated that he expected to see prices come down, but he would not say how much.  Read the article here.

The weekly email I get from Alamo Title Co. showed that for December, 2008, new listings were down almost 13%, pending sales were up almost 35% and the number of homes sold dropped 16%.  The average price for a home sold dropped almost 6% compared to December, 2007.  That is the largest price drop for all of 2008.  Though not a trend until another Eldon of months go by, it is an interesting statistic.

The Austin Business Journal (ABJ) published an article about commercial space in Austin here.  The article talks about the Austin economy being better than most cities in the country, but stated that industrial space absorption is slowing and vacancies in office space rising.  Sounds to me like 2009 might just be a good time to negotiate some good deals on this kind of space.

Another ABJ article talked about Austin having the 10th highest job growth rate of metro areas in the country between November, 2007 and November, 2008.  While true, the rate of job growth has slowed.  Five other metro areas in Texas were in the top 13.  This shows that Texas still remains strong economically.  However, with the decline in energy prices and with the national economy so slow, the economy in Texas is likely to soften more.  Read the article here.

Kiplinger took a shot at the ten best metro areas to live in the U.S. and Austin came in at #8.  Austin came in #47 on Forbe's list and #2 on the 2006 Money list.  Kiplinger talked how the Austin area offers "a strong economy, a solid, moderately priced housing market, a growing population and enough natural beauty to justify staying outside."  (Whoever wrote that must not have visited in August!)

I am not as optimistic about the real estate market in Austin for 2009 as I was six months ago.  The national economic crunch has not only lingered, but it has worsened.  Texas and Austin have been somewhat insulated because of job growth, but that has slowed as well.  My feeling is that homes the low end of the and those at the high end of the market will continue to be slow.  At the lower price points, people not being able to qualify for mortgages.  Higher end homes, especially those from $1 million and up, will continue to be slow because of excess inventory.  Homes in the $200,000 to $450,000 that are relatively close to the downtown area as well as in southwest Austin, western Round Rock and Cedar Park will continue to probably hold value better than other price points and other areas.

With interest rates so low, I still think that now is a reasonably good time to buy depending on what you are looking for.  I see some great deals for new construction as builders are still very eager to dump inventory.  Some builders are not only being very aggressive with prices, but also with financing.  If a buyer gets a great deal on a new home with a very low interest mortgage, even if prices drop more in 2009, they should have great equity in the home when the market rebounds.

Added on January 15:  Angelos Angelou, a noted area economist, came out with his forecast for Austin for 2009 and it isn't pretty.  However, it isn't hardly as bad as other parts of the country.  Read it here.

Update in early February, 2009 - home prices dropped over 9% in January, 2009 compared to January, 2008.

Comments?  Questions?  Call me at 512-293-2422.  Click to Search Austin Homes.