Arizonans, Californians, Nevadans, Floridians- the following video should take you back. It’s an Austin realtor talking about how Austin’s market will not see real problems–the story the rest of us heard a year or so ago:
There’s rumblings on the horizon though:
Pending sales in the Austin area, an indicator of the market’s health for at least the next month or two, dropped 48.5 percent in December when compared with a year ago. Even after the tech bust of 2001, pending sales were higher. And homes have been staying on the market longer, an average of 78 days, up 11 percent from December 2006.
The greatest percentage of sales in December were for homes priced from $200,000 to $400,000. Homes priced at less than $140,000 had the largest number of double-digit drops, with fewer entry-level buyers being able to obtain loans.
"Austin is not a protected island shielded from the world economy," said longtime local real estate observer Jack Hazzard, who formed the Ontra Companies in the 1980s to dispose of repossessed properties. "The economy will be highly stressed over the next two to three years."
A market doesn’t have to "bubble" to experience a downturn. A cooling economy, tightened lending and an oversupply of homes on the market can all do their damage to a market that didn’t see the double digit highs of the bubble markets.
Go ahead Austin- keep feeling "bullet-proof." We’ll see you at Cooling Markets Anonymous by next year.
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Yep, No sign of problems around Austin other than a 38% increase in Travis County foreclosures and maybe the 98% increase in nearby Williamson County. It’s not like you could find something discounted more than 10%.
Property #: 495-710665
Type: Residential – Single Family
Address: 1011 SAINT HELENA DR
LEANDER, TX 78641 County: WILLIAMSON
List Price: $147,600
As-Is Value: $164,000
Property Channel Owned by HUD
Listing Date: 01/23/2008
Deadline: 01/27/2008 11:59:59 PM
Bid Period: Government – General, Owner Occupant
Expect much better deals this October
Just a little observation in the video. One can see all of the sales listed on his white board for the previous month. Your right Twist things are just warming up in Austin.
Hutch-
I was going through the RE section of the Statesman yesterday. Most of the builders had something in the way of “special financing” [It was interesting that when you read the fine print, most of the best deals were through a "homebuyer assistance program.] Then there were the markdowns on the specs.
I’ve been driving the developments as well. Very little traffic in the sales offices, increasing numbers of specs sitting around. Agents admit it’s down a little, but keep telling me to buy now, or I’ll be sorry in the spring.
I wasn’t sorry in Phoenix, and I don’t anticipate being sorry here.
Yup, a blank white board and the need to post a youtube video (in what was a decent “profession” many years ago) is a sure sign of good times ahead. Many agents use those boards to list their listings as well. Huh? It’s truly sad to what lengths these “professionals” are being forced to go to in order to hustle some deals. And apparently it’s the “doom and gloom media” they are to blame. Funny thing tough….I didn’t see one piece in the media on the housing problem until AFTER it was already here??? These guys should really be thanking the media for milking the boom for an entire year longer than they should have been able to.
Austin is going to take a hit, but nothing like the rest of the country. The bubble was just not on the same order as the coasts. So I doubt prices will drop dramatically (meaning little tax relief). But it’s still going to be painful, especially as the rest of the country
The thing that freaks me out about austin is all those luxury condos going up in downtown. Besides totally jarring my conception of what Austin is or was (along with the Frost Bank building, atop which the Superheroes have their lair), all I can think of is what happens to condo owners when much of a building goes unsold, or sells for losses?
And they still haven’t broken ground on the W, that other place on Congress Avenue, and whatever is going to replace the recently removed unfinished building/symbol of the last r/e bust (built with massive tax abatements). I would love to live in any of those places (if I was made of money), but the financial uncertainty of condo ownership and special assessments wold prevent me. I imagine many of them will be converted to hotels and apartment complexes by the banks that end up owning them. But how many hotels does Austin need? It feels like downtown is already 40% hotels.
It seems like every single little apartment complex in Old West Austin/Clarksville is converting to condos as fast as possible, as well as the few remaining cheap student apt complexes in Hyde Park.
West Campus will come out intact, I think, but recently it has become extremely cramped with 5 and 6 story complexes built right out to the sidewalks everywhere you look. The students will not go anywhere, but I wonder how things will change when mommy and daddy can no longer afford a nice apartment and SUV for little Heather and Tyler. I have spent the last 10 years going thru that area wondering how kids got to be so rich since I was that age. Now that I understand a little better where the money was coming from, I have to wonder when that little party will be over.
What do you think are the probable outcomes for the condo towers downtown, Twist?
Condos, especially high rise condos are very expensive to start building, keep building, or later demolish. When the builders get into financial trouble, it is expensive at every stage to think about continuing the project.
Here’s an example in Fort Worth that was abandoned … not sure of its current status. Note it was abandoned because of tornado damage, not mortgage damage.
http://www.glasssteelandstone.com/US/TX/FtWorthBankOneTower.html
In the mid 1980s, there were a lot of empty buildings in Texas…. ten story ‘see throughs’ were not uncommon.
In Asia, after the Asian Meltdown of the late 1990s, there were quite a few abandoned high rises. In fact, last year a writer for the Asian WSJ toured a few of them in Thailand, and made a video of it. It was posted on HousingPanic for a while..
We’re about to see out own version here in Portland, Oregon… several high rise condo projects are showing 70 percent cancellation rates, and several major projects are being turned into ‘luxury apartments’… like there’s any market for those.
We’ll see what actually gets finished in our town.
tc-
Austin has too many condo projects coming on. You are right, there are an awful lot being built not only by UT, but all over Austin. I’m out in Bee Cave by the Galleria Mall, and I couldn’t believe how many units they are even building out here.
It’s always hard to get good numbers on new condo projects, and I keep hearing how high percentages of the towers are sold, but I do wonder if the figures aren’t stretched a bit. I also know that the “fat lady hasn’t sung” until the units are closed on- “sold” in many instances means that a deposit has been made. Tightening lending and lowering values are liable to result in a lot of cancellations.
I’m of the opinion that there are too many of these high-rise units being built. There’s a lot of inventory coming on as sales are cooling. [The Austing Assoc. of Realtors is reporting that condo/townhome resales were down 45% YOY in December.]
Austin won’t be Miami, but I don’t think the tower market will hold up very well here, either.
Here in Denver I also question the high rise condo mania. It’s as if the foreign money only understands this particular product given their highly urbanized societies and invests in it accordingly. A very large 500 unit project has just started up again after a 4 month shut down due to a German bank pulling out. The new money players have taken over a stronger equity position but no sales figures have been released. The operational mode appears to be a wish and a prayer.