Despite the Austin Statesman’s best attempt to put a positive spin on the local market, the Central Texas housing market is in trouble:
Sales of Central Texas homes fell 10 percent in January, the seventh month in a row that year-over-year sales dropped. But prices rose, and Austin’s market is in better shape than the nation overall.
The 1,321 sales last month were a two-year low, based on data from the Austin Board of Realtors. . The median price rose 7 percent to $187,000, contrary to a national trend of falling prices.
Nationally, homes sales fell 22.4 percent in January, and the median price was down 5 percent, according to the National Association of Realtors. And the market is glutted, with 3.7 million homes for sale. That’s up almost 20 percent in the past year. At current rates, it would take more than 10 months to sell everything.
The number of Central Texas homes on the market increased by 24 percent to 8,727 active listings, a 41/2 month supply.
With so much for sale and fewer buyers, it’s taking almost three months to sell a house.
Prices rising with sales falling is a typical pattern we have seen in other declining markets. As prices become less affordable, first time buyers drop out, raising the median when "same house" appreciation has disappeared. For January in Central Texas:
The sales drop is sharpest for homes priced lower than $150,000. But sales rose for homes between $170,000 and $179,000 and between $250,000 and $500,000.
Local agents are playing down the excess inventory:
With mortgage rates below 6 percent, the overall local market is good for buyers, said David Davidson, a broker at RE/Max Heart of Texas. "They have a good selection, and they can negotiate a little bit."
With builders cutting back on home starts, he said, buyers who might have bought a new home may turn to the resale market, helping "absorb that extra inventory rather quickly."
The reality is that starts are down because the homebuilders have a lot of inventory on the market already– homebuilders have been cutting prices and offering incentives in an attempt to move the backlog.
Central Texas, like other regions, is beginning to experience a rise in foreclosures. As in other markets, this is the result of slowing sales and the absence of real appreciation. Austin may be faring better than most of the nation, but it is not faring well.