I typically run end of the year statistics around this time of the year.  This year, I was curious to see how Austin has performed since 2006 (arguably the start of Austin’s real estate boom) through 2008 (arguably the peak) through 2010 (arguably the end of the recession.)  I expected to see numbers that showed neither the Chicken Littles (the sky is falling!) nor the Real Estate Cheerleaders (most agents) were correct.  I expected to see a gradual decline in volume & price, with a very slight uptick in pricing in 2010.  The numbers were pretty contradictory. First, all the numbers (you can click to expand.)

The first thing I noticed is the total units sold.  This number is way, way down (almost 35%.)

So it looks like the sky actually is falling.  The next set of numbers indicates roughly the same thing.  Total sales volume is also way down – almost 30%.

However, if the # of units sold is down by 35% and sold volume is down by 30%, then it indicates that prices have actually gone up.  If we look at average sold price, we see they’ve increased by just under 7% since 2006, with a decent dip in 2009/2010.

Many people don’t like to look at average sold price, but prefer to look at median.  If you look at median, the price flux is toned down, but price is still up by almost 10%.

So median sold price is up with a dip in 2009.  Many people consider median sold price/s.f. the best metric.  If we look at this, we’re still up by almost 5%, but down slightly since 2007.

So who’s right – the Cheerleaders or the Chicken Littles?  In my opinion, both are right, and both are wrong.

Austin’s job market held steady for 2009, shrinking by a mere 0.3%.  While we’re not at the 4% unemployment rate we enjoyed in early 2008, we’re still at a respectable 6.9%.  Here are the best performing metro areas in the country:

Third quarter numbers look very promising.  We obviously have to take into account the affect of the first time homebuyer tax credit, but it looks promising that it will be extended for 6 months, which will give our job market time to firm itself up a little before we ask the real estate market to stand on its own legs.

There were no considerable changes in the stats from 3rd Quarter 2008 to 2009.  Sold units were down 3.25%, median old price was down 2.12%, and average sold price was down 4.31%.  The discrepancy between median and average sold changes are the result of the higher end homes taking a larger hit.  The luxury market has seen larger declines than median & average priced homes.

Here are the 2008 numbers & the 2009 numbers.

So I’m WAY late posting these, and the numbers were fairly close to what I expected.  Median price is down by 4%, while average price is down by almost 5%.  Sold volume was down just over 10%, but inventory is being absorbed, as active listings are down by almost 8%.

ABOR just released the July 2008-2009 statistics.  It shows we’re leveling off in volume sold completely, but we’re down in median sales price by 1.8% and down in average sales price by 4.3%.

Austin’s real estate market seems to follow the general trend in the economy.  As stated before, we’re not correcting for a bubble (overall) so we shouldn’t see any drastic price movements (overall.)  The bulk of respected economists agree that the national economy is scraping across the bottom, and our real estate market seems to be doing so, as well.  It will be interesting to see the month over month change in the coming months, as Oct-Dec 2008 were pretty hideous (election and first stock market scare.)  From that point, it will be interesting to see how the market reacts if the first time home buyer credit isn’t extended or replaced from December on.

I manually ran the # of units sold for the first halves of 2008 & 2009, then broke it down by price point.  I was very surprised.  We’ve only seen negligeble median depreciation, but we’ve seen a larger (3-4%) average depreciation this year.  My assumption was that demand for luxury property is down, and we would see a larger decrease in units sold the higher the price point.  I was wrong (with the exception of $2mm+ homes.)

So, price is typically a function of supply & demand.  Demand is down, so it would logically follow that supply is up.  I ran the numbers for months inventory in each price point (# of homes available/absorption rate.)

And, voila…  The reason for the discrepancy (in my opinion) between average & median price depreciation is the increasing inventory as you go to higher price points.  Unfortunately, I don’t have historical data on inventory, or I would show year to year change.

What does this mean?  Prices will probably continue to decline in the luxury market for the near future – demand will have to go up, or remain constant while supply is allowed to absorb.  Most luxury builders have haulted production for the time being, so supply will be absorbed over time – it will just be a matter of when.

Up next….inventory conditions in different areas of town.