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Hope this 1st quarter market update for 2009 finds each of you well. The market in this last quarter has become a very sectored and sectioned market depending on area and price-point. Overall supply has continued to rise from 5.8 mths this past December to 6.97 mths currently. If you recall, a 6 mth supply is considered a balanced market. This rise in supply has been primarily driven by job layoffs in our region. As our job market goes so does our real estate market.
However, the volume of job layoffs has been lower than expected. That is not to minimize the sad fact that the job layoffs have been very real and felt. I expected a net loss of 5000 jobs in this first quarter from the financial markets collapse in 2008. In actuality that number was approximately 3000 jobs lost and overall Austin was one of the few cities in the country that remained on the positive side of job growth/loss. In direct relation, our real estate market has not collapsed:
Job Market Holding Steady
Austin #1 for Job Growth Potential
Best Cities for Jobs
In addition, tax credit incentives, extremely low interest rates and the large number of people/businesses that continue to move to Austin have brought more buyers into the local market in this first quarter than initially expected:
Austin 2nd fastest growing city in nation
Forbes - Best places for business
Based on our job market and my opinion that the majority of the remaining job attrition will be complete by end of 3rd quarter this year, I expect the bottom of our real estate market to occur in the next 3-6 mths. Pricewise I believe we've already reached that in certain areas and price points. In other areas I feel we're only 2-5% away. I feel that by summer of 2010, we'll have started our next business cycle in our economy and real estate market.
Note, one arena to watch is the commercial real estate market which may still experience some big challenges and may have a direct impact on the national/local economy. This is something I will be keeping an eye on.
In closing, the price-points that are holding well or undersupplied are $400k or lower in central, under $650k in Westlake area, under $200k in suburbs, under $600k through the 2222/360 corridor and above $2M. Price points not doing well and oversupplied include above $300k in the suburbs, above $700k in Westlake areas, above $400k in central, downtown condos above $300k and above $300k in Dripping Springs areas.
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