Hope this finds each of you well. The market continues to be sectored but overall supply has moved down from a 3-year high of 7.8 mths to 6.4 mths. Since a 6 mth supply is considered a balanced market I feel we're trending towards recovery and growth and even at 7.8 mths, we were holding up well compared to other markets.
Austin Healthiest Market in the Country
Austin on over 30 "Best of" Lists in 2009
The price-points at a 6 mth supply or under include: below $400k in central, below $450k in the downtown condo market, under $700k in Westlake area, under $225k in suburbs, under $600k through the 2222/360 corridor, under $400k in 620 corridor and under $350k in city limits. Oversupply is present above each price-point/area mentioned above.
The recent reduction from 7.8 to 6.4 mths supply has occurred primarily in the under-supplied ranges. Competition in these realms has actually been high on nice properties priced at market. In essence, we've hit bottom in the entry level and mid-level price-points which is also a precursor to stabilization in the high-end. For example, area-wide through May of this year 55 homes above $1M sold and since then 118 have sold...that has occurred at the same time the other two price-points have bottomed. I do expect the high-end to depreciate another 3% - 5% and hit bottom around Feb next year, given supply is at 14 mths.
Our supply numbers are directly related to our job numbers. In that regard our economy has been subpar - 4,000-5,000 net jobs added and a 7.1% unemployment rate which is high for Austin. We need to add 12,000-13,000 jobs annually to experience 6 mth supply or less in real estate here. However, we also have the lowest unemployment rate in the nation for a larger metro and 30,000 people have relocated to Austin in 2009. Keeping these two statistics in mind, it's no surprise our real estate market remains reasonable compared to the rest of the country.
Why Austin Remains Strong
Austin Best Performing Metro
I expect to see positive job growth in Austin around spring/summer due to productivity limits, corporate profits/losses stabilizing, etc. At that point I feel we'll see our real estate market start it's next up-cycle. X factors that could throw this off - commercial market foreclosures, inflation, and concerns about private equity markets.
Lead Indicators of Job Growth
Business Week - Next Recovering Job Markets
