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Hope this finds each of you well! Our market is shifting. There is still some pain ahead but I believe it has bottomed. Supply has stabilized between 6-7 months for 5 straight months - a very strong sign we've bottomed since 6 mth supply is considered a balanced market. Until job growth kicks in (probably 3rd quarter of this year) it'll stay flat but I believe the stage is being set for positive employment growth in Austin which fuels housing demand here. There have been trends in the first quarter leading to this consistent supply performance. The $500k-$700k range has seen a stronger uptick in pendings for the first time in 3 years. The downtown condo market has seen a strong increase in contracts after 10% reductions in a few projects, as well as 45-50% pre-solds on these towers indicating the bottom has been reached in this segment also. New construction by big builders is at/below 6 mths supply for the first time in 3 years...the "deals" on new construction are close to being done. Finally, $700k+ is still showing little movement however the "steals" are all but gone and I feel we're 2-3 mths from hitting bottom here.
Austin Inventory of Housing
Metrostudy - Austin Housing forecast
Specifically, 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 $275k in suburbs, under $600k through the 2222/360 corridor, under $400k in 620 corridor and under $400k in city limits. Oversupply is present above each price-point/area mentioned above.
Our supply numbers are directly related to our job numbers. In that regard our economy has been subpar, 500 jobs lost and a 7.5% unemployment rate so far in 2010...however it's the lowest decline in 2 years. Typically we need to add 12,000-13,000 jobs annually to experience 6 mth supply or less in real estate here. So why the 6 mths supply levels still? Well, we also have the lowest unemployment rate in the nation, we're tops in nation for relocation which is filling housing and finally there are lots of local midsized companies like Convio, Cirrus Logic, Bancvue, PayPal, BazaarVoice etc that are growing even in this economy, helping to offset the employment losses that are occurring.
Time Magazine - Cities Leading the US out of Recession
BuilderOnline - The 20 Healthiest Housing Markets
X factors include commercial market foreclosures, inflation leading to higher interest rates and concerns about private equity markets. These could certainly slow or stop what looks to be a pending growth phase in our local economy and real estate market.
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