Is It Time To Buy Austin Real Estate?

Is It Time To Buy Austin Real Estate?

by Brian Talley

So what is the state of Austin Texas real estate these days? And is it a good time for you to find an Austin Realtor and go shopping for a home?

As usual, that answer depends on who you believe, and how you interpret the facts about what's happening in our economy. And these days the facts don't seem to all point in the same direction.

Let's start with some good news: unemployment in Austin is down, from 3.7 % in March to 3.3 % in April. More people are in the workforce, holding down jobs. There are parts of town where development is thriving, adding new Austin office space, retail and other buildings. Outwardly, things in town appear healthy and optimistic - usually a great indicator.

It would seem, then, that the Austin Texas real estate scene would follow a similar upbeat pattern. Not so.

There are indications that the housing market is on shaky ground. To begin, foreclosures in the region are way up - 47 % from this time last year. And the number of homes selling is substantially down over last year. The first quarter of 2008 had a 25% decline in homes sold, with a staggering 43% increase in the number of homes for sale withdrawn from the Austin real estate market. The most recent figures from the Multiple Listing Service - the prime information source for Austin TX Realtors - only seem to cement this downward trend: for the month of May home sales were down 37% and withdrawn listings were up 39%. Further, homes are staying on the market longer too.

Despite all this news, amazingly home prices have actually managed to go up slightly, by 4%. One would think that would be a sliver of good news for a homeowner looking to sell.

But higher prices signal trouble to some analysts. The chief economist for the National Association of Realtors says that in cities like Sarasota and San Diego where prices have plummeted (due in part to rising foreclosures, where savvy buyers can get a home for a bargain) pending sales have actually increased - indicating to him that there is a real estate recovery, and it's on the fast track.

That same news, he argues, is to the disadvantage of cities like Nashville, Seattle and yes - Austin, where he claims home prices peaked last year and are still too high for buyers to afford. He is looking for what he calls a "painful correction" in Austin real estate, saying buyers won't come off the sidelines until prices fall significantly.

But does that make sense? Does that square with the fact that foreclosures here too have been on the rise? Wouldn't that then have already helped Austin real estate prices fall like in the other cities?

And how does this reconcile with earlier reports this year from various other analysts that the Austin Texas real estate scene was one of the exceptions to the gloomy predicament gripping most of the rest of the country?

And what "Austin" are we talking about? Oak Hill? Westlake? Pflugerville? Anyone who lives here knows that you can't generalize Austin, given the array of vastly different sections and subdivisions.

Could it be that the reason more homes aren't selling is because the universe of potential buyers has shrunk, due to lenders being a little stingier with loans, in the wake of the sub prime mortgage crisis?

In the end, can anyone make a definitive statement about the health of Austin's real estate market? And for a person thinking about buying a home now, does any of this even matter? Assuming you can qualify for a loan, the simple truth is there is a lot of inventory out there right now, in a whole range of prices, spanning a wide variety of neighborhoods.