The article above appeared in the Austin American Statesman last week, and our friend, Independence Title, in-house analyst, Mark Sprague, had some comments. In taking apart some of the numbers reported by the Statesman, there are some revealing insights into our local markets, and how we can expect them to perform in 2012.
http://www.statesman.com/business/signs-point-to-healthier-central-texas-housing-market-2067020.html?viewAsSinglePage=true#.Tv3Mobmmqag.email
To begin, the local real estate market turned from the bottom over a year and a half ago. But it was a slow turn, only lately has it begun to showing stronger activity, primarily in the resale market. Other portions of the local real estate market (commercial on almost all channels) have also begun to show strength. Is it back to 2005 /2006 numbers? No, but showing more signs of strength than the past 3 years.
Is it time to buy? Absolutely! Those that have been shopping will tell you that below $700K the market is very tight in Travis County. The home (that’s priced correctly) you look at today, will not be there tomorrow.
If we look at Travis County, we have had a fair appreciation the last year, particularly when compared to the rest of the nation or even the region. (And keep in mind, very few property owners hold a home for a single year.)
Historical Home Price Appreciation
Last Quarter 0.89%
Last Year . . . . . . . . . . . . . . . . . . . .. 1.6%
Last 5 Years ……………………….10%
Last 10 Years . . . . . . . . . . . . . . . . . .31%
Last 20 Years ……………………...152% or 7.6% annually
Remember this is an overview of all the submarkets in Travis County. Not all will see appreciation, and some submarkets will still be challenged by foreclosures. For example, 1 in 1401 homes are in some stage of foreclosure in Travis County. By contrast, that number in Hays County is 1 out of 475, and in Williamson, 1 out of 474 (according to the Foreclosure Listing Service). Travis County (particularly the west part of Austin and the CBD) has had strong appreciation in the low 20% range. However, there were other softer markets within Travis that brought that average down.
To put it in perspective, the highest annual home appreciation rate in the Austin Real Estate Market was 21% in the twelve months that ended with the 2nd Quarter of 1980 as Austin was coming out of the 1976 – 79 recession. The worst annual home appreciation rate in the Austin Market was -20% in the twelve months ended with the 2nd Quarter of 1989 at the bottom of the oil bust.
The highest home appreciation in the Austin Real Estate Market over a three year period was 49% in the three years ended with the 3rd Quarter of 1980. The worst home appreciation over a three year period in the Austin Market was -27% in the three years ended with the 2nd Quarter of 1989.
In the upcoming months, the surrounding county markets (particularly where production homebuilding was strong in 2004 through 2006) continue to see resistance due to foreclosure values. On a larger scale, there has been over 2500 potential developed lots being negotiated or sold over the last 30 days, a strong indicator of the vitality and interest in this market.
What will 2012 bring?
With unemployment continuing to drop locally as well as regionally, rental housing continuing to tighten, and for-sale residential and commercial markets tightening, it should be a better year. I hope that history will show that our local market in 2011-2012 mirrored the positive turn we saw in 1992-1993 after the last major recession.
If we look at residential re-sales locally, the appreciation rate should be somewhere between 2% to 4% in 2012-2013 (barring a catastrophic event). Anything stronger would cause some concern because it will create the appearance of a ‘bubble,’ which is never healthy to a market. The outlying counties around Travis will still have some resistance to appreciation for a while, due to foreclosures pressures.
The main factor holding the Austin housing market in check has been the national housing market. Note that Austin, San Antonio and Houston have made the turn regionally. D/FW continues to struggle – we are not out of the woods yet.