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Market News and Trends

Austin Metro Building Permits


Much of what I have written about the “state of the market” in and around Austin has focused on resale homes.  New construction is obviously an important part of the market, and it’s a great barometer for confidence in the local economy, job growth, investment opportunities, etc.

This chart summarizes residential building permits issued from January 2000 to January 2010:

Austin Area Building Permits

The top graph on that page shows rolling 12-month totals of building permits issued.  The bottom graph shows the average value of those permits as reported by the builders involved.

The most visible feature of this ten years of history is the bubble in 2006.  It is widely recognized that was a nationwide phenomenon, and it was much more dramatic in most areas that have felt the downturn more seriously since then.  That bubble is also readily identifiable in both the long-term and five-year views of my Austin Market Dashboard

You can see the effect of supply and demand in both the Building Permits chart and on my Dashboard, but with different results.  On the Market Dashboard, average home prices have been below the long-term trendline for more than a year, reflecting the fact that total demand fell more than the total supply of homes on the market.  As I have written many times, homes continue to sell and values continue to trend generally upward.  The Austin/Central Texas area remains one of the strongest markets in the United States, and is recognized as one of the first (if not the first) to emerge from the recession.

As I have noted, the Austin metro area continues to add jobs on a month-to-month basis, and home builders recognize that strength.  The 12-month total of new permits has begun to move slowly upward since the 2nd quarter of 2009.  (That statistical measure moves slowly because it includes a full year’s data, and in this case recent numbers include normal seasonal softness in the 4th quarter.)  It’s interesting, though, that even with the same 12-month damper effect the average value of new permits improved until the 2nd half of last year.

The coming Spring and Summer seasons will tell the rest of that story.  In addition to continuing general uncertainty about the U.S. and world economies, there are real estate-specific influences on the calendar:  (1) the Fed still intends to stop purchasing mortgage-backed securities at the end of this month, and (2) the current tax incentives for home buyers will expire April 30.  (Contracts executed by 4/30/10 and closed by 6/30/10.)  Also see Act soon to take advantage of low interest rates, 01/28/10 and More about mortgage-backed securities, 02/10/10.

The combination of expected higher mortgage interest rates and the lack of incentives could disrupt normal seasonality in the housing market.  I’ll keep watching and reporting.

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About Bill Morris, Realtor

More than thirty years of business experience (high tech, client service, business organization and start-up, including many years in real estate) tell me that service is the key to success and I look forward to serving you. I represent both buyers and sellers throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs: -- Seller Representation is a comprehensive process that begins with thorough market analysis and consultation, continues with properly staging the home to achieve the highest price possible in a reasonable time on market, a complete program of marketing and promotion, ongoing updates and communication, closing coordination, and follow-up throughout (and after) the sale. -- Buyer Representation is also full service: shopping, previewing, price and market consultation, contracting, negotiating, coordination of inspections, appraisals, repairs, and closing details, and follow-up beyond the closing of your purchase to ensure your lasting satisfaction. Because the real estate industry is becoming more sophisticated and challenging every day, you need a professional that understands the industry and is positioned to stay ahead of the game. I go the extra mile to help you achieve your goals. That's why I constantly research the market and property values so your home is priced effectively from day one. I also make sure the public knows your home is for sale by using innovative advertising and marketing techniques to attract potential buyers.

Discussion

4 thoughts on “Austin Metro Building Permits

  1. Nice post Bill. You’ve nailed it.

    Posted by Mr. Bubble | March 11, 2010, 2:11 AM
    • Thank you. I see so much distorted, or just uninformed, reporting on our industry that I feel the need to do my own analysis. Of course, I could be as wrong as other observers these days, but I think the market generally speaks pretty clearly if we just listen.

      Posted by billmorrisrealtor | March 12, 2010, 5:28 AM

Trackbacks/Pingbacks

  1. Pingback: Housing Recovery — yes … no … maybe? « Bill Morris' Austin Real Estate Blog - March 26, 2010

  2. Pingback: 2010: BillMorrisRealtor.com in review « Bill Morris' Austin Real Estate Blog - January 2, 2011

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