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More about foreclosure/short sale impact in Austin


Housing still can’t find a date for economic recovery dance” was the way McClatchy Newspapers headlined a feature article this week about our national situation.  The same article was prominent in today’s Austin American-Statesman Business section, but it did not make it to the online version of our local newspaper.  The key difference was that the local print article included this:

“Central Texas is not in the same boat as many other parts of the country.  While home sales remain at a slow pace, prices have not dropped, and many economists say an upturn is in the making for 2012 as the region continues to add jobs.”

Aside from the fact that the Austin Metro area has continued to create and attract job growth, the prevalence of distressed home sales (short sales and foreclosures) in other markets has had much to do with their declining home values and continuing market malaise.  I spoke this afternoon with an agent in San Diego, California who is working with a large number of distressed sales.  He is not feeling any of the optimism that I routinely find in conversations with Austin-area agents and brokers.

The McClatchy article included this graphic, showing the national statistics over the past 2 1/2 years:

Distressed Sales, National, 10/2008 - 02/2011

In contrast, here is the same data for the Austin metropolitan area:

Distressed Sales, Austin Metro 10/2008 - 03/2011

Click on both graphs to enlarge if needed.  The important point is how much less impact short sales and foreclosures have had on market conditions in Austin and Central Texas:

  • On average, foreclosure sales represented more than 20% of total sales nationally in all but 4 months during the period shown.  I do not have the supporting data for that graph, but it appears that the overall average was in the 24% range.  (RealtyTrac recently reported a national average of 26%.  See ForeclosureImpact in Austin, February 24.)
  • In Austin, on the other hand, foreclosures only reached 20% of sales once, in February 2011.  The average over the period graphed was 13.5% — far below the national average.
  • Nationally, short sales comprised about 13% of all sales across this period, dipping as low as 10% in just three months.
  • Short sales in Austin averaged 3.3% over the period — about 1/4 the national rate — and only reached 5% once.

Notice that I included one more month — March 2011 — for Austin.  We don’t have “final” data yet for March, but these preliminary MLS numbers show a dip in the percentage of both short sales and foreclosures last month.

As I have noted a number of times, distressed sales have been heavily concentrated in relatively few metropolitan market areas, so the contrast between Austin and those cities is even greater.  In Austin, given the concentration of foreclosures in specific neighborhoods they had very limited impact on area-wide sale prices.  When foreclosures represent 25% to 30% (or more) of sales, however, virtually all sale values are affected, and recovery of those local housing markets is really struggling to gain traction.

The strength of Austin’s ultimate recovery in home sales volume — and the larger economic recovery nationwide — will depend on new residents’ ability to sell homes elsewhere, so this national picture matters significantly to all, but this contrast has clearly benefited Austin and Central Texas throughout the recession and housing downturn.

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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

2 thoughts on “More about foreclosure/short sale impact in Austin

  1. Hi Bill – you’ve posted a great analysis of the numbers for Austin compared to the rest of the country. We are lucky here to have such a diverse economic base and that people can move here from more expensive parts of the country and get more less expensive housing in a hip, urban area.

    Posted by Alison Shuman | May 10, 2011, 6:45 PM
    • Thanks, Alison. Austin is different in many ways, but the relatively few distressed sales has been an important part of why we weathered the last three years so well. Hope you’re having a great year personally and professionally!

      Posted by billmorrisrealtor | May 10, 2011, 7:54 PM

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