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