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Market News and Trends

Austin sales performance by price range


In March  2011, the average residential sale price in the Austin metropolitan area was $245,100.  That was 1.3% higher than the previous month, and 5.5% higher than March 2010.  As I have noted in previous posts, the increase in average sale price in recent months has been influenced by a larger percentage of total sales taking place in higher price ranges than before.   Homebuyer tax credits over the past three years influenced sales most of lower priced homes, so after the expiration of the last tax credit program we saw less of those properties in the mix, leaving more expensive homes more strongly represented.  Now, almost a year beyond the last tax incentives that migration has slowed.  (You can see this data and much more at AustinMarketDashboard.com, which I update each month.)

As an updated snapshot of that market influence I reviewed sales of single family homes in March, and also studied how well homes sold in various price ranges as measured by Days On Market and the % of List Price (and % of Original List Price) actually achieved.  Separately, I will post information about supply and demand by price range, but I find these other measures interesting as well.

First, it worth noting that the majority — 57% — of of those recent sales were still between $100,000 and $250,000.  The “sweet spot” in the Austin market has edged upward in the past couple of years, but it has not made a step-function shift:

Single Family Home Sales by Price Range

It is also worth pointing out that almost 7% of all sales were above $500,000.  That was about equal to sales in that range overall in 2010, 17% morre than in 2009, and twice the contribution of those price ranges ten years ago in 2001.

The common perception has been that sales are VERY slow in those upper price ranges.  Actual data from March 2011 bears that out:

Days On Market By Price Range

The ten price ranges in which the Average DOM was highest were all above $500,000.  On the other hand the two price ranges with the lowest Average DOM were $750,000 to $800,000 and $950,000 to $1,000,000.  Clearly, time on market is not determined solely by price range.

What’s the difference?  Perceived value vs. price.  In all price ranges.  All the time.  What the homeowner has “in” the property has little to do with what they may take “out” of it at a given point of time.  Market value is nothing more or less than what a willing seller and a willing buyer agree on.  The proof that all these buyers and sellers in March believed they got the best the market would allow in these transactions is that they signed contracts and traded property for dollars.
 
One way to view that factor is looking at what percentage of asking price was actually paid by the ultimate buyers.  The final price vs. value comparison by those buyers was based on the list price at that time, but total time on market is strongly influenced by the original list price, and by how long it took for that price to reach something near actual market value.  Here’s a look at that information:

Sales Price % By Price Range

To avoid any impression that I have massaged this data at all, I am simply reporting the data exactly the way it comes out of our MLS.  That said, I point out the homes in the $500,000 to $550,000 price range did NOT sell for above their original list prices.  That anomaly in this chart resulted from an error when one listing was initially entered — at a list price of $61,900 instead of  619,000.  If that is corrected, the average Sale Price % of Original List Price was 91.4%, on par with results in some other upper price ranges. 
On the basis of SP%/OLP, the worst performing price range was $0 to $50,000, at 77.73%.   Those of us who have closed an occasional transaction in that market segment will attest to the “wild cards” that come on the market there.  Interestingly, the second worst performing price range was $1,000,000 to $1,100,000, at 82.89%.  That was also one of the slowest selling segments.

The average selling price in the lowest priced segment was just over $38,000, so a 1% change in the price was worth about $380.  At $1 million, a 1% change was worth $10,000.  That means the average difference between sale price and original list price in the low priced segment was about $8,500.  The average total price reduction in the higher priced segment was more than $170,000!

It’s easy to discuss percentages, but when you’re a seller who remembers what you paid for the house, and every penny you spent updating and upgrading it, and may even know what your neighbor got for the house next door in 2007, $170,000 is a lot of money!

I have posted statistical evidence in the past that a house priced correctly at the outset will sell faster and for a higher price than the same house that is priced too high at the beginning.  (See Pricing to sell — the real world, 02/07/2011.)  Real estate professionals owe our clients — buyers and sellers — thorough market analysis and pricing consultation.  Obviously, this post offers no advice to any individual homeowner, but even without  discussing specific prices of specific homes, I hope this snapshot of one month’s sales will provide a point of reference in thinking about positioning the home you wish to sell. 

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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

One thought on “Austin sales performance by price range

  1. This is a really great blog. Thx to the auther

    Posted by Evelyn | May 21, 2011, 5:24 PM

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