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Market News and Trends

Housing Bubble?


I found an interesting article today on HousingWire.com:

The most important chart in housing right now

As the title suggests, there is a chart at the heart of the commentary:

Case Shiller Chart 011614

The graph shows Case-Shiller Price Indices for the 20 metro areas S&P tracks.  I’ll get to Austin in a bit, but for context, notice that the worst-performing MSA was Las Vegas, NV, where home prices declined about 62% from the peak of the last market cycle to the trough of the most recent recession, and where home prices remain more than 45% lower than the last market peak.  In contrast, the best-performing Case-Shiller metro was Dallas-Ft. Worth, TX, with the peak-to-trough decline was closer to 15%.  Moreover, home prices in D/FW are UP about 5% compared to the last peak.  (NOTE:  “Now” in this analysis is October, 2013, the most recently reported Case-Shiller data.)

How does Austin compare?  Peak-to-Trough:  -12.6%.  Peak-to-Now:  +7.7%.

Housing bubble?  Reading reports of how quickly home prices have increased around the country, it would be easy to think so.  I agree with HousingWire, however, that this historical context is important.  Home prices in most major U.S. cities are still lower than the last market peak.  That is not the definition of a bubble.

Prices in Austin have increased rapidly, but not as fast as most cities that really experienced the downturn.  (We didn’t.)  Even with extremely strong demand (100 to 150 new Austinites/day?) and very limited listing inventory, multiple offer situations, etc. the average price in the metro area in October 2013 was up just 2% compared to October 2012.  (Data from TAMU Real Estate Center.)

By all appearances and forecasts, 2014 promises to be another very busy year in Austin-area real estate.  Real-world pricing data does not indicate a new bubble here, though, and healthier regional economies elsewhere around the country will be good news for all of us.

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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.

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  1. Pingback: Case-Shiller and Market Bubbles | Bill Morris on Austin Real Estate - December 19, 2014

  2. Pingback: Another “over-valued” report | Bill Morris on Austin Real Estate - December 19, 2014

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