The numbers for May have been out for a few weeks now, but I wanted to get a little more data to evaluate before commenting on what I think has been happening here in ATX.
As I have expected for a while now, things have slowed down a bit. Take that with a grain of salt because it's still a hot market, but things have definitely cooled down as compared to last year. Sales are down 5.9% from May of 2014 to May of 2015 in overall MLS and the condo sales are down 12% and I've had numerous discussions with colleagues about why this is occurring. Have any economic indicators switched gears? Are fewer people moving here now as compared to last year? As far as I can tell, the answer to both of these questions is "no".
But the fact remains that days on market are higher overall for the entire city. Inventory in hot areas like Circle C are higher than they were 12 months ago. Have values gone down? In almost every case, absolutely not, especially in the places where the price point is lower than $300,000. The median home price is up 7.9% over a year ago and is less than 1% of the all time high back in July of 2006. My colleagues and I believe that the median and average home price in Austin will continue to rise, but at a lower rate and in most cases, the more valuable your home is, the lower the appreciation rate will be.
Part of this is that while there are still 100 or so people moving here every day, not all of these people are Apple or Google engineers and there are a lot of folks relocating to our area that don't make $175,000 a year. Outlying area sales where price points are lower are feeding into new sales data. Also, as interest rates begin to rise (we expect a steady hike during and after August) things will continue to slow down, especially in the $500,000 and up category.
The good news is that the market is still healthy and the economy is still healthy. We would much rather see a steady slowdown than an abrupt stop, like we did in 2007.
So as always, what does this mean for you? If you are a buyer, do not give up hope. Things are going to get better. It's still not going to be easy as we have a healthy economy here, but if you were frustrated and gave up earlier this year or last year, I'd urge you get back in the ring and keep trying.
If you are a seller or are going to be a seller next year, it's time to face reality. It's not a harsh reality, but you are going to have to be more realistic. I can't tell you how many times I get asked by sellers about "the house down the street that's the same square footage as mine, but not nearly as upgraded". Your home is different. And just because you spent $40,000 in the last ten years on general maintenance, doesn't mean your home is upgraded. We need to have realistic expectations when it comes to setting a list price. And don't even think about calling your cousin's friend that is "kinda cool" but doesn't know what the words "home staging" really mean! It's time to hire a professional and dial in the expectations. At Spyglass Realty, we will always outperform the average agent, especially as the market continues to slow down.
Oh, and if you're an investor, get with me. Fall is coming and we have a plan for you when it does.