Bill Morris, ABR, CRS, CDPE, ePRO, MBA

In a post here yesterday (What do you get for $1,000,000 in Austin?) I focused on properties that have sold recently for around $1,000,000.  I mentioned that there are still more than 100 active listings in this price range, so I am writing today to highlight a few of the million dollar properties that are still available:

First, the largest -- 11,000 square feet on almost 22 acres in a gated equestrian community northeast of Austin.  This home has everything except the views south and west of Austin, and it's available at $995,000:





Now, the smallest -- 800 SF, 1 bedroom, 1 bath ... This one is all about location, for just $994,500:






A real classic -- Vintage style in a classic central Austin neighborhood, rebuilt five years ago, and beautiful.  Almost 3,600 SF for $1,079,000:





And a couple that I just really like --

4,700 SF on 2 1/2 acres in a convenient location near Lake Austin and Emma Long Park, at $959,000:





or 4,000 SF on 5 acres, with HUGE views, offered at $1,099,999:





Now, six photos is not enough to really show these properties, but they'll give you an idea of the contrasts.  There is a lot of value in this small sample.  I'll be happy to provide more information.  Just call or text or email me and let me know how I can help.

The first thing you may notice is that this an over-inventoried market segment, with 126 properties on the market today and only 23 sold in the past six months.  (NOTE:  These are single family homes only, and only in the selected regions, not the entire metro area.  Sales are clearly concentrated geographically, however.)  Sixteen months' supply is a textbook buyer's market.  The difference here, though, is that 126 homes really isn't that many in a metro area of 1.5 million people, and buyers in this segment may well be looking for THE house, distinguished uniquely by location, style, size, view, waterfront, pool/no pool, acreage, HOA/no HOA, maintenance required, etc., etc., etc.

And among those that have sold recently, there is a real variety ...

Among the smaller homes:  about 2800 square feet built in 1939, remodeled in 2008, on a fairly typically sized residential lot -- centrally located, with no view, no waterfront, but in just the right place for at least one buyer for $1,000,000 in May 2011:



One of the larger:  about 5600 square feet built in 2000 on 1 1/4 acres west of town, near Lake Austin -- with very nice (but not spectacular by some local standards) Hill Country views -- pool, spa, well-appointed guest quarters, four stone terraces and a balcony -- perfect for one buyer for $980,000 in June 2011:




Waterfront:  that's the focus of this one -- 3850 SF on 6 acres on Lake Travis -- 110' of frontage on a deep-water section of the lake!  This one sold in May 2011 for $950,000.  They didn't even bother to include a picture of the front of this house in the listing because all the "action" is on the lake side:




Views are always in demand in Central Texas:  as one example, this one offers 4755 SF on a little more than 1/2 acre overlooking Lake Travis, with pool, spa, outdoor kitchen, and huge patio with VIEWS!  Sold in June 2011 for $930,000:




And then there's "distinctive," as described by a listing agent:  4800 SF built in 1983 on 1/2 acre, sold in April 2011 for just under $950,000:




Is there new construction in this price range that isn't reflected in MLS data?  Absolutely.  Is there more variety in locations than I have included here?  Some, but surprisingly not all that much, and not in some really beautiful neighborhoods.  Geographic markets in the Austin area that really support $1 million sales are fairly limited.  Is there a market for specific styles, like "modern"?  Certainly, but oddly enough "traditional" housing and "Keep Austin Weird" go together for the most part.  I know of two examples of truly "modern" design sold in the areas covered here in this price range over the past three years, and those were very close to Central Austin.  Hill Country and Modern have not often been a successful combo.

As I said at the outset, though, this high-end market segment is largely the domain of buyers who know what they want, and they know that most of our inventory at any point in time is not exactly "that."  When they find it they'll drive a hard bargain, but ultimately there is a buyer for every home.  In this market segment, as in all of real estate:  all sales are driven by Location, Property Condition, and Price, and sellers have control over two of those three factors.  The rest of the equation is just the motivation of the buyer and the seller, and "market value" is nothing more or less than what a willing buyer and a willing seller agree on for a specific property.

Residential market activity in the Austin metropolitan area is up.  As of June 29, 2011, here is a high-level look at our residential market:


At that pace, existing inventory will last about 5.6 months, compared with 6.5 months that most analysts consider a "balanced" market.  This is really a minor difference.  The characteristics of a strong Buyer's Market really become noticeable at about 8 months' inventory.  A true Seller's Market becomes recognizable at about 4 months' supply.  The Austin market remains highly variable, with some neighborhoods that are dramatically over-supplied, with slow sales and weak values, while other nearby areas are selling very quickly and with rising prices.

Average time on market for homes that sold in the past month was 69 days, and sale prices averaged 97% of list price.  In the aggregate, Austin/Central Texas remains a healthy market for residential real estate.


(Note:  Figures above are "raw" MLS data only.  After the month closes, final data may differ.  All other information included in this report are from the Real Estate Center at Texas A&M University.)

I discussed the number of pending sales more extensively earlier this week in Signs of Austin-area market progress.  For now, I'll just summarize that the number and percentage of pending contracts at the end of May were very near the 10-year average and near pre-recession levels.  Moreover, that level was reached this year without the distortion of temporary tax incentives for home purchases.


Looking back at final data for May, there are other encouraging signs.  First, the "odds of selling" that I have tracked for years was at a 2-year high:


I have pointed out before that in every market cycle since1990, an absorption rate of about 10% signaled a coming upturn.  In the worst of those cycles (1990-1991 and 2003-2004), the odds of selling dipped to that level twice before a genuine growth cycle began.  This time, we have dipped three times -- in January 2009, January 2010, and January 2011.  Volatility is probably not entirely behind us, but as I mentioned above market performance this year has not been influenced or distorted by artificial incentives.  We are about three weeks away from having final June 2011 data, but I am eager to see if it confirms this growth trend.

It is also encouraging to see continuing strength in home values:


The average sale price in May 2011 dipped 0.4% from the previous month, but was up a respectable 10% compared to May 2010.  The median price was up 1.9% month-to-month and rose 4% from a year earlier.

The 12-month average filters out most seasonal effects:


Even though unit sales remain well below peak volume, the 12-month average sale price reached another all-time high in May.  Referring back to the Market Price Movement chart above, notice that the year-long average still includes a significant spike in July 2010.  That was the month after the last homebuyer tax credit program ended and was the result of most entry-level buyers completing their purchases in June, leaving more expensive move-up purchases to dominate the average in July.  Next month's 12-month average will be the last to include that spike, so I expect to see a dip in the rolling average in July 2011.  If we really are entering a new growth phase, though, we should see the upward trend resume the following month.



I am always available to answer questions about this information, or about specific homes or neighborhoods.  Feel free to call or text or email me, or just complete the easy form below and I will follow up with you promptly.

Market conditions for residential properties in the Austin/Central Texas area continue improve, and remain better than reports in the national media and far better than conditions in the metro markets that suffered most during the housing downturn over the past few years.

This recent article highlights an important point of reference:


I will update my Austin Market Dashboard shortly, but the highlight in that Austin American-Statesman piece is the emphasis on the number of pending contracts for single family homes at the end of May 2011 -- up 53% from May 2010.

My readers know that I am skeptical of virtually all single-point comparisons as indicators of market change.  Pending contracts are important as the most current measure of demand, and this is a statistic that is worth following.  Historical perspective almost always helps, though.  With that in mind, here is a look at ten years of pending sales data:


With that view, the year-to-year growth mentioned in the Statesman article is visible.  So is an almost equivalent tumble in the previous twelve months.  This looks very much like a repeat of  the pending contract counts we saw in 2008-2009.

What I find most encouraging about this data for May 2011 is that we're back again to very near the 10-year average, and only slightly below our market's pre-bubble performance in 2004 and 2005.  We saw this kind of surge in 2009, but this year it was unassisted and undistorted by tax incentives for home buyers.  This time should be more representative of "real" market conditions.

Even more important than the absolute number of pending sales is how that volume relates to total supply -- i.e., Pending contracts as a percentage of Active listings.


The shape of year-to-year changes in this view matches the first chart closely except that you can see demand relative to supply was a little inflated in 2005.  Still, though, demand as measured by Pendings at 19.5% last month compares well to the 19% absorption rate using sales actually closed in May 2011.  More on that on the dashboard later.

It is certainly true that closed sales were down from May 2010 to May 2011, but the most immediate measure of market demand clearly shows improvement.  Anecdotally, my business and that of most real estate professionals that I talk to indicate that the pace of market activity is up, and there is plenty of support in local economic reports to expect that we really are on the way to more consistent growth.

Final data for May 2011 is available this morning so I will be updating my Austin Market Dashboard this week. For now I just want to offer a quick summary.

First, home sales (units) in Austin and Central Texas are still down year-over-year, about 10% from May 2010 to May 2011, but the gap was narrower last month, and the year-to-date trend is encouraging (data courtesy of the Real Estate Center at Texas A&M University): Of course, monthly sales growth this time of year is normal, but "normal" seasonality has been a little less predictible in recent years than before 2007.

It is also worth noting that both average and median sale prices in May 2011 were the highest they have been since July 2010. (As I have commented before, July 2010 was distorted by the end of homebuyer tax incentives in June 2010. That left very few entry-level buyers still in the market in July, so the average price was dominated by move-up purchases in higher price ranges than usual.)

At first glance, this is an encouraging report for last month. I'll post more thorough analysis over the next few days.