Central Texas defies U.S. trend, with home sales in April increasing 12 percent as local economy grows.
By Shonda Novak
AMERICAN-STATESMAN STAFF
Wednesday, May 24, 2006
Even as the national real estate market cools, Central Texas' housing market is sizzling, fueled by rising job and population growth and robust sales of residential investment properties.
Home sales in the region jumped 12 percent in April compared with a year earlier, and the median price rose 8 percent to a record $175,000, the Austin Board of Realtors reported Tuesday.
Real estate agents say that multiple offers are on the rise and that people are asking higher prices — and getting them.
"I think boom times are here again," said Bill Stanberry, owner and CEO of Stanberry & Associates, an Austin-based residential and commercial real estate firm.
"With the popularity of this area, and the many jobs that appear on the horizon, I anticipate that, despite slowly rising interest rates, the market will continue at a brisk pace," said Stanberry, who predicts that prices will appreciate 8 percent to 10 percent annually for the next three years.
If they go even higher, however, many potential buyers could be forced out of the market, he said.
"An area cannot long withstand a 20 percent or higher rate of escalation without bringing up the economic affordability factors that result in a slowdown or sometimes a regression in prices," Stanberry said.
Last month, almost 98 percent of homes sold for their asking price, the highest level since June. Homes sold within an average of 59 days, 20 percent faster than in April 2005.
"One reason for the city's continued growth is that the cooling markets in other areas of the country are drawing out-of-state investors to Austin," said John Rosshirt, chairman of the real estate board. "As this investment continues, we will see a continued increase in the number of properties for rent."
A growing economy also is boosting sales and prices locally, said Rakesh Shankar, senior economist with Moody's Economy.com, a Pennsylvania-based economic research and consulting firm.
"Austin is now posting one of the fastest job and population growth rates among large metro areas of the nation," Shankar said.
Demand continues to rise, but the supply of homes on the market is shrinking, which is also pushing up prices. The 8,123 active listings last month were 9 percent fewer than a year earlier; new listings increased only 1 percent.
May is shaping up to be a strong month, with a record 2,943 pending sales, a 22 percent increase from a year ago.
Supply is especially tight in South Austin, most dramatically in the area between Interstate 35, MoPac Boulevard (Loop 1), Ben White Boulevard and Slaughter Lane. Single-family homes in the area were on the market for an average of 27 days and sold for 10 percent more than last year, at a median price of $143,500.
Investors are coming primarily from the West and East Coasts, said Peter Sajovich of ReMax Austin Advantage.
Sajovich, who specializes in sales of residential real estate investment properties, said he is dealing with buyers from Virginia, Boston, New Jersey and "many, many from California."
Most investors are buying single-family homes, often more than one, priced at less than $150,000, Sajovich said.
Sajovich is working with an investor from Laguna Beach, Calif., who already has spent $1 million on four single-family homes in North Austin and a four-plex in West Lake Hills.
The investor plans to buy an additional $3 million of residential properties in Austin.
In another case, a New Jersey lawyer bought a duplex in Southeast Austin for $140,000, staving off offers from five other investors, Sajovich said.
Investors account for about 15 percent to 20 percent of current residential sales in Central Texas, Sajovich estimates.
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