Busted

9/6/20063:08:12 PM Link |  | Add comment

Market Statistics, National Real Estate, Real Estate

Bad news travels fast.  We've all heard it time and again.  So when many of the recent real estate questions I field are related to the housing bust, I know exactly why I'm receiving them.

For the past few years, as the markets in many areas heated up, became sketchy, and then 'popped', resulting in declines in value.  Much of the media is coastally driven - meaning much of our national news comes from people with either an East Coast or West Coast perspective.  I heard and read many stories during the first part of this decade about how 'hot' the real estate market was and the double digit gains many of the major markets were experiencing.  All the while, Austin's real estate market was languishing behind a virtually flat growth trend line from Fall of 2000 to Fall of 2004.  Four years of nada.

More and more there are news stories discussing the slowdown in the real estate market, and the downturn that is actually occuring in many of the markets.  Many people will probably think of 2006 as the year the downturn began.  In all truth the slowdown in many markets began in 2004, according to the Standard & Poor's/Case-Shiller Composite Home Price Index, a housing benchmark that follows 10 major markets.  These markets are San Francisco, Los Angeles, San Diego, Las Vegas, Denver, Chicago, Boston, New York, Washington DC and Miami.

Fall of 2004 is also where I would put the 'bottom' of the last down cycle for Austin's real estate market.

Information released yesterday by the Office of Federal Housing Enterprise Oversight shows that prices declined in 61 of the 275 cities tracked.  Taking it from a local perspective, Austin ranked 123rd with an 8.42% annual growth rate between the second quarters of 2005 and 2006.  Many people might look at that and say, 'well, that's almost right in the middle, whoop-dee-doo'.  Understand that from the first quarters of 2004 to 2005 Austin ranked 7 places away from dead last in the results.  To go from 258th (only 265 markets were tracked at that time) to 123rd over the period of one year is pretty impressive.  When you take into account the historical perspective that Austin typically has worked in cycles of 8-10 years of 'up' and then 3-5 years of 'down', it would certainly appear that Austin is due to continue its climb up the rankings for several more years.

Just remember as you see and read these reports - all real estate is local.  As many of the markets around the country struggle and go down, many other markets will begin to thrive.  My thoughts are that the Austin real estate market should continue to do well for many more years and we will continue to see solid appreciation in Austin home prices through at least 2011.