Bill Morris: Housing recovery is largely a local story

Housing recovery is largely a local story

I just posted this article on AustinMarketInfo.com:

Housing market's recovery appears at risk

I continue to be amazed at the dramatic knee-jerk reaction to every new bit of data -- jobs, home sales, building permits, consumer confidence, consumer spending ....  Up one week, down the next, and it seems that every press release identifies a "trend."  In addition, the "economy" and the "housing industry" are treated as monolithic things -- as if Austin and San Francisco and Fort Lauderdale have experienced the past two years in the same way.

The simple truth is that within "the economy," some industries will gain ground during this recession and others will lose, and within a losing industry there will be companies who figure out how to capitalize on the downturn and reinvent themselves more profitably than ever before.  When it comes to real estate, things are even more "hyper-local."  As I have written repeatedly, Austin has never felt this downturn as badly as many other areas, and by all appearances we are in the very beginning of recovery.  Average prices are up about 1% from February 2008 ...

... but averages -- locally or nationally -- are not helpful in understanding what's going on in a specific market area.  I had lunch today with a client who has lost about 7.5% in the market value of her home over the past two years.  On the other hand, I analyzed a very small area in Austin yesterday where price appreciation has generally tracked our local averages over the past two years, but where sale prices over the last twelve months were 4% higher in one neighborhood than in an adjacent neighborhood -- same ages, same sizes, same styles, etc.  The only difference is that one is east of a dividing street and the other is west. 

Don't let one news report lead you to believe you really know what's going on in your neighborhood.  Dig deeper.

Having gotten that little rant off my chest, I am really writing to point out that home sales in Austin did NOT fall in February.  They were UP almost 27% over January!  They were UP almost 7% over last February!  Average prices last month were also UP about 1% over the previous month.  Prices were down about 1% in February 2010 vs. February 2009, but up about 1% compared to February 2008.  Moreover, I wrote earlier this month that the trend in Austin Metro Building Permits bodes well for our area. 

The point is that stories about the national economy and the national real estate market should be the starting point for analysis, not the end.  Of course, we are susceptible to some national trends, but we also have our own local and regional strengths.  Just like some companies fail while others thrive in difficult times, local and regional economies have comparative advantages and disadvantages, and optimism for the Austin/Central Texas area has been widely reported.  Spend just a few minutes browsing the Market News and Trends category at BillMorrisRealtor.com and you'll see months of news supporting that optimism.

Bill F. Morris, ABR, CRS, CDPE, e-PRO, MBA
RE/MAX Capital City
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Comment balloon 2 commentsBill Morris • March 25 2010 03:56PM

Comments

Sales are up here but we have home prices down 40% to 60% from 4 years ago, really.

South eastern Michigan cities such as Flint (80,000) are destroying houses to increase the value of the remaining homes. Times are changing here, values are local and depend on the job availability.

 

Thank you

Posted by Mike Warfel, Associate Broker (Mike & Rita Warfel Real Estate LLC) over 9 years ago

Mike, I have discussed in Austin many times at the most significant damage from the recession and housing downturn is concentrated in five state -- and it is REALLY a problem there.  Michigan's downturn actually began before the nationwide problems, and many places like Flint have fallen farther and harder than most people here can know.  I don't envy you working in that environment, but I wish you nothing but the best.

Posted by Bill Morris, ABR, CRS, CDPE, ePRO, MBA (RE/MAX Capital City) over 9 years ago

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