Real estate professionals are often asked to predict the direction of Austin home prices, and any responsible professional will tell you that accurately predicting home prices is frankly impossible. There are, however, numerous resources available that allow a trained professional to render an educated approximation.
Factors that Influence Austin Home Prices
In this series of posts I’m going to discuss some of the factors that can and do influence Austin home prices and Austin home values so you can better understand how to use the market forces in your best interests.
Austin Housing Inventory
Housing Inventory is a term used to denote the number of homes for sale in a given geographic market. The total housing inventory includes newly constructed homes and existing, resale homes. Of course there usually is a relationship between the numbers of new homes for sale versus the number of existing homes for sale. Many builders continued to build when demand was lower creating a super-saturated inventory of unsold homes. Over supply and under demand was the perfect storm in driving down home prices.
Fewer Potential Buyers Resulted in Lower Home Prices
From 2008 to 2011 a bloated housing inventory was a significant factor in plummeting home values. In the wake of the mortgage market debacle in 2008, many, many buyers were unable qualify for loans and home prices began the drop. Sellers were forced to drop their prices at attract an ever diminishing number of qualified home buyers.
Sellers Were Fearful and Wanted Out of the Market
At this point in the cycle, many home owners recognizing a devastating trend choose to “get out while you can” and at least try to save some of the equity they accumulated during the subprime lending glory days. Combined with over building, this caused a spike in the housing inventory never before seen in the US. Couple this with far more stringent loan underwriting criteria that drastically reduced the number of qualified buyers; it’s easy to see why home prices plummeted.
Government Bailouts Failed Creating a Different Type of Inventory
Today in 2011, the term housing inventory has a decidedly different meaning with a number of homes on the market being up-side-down short sales or foreclosures in certain neighborhoods. Even after the big bank bail outs and numerous failed Government programs allegedly designed at helping distressed homeowners save their home, we have a huge housing crisis of incalculable proportion.
Manipulation of Real Estate Market Means Less Predictability
In normal markets, supply and demand has been the primary influence on home prices and values. However, the housing market has been so demonically manipulated by the federal government, we can with a fair degree of certainly ignore the traditional predictors of home prices.
Every Market is Unique
That being said: every housing market is different and all real estate is local. Supply and demand factors are unique and individualistic even down to a particular neighborhood in any specific market. Some markets and neighborhoods experienced more or less volume of distressed homes and/or new construction than others.
What was Once Predictable is Now Uncertain
In normal economic cycles, absent governmental manipulation, the level and growth of the housing inventory are the prime criteria affecting home values. Unfortunately, normality is not in our field of vision.
Considering Buying or Selling? Work with a Professional
If you’re in the market to buy or sell Austin real estate, find a professional who can help you interpret the market in your neighborhood. Get all the information so you can make an informed decision. For more information about our Austin real estate team, check out Buying a Home in Austin and Selling a Home in Austin. We know the market well and can help you interpret the market and decide if its the right time for you to buy or sell. Call us at (512) 827-8323 to schedule a no obligation consultation.
Enjoyed this Austin Home Buyers Post?
Why not subscribe to our RSS feed, follow our site updates on Twitter @ATXREHomes or follow us on Facebook.
Leave a Reply