Sunday, 23 May 2010
Austin Home Prices Are Deceiving
Don’t let the median price of a home in the Austin area fool you. It is true that the median value of homes in the Austin area is lower than the national average. However, this can be a bit deceiving.
Many investors, retirees and people relocating for jobs have seen the have been attracted to our area because of how inexpensive homes are here. It is true that the median price of a home in Austin is not very high relative to other places in the country. In May, the median price of a home in the Austin MLS Area was $174,000. The average sale price was $236,406.
This year, I have talked with a number of people relocating to Austin from California, Phoenix, Florida and other areas. Many have thought they could pick up a pretty nice home for a relatively low price. This is where the misconception comes in.
There are parts of Austin in which homes really are pretty inexpensive. This includes much of Cedar Park Leander, Round Rock, areas in East Austin, areas east and northeast of the Austin city limits and much of South Austin and outlying areas south and southeast of Austin. These are all areas in which home sales are tracked by the Austin Board of REALTORS®. This include the counties of Travis, Williamson, most of Hays and parts of surrounding Counties. This is a lot of ground to cover and there are a huge number of homes in these areas.
One thing that attracts many people to the Austin area is the Central Texas Hill Country. This includes much of the Western Travis County and Dripping Springs area. If you take a look at an <a http://www.abor.com/MLS/mlsboundarymaps.cfm> Austin MLS Area map</a>, this includes Areas 8E, 8W, W, LS, RN LS, LS, HD and HH. These areas contain few homes that are valued close to the median price stated earlier. These areas also do not have as many homes in the areas previously mentioned.
Let’s look at these area and do some comparing. Let’s compare sales of all single-family homes built between in 2002 and 2003 that sold in May, 2006. In the relatively less expensive areas mentioned above, there were 100 homes sold in May, 2006. The average sold price was $178,403. The average price per square foot was $81.64.
Using the same criteria, but looking in Areas 8E, 8W, W, LS, RN LS, LS, HD and HH, there were 33 homes sold in May, 2006 that were built in 2002 and 2003. The average sold price was $390,875. That is an average price per square foot of $167,82.
Now let’s look at current listings for new construction. This means homes currently listed for sale in the MLS with a year built stated as 2006. In the less expensive areas mentioned above, there are 492 homes listed with an average list price of $228,069. The average list price per square foot is $95.70.
In Areas 8E, 8W, W, LS, RN LS, LS, HD and HH, there are currently 293 new homes listed for sale in the Austin MLS. The average list price is $666,697. The average price per square foot is $174.11.
So what’s the difference in the areas? The western Travis and northern Hays County areas have a variety of things to offer. One is that they contain some of the best school districts in Central Texas including Eanes, Lake Travis and Dripping Springs ISDs. Another is the drama and beauty of the Central Texas Hill Country. If you look at 8E, 8W and RN, you also look at a good number of homes on Lake Austin or Town Lake. In the LS Area, you have a good number of homes either on or with views of Lake Travis. In very far western Travis County and northern Hays County, you can find homes on acreage. All of these factors add up to some very expensive real estate relative to other areas.
When you look at areas northwest, north, northeast, southeast and south of the greater Austin area, you find a lot of flat land. This makes for easy building. Builders in these areas can build a very high numbers of tract homes. The economies of scale when building many homes in these areas make for inexpensive building compared to the more custom building that goes on in the western areas.
As far as resale goes, the areas with the lower average sale price have had a lot of pressure from new construction. In the areas with the higher average sale price, there is pressure from new construction, but even the new homes are much more expensive than many other areas.
Obviously, this discussion did not take into account areas closer to the downtown and University of Texas areas. There are pockets of less expensive homes and pockets of very expensive homes in these areas.
If you do decide to look at Austin real estate, get a good <a http://www.abor.com/MLS/mlsboundarymaps.cfm> Buyer’s Agent</a> and put him to work for you.