Statistics show that in a housing downturn, property closer to a city’s center will typically be less effected than property further out. We’ve seen this here in Austin. In 2008 Austin had a net gain of around 2% in property values during a time when much of the country was seeing steep declines. Closer to downtown, we saw an appreciation closer to 5%. Sales have been slow during this period but I think that we are starting to see a new trend emerging. Our office has closed 15 units in the past two weeks while putting another 30 under contract. These numbers are incredible in our current economy but I think that they show two things: 1) There are buyers in this market and 2) The market will always pick up first in areas close to downtown. I have to point out the obvious; that these buyers are only going to purchase if they are getting a “deal”. Some of the condos and homes around downtown were subject to a bubble of sorts in 2007. The prices got a little high for the demand but I do think that those 2007 prices can be achieved again. We need to either increase the size of the market or create more demand (this is coming). We currently have about 500 units for sale right now in the market. This number includes all of the units under construction today. Our absorption rate downtown has hovered right around 300 units per year. If you consider that no other projects could be ready to break ground for the next four years we are going to have a huge shortage of demand real soon. It would seem then, that the people buying now, in what appears to be the bottom of the market, will be rewarded in the longrun.
Let me know if you would like to receive a more detailed analysis of the market downtown or if you would like to chat about the current conditions.
