Exclusive: January & February Downtown Condo Sales

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for January and February, 2010. With the new results loaded, we are pleased to announce that year-over-year sales volumes have increased for the eighth month in a row. That, however, is where the good news ends.

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During January and February, 14 downtown Austin condo units were transacted on the MLS: 4 more than during the same period in 2009 with the gain spread across both of the months. While volumes are up, prices are headed downward as buyers gravitate towards smaller, older, and cheaper units than they did in the past.

Read the full analysis:


Coming up: Urbanspace Downtown Q&A

As we first announced last month, urbanspace has announced a monthly downtown Q & A that will be held at the urbanspace office the first Saturday of every month.  It is free to anyone interested in learning a little bit about downtown Austin and the development taking place.  

The Downtown Q&A was founded by Emily Crawford and developed in conjunction with Bryan Cady. As former first-time buyers and former Downtown Austin newbies themselves, they wanted to provide an interactive forum to help new buyers understand the options in the current Downtown Austin marketplace. Likely questions: Should I lease or buy downtown? What is the Downtown Austin lifestyle all about? What are the best deals out there? Why live downtown?

You can join them this month on April 3rd from 11-noon.

Top Art Galleries: New York, San Francisco, 360 Tower

This week, Details magazine published its list of the ten coolest art galleries in America. As would be expected, the list was dominated by galleries in New York (4) and California (3). Less expected was the inclusion of Austin's own Lora Reynolds Gallery which is located in the base of the 360 tower. The remaining two galleries were located in Chicago and Minneapolis.

Details claims that the 10 galleries on the list represent "the top places in the country to see contemporary art." In their profile of the Lora Reynolds' Gallery, the author writes that "after seven years toiling in the London and New York art worlds, Reynolds forged a niche in the competitive Austin scene by luring a roster of international talents like British artist Ewan Gibbs to Texas. As she told the Austin American Statesman when the gallery opened in 2005: "Why not bring art here that otherwise wouldn't be shown?" And what she shows doesn't just make you look—it makes you look twice."

Lora Reynolds established the gallery in March 2005 after working with galleries in London and New York. The gallery's mission is to bring national and international contemporary artists in all media to Austin. The gallery organizes 6 – 8 shows annually of emerging, mid-career, and established artists.

While Austin has a strong cultural scene for a mid-size city, it is not known for contemporary art. In addition to the well-respected Arthouse, it is great to see national recognition for Lora Reynolds Gallery. See the full article here.

Lora Reynolds Gallery
Lora Reynolds gallery Austin Texas

Forbes: Austin Economy Good

According to Forbes.com, the Austin-Round Rock area tied for first on a list of large metropolitan areas where the recession is easing.

The report listed Austin and Washington D.C. as the two top cities in terms of economic recovery. The report considered a number of factors including local economic output, job growth and real estate industry trends. While the national unemployment rate hovers at 9.7%, the comparable rate in Austin is 7.6% (up from 7% a month ago). Washington D.C. has a 6.2% unemployment rate.

According to Forbes, one thing that Austin and Washington D.C. have in common is a high rate of government job generation. The number of Central Texas jobs increased just shy of 1 percent between 2007 and 2009, more than any other city included in the research. Dallas came in second on the ranking behind Austin. The number of jobs there are expected to increase more than 7 percent in the next three years. San Antonio and Houston also made the top 10 list.

For anyone with a stake in downtown Austin real estate, future downtown home values will be driven by supply, access to lending, migration, and economic growth with job growth being a key factor. Supply for the next few years is highly predictable --- it's growing on the high end and flat in the low and middle price brackets. Access to mortgages remains constrained for conforming loans and highly constrained for jumbo loans. Migration is expected to remain strong. That leaves economic growth remains the biggest unknown.

While the economy is improving, cuts at large local employers or a dip in technology spending could dramatically change the local housing outlook. But so far, as Forbes notes, Austin is doing better than just about every other city in the country.

Exclusive: 2009 Condo MLS Sales Review

With the help of urbanspace Realtors, we have put together a comprehensive analysis of recorded downtown Austin condo transactions in 2009. The analysis looks at MLS data capturing 2009 condo sales in area DT during the year 2009. Like all listing data, it excludes private transactions that were not listed on the MLS. This is a big exception considering that hundreds of units have been sold through non-mls sales.

The data does, however, provide a very clear view of the downtown resale market. It shows the price per square foot that buyers are willing to pay for real units, provides information on building-by-building sales prices, and shows how long it takes for units to actually sell. Here is the annual summary of 2009:

Market Summary - MLS recorded 112 downtown Austin condo transactions during 2009 (down 14% over 2008) with an average sales price of $329,374 (down 5%) which represents an average price per square foot of $298 (down 3%). Units sold for 95% of listing price in an average of 88 (3 days faster than 2008). For the second year in a row, the project with the most sales on MLS was Milago with 24 transactions (v 25 last year). Here are the details for 2009 with the comparison to 2008 in parenthesis:
- DT Condo Transactions: 112 (130 in 2008)
- Avg. Sales Price: $329,374 ($345,856)
- Avg. Listing Price: $353,311 ($362,750)
- Sold Price as % of Listing Price: 93% (95%)
- Avg. Sold $/SF: $298 ($308)
- Avg. Listing $/SF: $319 ($322)
- Avg. Days on Market: 88 (91)
- Avg. Unit Size: 1,126 (1,106) Square Feet

Old v New
- The MLS data clearly shows that the downtown Austin condo market is really 3 separate markets. The first market contains older units constructed prior to 1986 with an average age of 41 years. The second market is buildings constructed after 1998 when the current downtown boom started. The third market, which we have the least data on, is buildings currently under construction or recently completed. In particular, the high-end Austonian, W, and Four Seasons serve a much higher-end market than any of the current projects. Over the last year, sales of older units has plummeted as new buildings have entered the market. Sales of newer units are up dramatically. Prices for all units are down. Here are the details:
- Average Year Built, All Condo Sales: 1991 (1983 was the average in 2008)
- Units Built Before 1986: 40 (73)
- Units Built 1987 - 1998: 0 (0)
- Units Built After 1998: 82 (57)
- Pre 1986 Avg Sales Price & $/SF: $219,083 ($277,737) & $237 ($278)
- After 1998 Avg Sales Price & $/SF: $390,646 ($430,416) & $324 ($363)

High & Low: In a market and year where affordability is an important issue, it is amazing to see that there were 24 transactions under $200K which is a large increase from 18 units in 2008. It shows that it is possible to find affordable units downtown.
- Least Expensive Sale: $110,000 in Greenwood Towers ($107,000 in Greenwood Towers in 2008)
- Most Expensive Sale: $1,368,000 in the Nokonah ($1,100,100 in the Nokonah)
- Lowest $/SF: $162 for a unit in Greenwood Towers ($168 for a unit in Towers on Town Lake)
- Highest $/SF: $452 for a unit in the Nokonah ($571 for a unit in Five Fifty Five Condos)
- # Units Under $200K: 24 (18)
- # Units Over $750K: 5 (6)

Transactions by Month: Sales results were less cyclical than usual with strength in the second half of the year. Compared with 2008, the beginning of 2009 saw a dramatic reduction in the number of units and the back half of the year saw a strong increase over 2008. While there was strength in the back half of the year, it doesn't seem to have translated into higher prices. At Milago for example, prices were 3% lower on average in the second half than the first half.
Month - # Units
January - 4 (5)
February - 6 (6)
March - 4 (14)
April - 4 (22)
May - 11 (13)
June - 8 (13)
July - 12 (10)
August - 14 (13)
September - 15 (13)
October - 13 (9)
November - 13 (8)
December - 8 (4)

Over the next year or two, as a significant quantity of transactions continue to be conducted outside of the MLS, it will be difficult to gauge exactly what is happening with downtown Austin condo sales, especially on the high end. With a greater proportion of transactions shifting from private developer sales and auctions to resale and the MLS, we need to see increased MLS activity over the next year just for the market to remain stable. While lending remains constrained and the stresses of the economy remain strong, a dramatic near-term downtown condo upswing is unlikely. For sellers in particular, the next few months will continue to be very difficult.

With the addition of December data (it was a strong month), we've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index through the end of 2009.

Another Downtown Building Boom?

There should be no doubt: It's a tough time to be a downtown condo developer in Austin, Texas. While building costs have slipped from their peak, demand is soft and it remains a buyer's market. For high-end projects in particular, supply remains plentiful and competition among sellers is fierce.

Yet, developers are once again thinking about the next wave of projects. Over the next year, the current non-luxury condo inventory is almost certain to be depleted. With a 2-4 year construction timeline, developers are thinking now about the next wave of demand.

Here is a summary of some of the projects currently on the drawing board:

- Aquaterra (condo): Originally envisioned as a 163 unit 20-floor condo tower at 210 Barton Springs Rd., this was one of the first projects cancelled. Now, the architects have been asked to update the project to be more competitive in the current environment as the developers look for a path to proceed. No funding has been lined up.

- 7Rio (Condo): Originally envisioned as a $50M 34-floor 160 unit condo project, 7Rio is also back on the drawing board and being actively rethought for development. Originally planned for completion in 2009, the building would be on the site of Ranch 616 which will be incorporated into the building. The project has been supported by the neighborhood Association and the developer has already successfully completed two other projects in Austin.

- 800 W 6th St (Office): Austin-based Cypress Real Estate Advisors plans a 120,000-square-foot, six-story, Class A office building on the site.

- Block 51 (Office + Condo): According to the Austin Business Journal, the stalled Ovation development, originally reported to be a 37-story condo tower on Block 51 by Atlanta-based Novare Group Inc. and Austin-based Andrews Urban LLC, is being revamped. It now involves a partnership with International Bank of Commerce and more office space than originally planned. The plan revisions are in the beginning stages, and specifics will be available in mid-2010, he said.

- Schlosser Tower (Office & Condo): Schlosser development plans to construct a new 27-story downtown condo and office tower. The developer is proposing to build a tower of up to 350 feet on the vacant lot between Whole Foods and Austin City Lofts. As proposed, the new building would include street level retail and parking on the lower floors, 16 stories of office space, and 90 condo units on the top seven floors. In addition, a companion building on the 2.7 acre site would include three levels of commercial office space with parking and street-level retail.

- 21c (Apartments): The developers are proposing -- but have not found funding for -- a 31-story 350 unit apartment tower near the corner of Red River and Cesar Chavez. Rents would start at $1.50 per square foot which would mean $1,000 / month for a 700 square foot unit or $1,500 for a 1,000 square foot unit. The goal would be to make the building 70% 1 bedroom / 1 bath units. As many as 10% of the units for be designated as affordable units with controlled rents. A second tower -- which is more precarious in the current environment -- would be a 12-story 200 room hotel, spa, and restaurant. The developers are hoping to put parking underground and include ground retail in the project. Although no specifics have been announced, the third tower could include condos if at some point it does get built.

While almost none of these projects have funding, the investment in new development is a strong sign that when the market stabilizes and commercial financing becomes more common, another building boom is likely. With projected population growth and one of the strongest economies in the country, Austin will likely be an attractive target for development as the markets improve.

7RIo Tower as originally Proposed
7Rio Tower CLB Austin Condo