Nov 2009
21c Austin: New Renderings Magically Appear
November 28, 2009 16:22 Filed in: News
This week, it has been reported that the developers of 21c are coming back to Austin to provide an update on the status of the project. Apparently, the plans are now complete and they are ready to proceed with a third version of the project on a large site located at the intersection of Red River and Cesar Chavez streets.
The history of the 21c project is quite unique. The original 21c project was late to the game, announced just 2 months before the summer meltdown of U.S. credit markets. The project was originally scoped as a 44-story condo and hotel project on third and Brazos street. Although 21c had been actively marketing condo units through a sales office on 6th and Congress, the office was shut and shackled before the developers announced that they had abandoned the planned third and Brazos project in favor of a new multi-building complex to be located a few blocks East on Waller Creek.
The new project, also to be named 21c, was slated to include a 16-story hotel with 243 rooms which would be followed by a 49-story condo tower. The hotel was supposed to break ground in 2009 and the condo tower was supposed to break ground by 2010. Then, the project became a victim of the financing crisis that has scuttled most of the other unbuilt Austin projects.
21c Version One (3rd & Brazos)
21c Version Two (Red River & Cesar Chavez)
And now, the website is showing a third version of the planned project:
According to the Statesman:
The developers of the proposed 21c Museum Hotel are coming to Austin next week to present an update on the stalled downtown project.
Developers Steve Poe and Craig Greenberg will be speaking to the Waller Creek Citizen Advisory Committee at City Hall on Dec. 3.
The proposed project includes a hotel and condominiums at East Caesar Chavez and Red River streets. City leaders had hoped that the tax revenue from the project would kick-start plans to build a flood control tunnel along Waller Creek, helping spur redevelopment in the area.
Michael Bonadies, president and CEO of 21c Museum Hotels, said the project plans are complete, and they’re ready to move forward.
But there is still a major obstacle.
“We continue to work hard on sourcing construction financing in what has proved to be a difficult environment,” Bonadies said in an email. “However, we remain optimistic, encouraged by some of the feedback we have recently received, which leads us to believe that 2010 will bring a more favorable climate for construction financing.”
We'll see what they announce this week!
The history of the 21c project is quite unique. The original 21c project was late to the game, announced just 2 months before the summer meltdown of U.S. credit markets. The project was originally scoped as a 44-story condo and hotel project on third and Brazos street. Although 21c had been actively marketing condo units through a sales office on 6th and Congress, the office was shut and shackled before the developers announced that they had abandoned the planned third and Brazos project in favor of a new multi-building complex to be located a few blocks East on Waller Creek.
The new project, also to be named 21c, was slated to include a 16-story hotel with 243 rooms which would be followed by a 49-story condo tower. The hotel was supposed to break ground in 2009 and the condo tower was supposed to break ground by 2010. Then, the project became a victim of the financing crisis that has scuttled most of the other unbuilt Austin projects.
21c Version One (3rd & Brazos)
21c Version Two (Red River & Cesar Chavez)
And now, the website is showing a third version of the planned project:
According to the Statesman:
The developers of the proposed 21c Museum Hotel are coming to Austin next week to present an update on the stalled downtown project.
Developers Steve Poe and Craig Greenberg will be speaking to the Waller Creek Citizen Advisory Committee at City Hall on Dec. 3.
The proposed project includes a hotel and condominiums at East Caesar Chavez and Red River streets. City leaders had hoped that the tax revenue from the project would kick-start plans to build a flood control tunnel along Waller Creek, helping spur redevelopment in the area.
Michael Bonadies, president and CEO of 21c Museum Hotels, said the project plans are complete, and they’re ready to move forward.
But there is still a major obstacle.
“We continue to work hard on sourcing construction financing in what has proved to be a difficult environment,” Bonadies said in an email. “However, we remain optimistic, encouraged by some of the feedback we have recently received, which leads us to believe that 2010 will bring a more favorable climate for construction financing.”
We'll see what they announce this week!
Milago: Detailed Comparable Sales Analysis
November 23, 2009 21:42 Filed in: Market Analysis
Over the last 22 months, AustinTowers has been working closely with urbanspace to track the downtown Austin condo market.
During this period, Milago has sold more units on the resale market than any other project . The 46 Milago transactions over the last 21 months provide an interesting microcosm of the downtown Austin market.
The numbers clearly show the challenges that the market has faced over the last year. Over the last six months there have been 16 Milago transactions averaging $268/SF. Over the previous 15 months, there were 29 transactions averaging $320/SF. This decrease represents a 16% market decline. During this period, average days on market increased 50% from 75 to 113 and the average discount from listing price increased by one point from 4.5% to 5.5%.
The 15 units sold over the last 6 months ranged in price from $175,000 for a 756 foot one bedroom unit on the 11th floor ($231/SF) to $372,500 for an 1,189 square foot 2 bedroom unit on the 9th floor ($313/SF).
Interestingly enough, the 2 bedroom units have commanded a per-square-foot premium over the one bedroom units over the last 21 months. During this period, 20 two bedroom units have sold for an average price of $368,923 ($309/SF) and 24 one bedroom units have sold for an average of $227,256 ($288/SF) representing a 7.5% per-square-foot premium for two bedroom units. In addition, one three bedroom unit sold in early 2008 for $368 / SF.
Finally, over the last year, 22 of the project's 240 units have sold representing 9% of the building's units. An additional 20 units are currently on the market which is equivalent to 10.9 months of inventory.
The good news for Milago owners is that the units continue to sell at a reasonably brisk pace and are relatively liquid. The large number of transactions means that comparable values have been firmly set making pricing key for sellers looking to move their units . For buyers, it means that comparative analysis from a realtor is key to ensure that you are not overpaying.
During this period, Milago has sold more units on the resale market than any other project . The 46 Milago transactions over the last 21 months provide an interesting microcosm of the downtown Austin market.
The numbers clearly show the challenges that the market has faced over the last year. Over the last six months there have been 16 Milago transactions averaging $268/SF. Over the previous 15 months, there were 29 transactions averaging $320/SF. This decrease represents a 16% market decline. During this period, average days on market increased 50% from 75 to 113 and the average discount from listing price increased by one point from 4.5% to 5.5%.
The 15 units sold over the last 6 months ranged in price from $175,000 for a 756 foot one bedroom unit on the 11th floor ($231/SF) to $372,500 for an 1,189 square foot 2 bedroom unit on the 9th floor ($313/SF).
Interestingly enough, the 2 bedroom units have commanded a per-square-foot premium over the one bedroom units over the last 21 months. During this period, 20 two bedroom units have sold for an average price of $368,923 ($309/SF) and 24 one bedroom units have sold for an average of $227,256 ($288/SF) representing a 7.5% per-square-foot premium for two bedroom units. In addition, one three bedroom unit sold in early 2008 for $368 / SF.
Finally, over the last year, 22 of the project's 240 units have sold representing 9% of the building's units. An additional 20 units are currently on the market which is equivalent to 10.9 months of inventory.
The good news for Milago owners is that the units continue to sell at a reasonably brisk pace and are relatively liquid. The large number of transactions means that comparable values have been firmly set making pricing key for sellers looking to move their units . For buyers, it means that comparative analysis from a realtor is key to ensure that you are not overpaying.
Austin: 3rd Best City for Development
November 19, 2009 21:42 Filed in: News
From my perspective, it is always great for Austin to be included in a top five list that includes San Francisco, New York, Boston, and Washington DC.
This week the Urban Land Institute, a 2,000 member not-for-profit real estate and developer network, released its list of the 5 cities for development in 2010. In order, the Institute's analysis recommends Washington DC, San Francisco, Austin, Boston, and New York.
The report provided the following rational for picking Austin as the #3 city for development:
Austin, Texas: A growth bastion, Austin’s low state taxes and a pro business environment are expected to contribute to future growth and continuing corporate relocations. Austin fits the “brainpower” model with its state capital, large state university, and offshoot tech and software businesses.
While not everybody is looking for another wave of downtown development at this point, the report does bode well for current downtown condo owners. As the institute analyzes major markets, it is clear that Austin's strengths include a dynamic economy, consistent population growth, and a community that attracts businesses and entrepreneurs. And where there is growth and economic strength, home value increases are likely to follow.
This week the Urban Land Institute, a 2,000 member not-for-profit real estate and developer network, released its list of the 5 cities for development in 2010. In order, the Institute's analysis recommends Washington DC, San Francisco, Austin, Boston, and New York.
The report provided the following rational for picking Austin as the #3 city for development:
Austin, Texas: A growth bastion, Austin’s low state taxes and a pro business environment are expected to contribute to future growth and continuing corporate relocations. Austin fits the “brainpower” model with its state capital, large state university, and offshoot tech and software businesses.
While not everybody is looking for another wave of downtown development at this point, the report does bode well for current downtown condo owners. As the institute analyzes major markets, it is clear that Austin's strengths include a dynamic economy, consistent population growth, and a community that attracts businesses and entrepreneurs. And where there is growth and economic strength, home value increases are likely to follow.
October Surprise: Austin Home Sales Surge
November 18, 2009 22:04 Filed in: News
We reported 9 days ago that downtown Austin condo sales were up 44% year-over-year while prices were down 3%. This was good news but not necessarily indicative of the broader Austin market. Today, newly released MLS numbers show that central Texas existing home sales soared 38% in October with 1,823 houses selling compared with 1,322 a year ago.
While volumes were up, prices were down 5% to $182,000 as a result of a shift in mix to lower priced houses as the demand for inexpensive housing was boosted by the federal tax credit for first-time home buyers.
October sales volumes surpassed October sales in 2008, 2007 and 2006 making this the best October since 2005. The number of homes listed for sale, 8,947, was down 10 percent from a year ago. And pending sales were up 47 percent, with 1,811 contracts waiting to close. Year to date, area home sales are down 11 percent, and the median price was down a very minor 1 percent to $189K.
This is very good news for the Central Texas market and another sign that the worst may be over. That said, the current real estate market remains fragile with low interest rates and tax credits driving mostly low-end demand. For downtown condos, it still remains a buyer's market although the supply of new units priced below $350K is rapidly disappearing. Many reasonable units, however, are still available on the re-sale market.
While volumes were up, prices were down 5% to $182,000 as a result of a shift in mix to lower priced houses as the demand for inexpensive housing was boosted by the federal tax credit for first-time home buyers.
October sales volumes surpassed October sales in 2008, 2007 and 2006 making this the best October since 2005. The number of homes listed for sale, 8,947, was down 10 percent from a year ago. And pending sales were up 47 percent, with 1,811 contracts waiting to close. Year to date, area home sales are down 11 percent, and the median price was down a very minor 1 percent to $189K.
This is very good news for the Central Texas market and another sign that the worst may be over. That said, the current real estate market remains fragile with low interest rates and tax credits driving mostly low-end demand. For downtown condos, it still remains a buyer's market although the supply of new units priced below $350K is rapidly disappearing. Many reasonable units, however, are still available on the re-sale market.
Houston Condo Market Problems
November 16, 2009 22:22 Filed in: Market Analysis
The #1 thing going for the downtown Austin Condo market is downtown Austin. In downtown Houston, where they also have a brand new crop of high rise condos, very few people want to live downtown. In the other neighborhoods where towers have popped up, picky residents can live nearby in larger, less expensive housing.
Here is a summary from the Houston Chronicle:
Even as single-family housing shows signs of momentum, Houston's high-rise condo market remains stalled.
Developers who put up shiny new towers during the boom have filed for bankruptcy protection and others are renting their high-dollar units because they can't sell them.
“In all of our projects, the market is really slow,” said Ben Lemieux of Group LSR, which develops condominium buildings in the Houston area under the name InnerLoopCondos.
Sales and prices of these properties have fallen every quarter over the past two years.
During the last quarter, sales were down 17 percent and prices were off 20 percent compared with the same period in 2008, according to data from the Houston Association of Realtors.
Brokers are quick to point out, however, that Houston is no Miami. There, tens of thousands of high-rise units sit vacant, casualties of the nation's real estate crash.
On Houston's Multiple Listing Service — which doesn't include every building on the market — 486 condos are up for sale.
Unlike other cities whose condo markets cratered after investors bid up prices during the boom, Houston's troubles had other causes.
For one, developers misread demand for this type of housing, said Giorgio Borlenghi, whose firm built two condo towers in Uptown Park before the market began to sink.
He believes there's only demand for about 30 high-end units per year in Houston.
“If you have two or three buildings coming up at the same time, it will take some time to absorb,” Borlenghi said.
Still, not everything that was supposed to be built here was.
Some developers pulled out of the market after trying to pre-sell units — but not until after spending millions on sales centers and lavish parties.
They were encouraged by the city's large population and the amount of wealth created by the energy industry.
But what they didn't realize was that the price of a single-family house or patio home in Houston is often less than a high-rise unit just a few blocks away.
“It's not housing you're selling, it's a lifestyle,” Borlenghi said. “And when you're selling a lifestyle, it's an even smaller market.”
Here is a summary from the Houston Chronicle:
Even as single-family housing shows signs of momentum, Houston's high-rise condo market remains stalled.
Developers who put up shiny new towers during the boom have filed for bankruptcy protection and others are renting their high-dollar units because they can't sell them.
“In all of our projects, the market is really slow,” said Ben Lemieux of Group LSR, which develops condominium buildings in the Houston area under the name InnerLoopCondos.
Sales and prices of these properties have fallen every quarter over the past two years.
During the last quarter, sales were down 17 percent and prices were off 20 percent compared with the same period in 2008, according to data from the Houston Association of Realtors.
Brokers are quick to point out, however, that Houston is no Miami. There, tens of thousands of high-rise units sit vacant, casualties of the nation's real estate crash.
On Houston's Multiple Listing Service — which doesn't include every building on the market — 486 condos are up for sale.
Unlike other cities whose condo markets cratered after investors bid up prices during the boom, Houston's troubles had other causes.
For one, developers misread demand for this type of housing, said Giorgio Borlenghi, whose firm built two condo towers in Uptown Park before the market began to sink.
He believes there's only demand for about 30 high-end units per year in Houston.
“If you have two or three buildings coming up at the same time, it will take some time to absorb,” Borlenghi said.
Still, not everything that was supposed to be built here was.
Some developers pulled out of the market after trying to pre-sell units — but not until after spending millions on sales centers and lavish parties.
They were encouraged by the city's large population and the amount of wealth created by the energy industry.
But what they didn't realize was that the price of a single-family house or patio home in Houston is often less than a high-rise unit just a few blocks away.
“It's not housing you're selling, it's a lifestyle,” Borlenghi said. “And when you're selling a lifestyle, it's an even smaller market.”
New, Less Restricttive FHA Rules for Condo Loans
November 11, 2009 22:44 Filed in: News
In a dramatic temporary reversal of policy, the Federal Housing Administration is giving condo buyers a much-needed break.
Last week, the FHA, the federal agency that insures low-down-payment home loans for private lenders, said it was relaxing its building underwriting guidelines as a way of helping the struggling sector ride out the downturn. The move could help boost sales in condos by making more FHA mortgages available to borrowers.
FHA loans provide qualified buyers an opportunity to purchase units with loans that they would not otherwise qualify for. In particular, FHA loans allow for smaller down payments, often as low as 3% of the purchase price. This month, the rules behind these Federal loans were supposed to change substantially, making many condo projects and buyers ineligible for the first time.
When it comes to downtown Austin, FHA loans are the exception and not the rule. Many new condo developments require deposits and down payments beyond the FHA minimums, diminishing the advantages of an FHA loan. In addition, many units are priced beyond the FHA loan maximum eliminating these loans as a viable financing option. Finally, since the process has always been complex and painful, few projects go through the hassle to be certified.
The new rules - which are temporary - come after more than a year of more stringent standards from lenders, who, after suffering major losses on condos, began vetting and disqualifying condominium projects for purchase loans, regardless of whether home buyers qualified.
The temporary rules are effective for most of the coming year and will help the marketplace transition into a new set of tougher guidelines that bring FHA into closer alignment with the project underwriting practices of Fannie Mae.
Earlier this year, Fannie implemented a slew of new regulations governing condo projects that some claim have strangled the market by stigmatizing condo loans in tough markets such as Florida.
Similar to Fannie regulations, the FHA is also now singling out those markets for special attention by approving projects itself, rather than lenders. Burns said lenders and investors were reluctant and even "scared" to lend money, prompting the agency to step in as a way of calming nerves.
Last week, the FHA, the federal agency that insures low-down-payment home loans for private lenders, said it was relaxing its building underwriting guidelines as a way of helping the struggling sector ride out the downturn. The move could help boost sales in condos by making more FHA mortgages available to borrowers.
FHA loans provide qualified buyers an opportunity to purchase units with loans that they would not otherwise qualify for. In particular, FHA loans allow for smaller down payments, often as low as 3% of the purchase price. This month, the rules behind these Federal loans were supposed to change substantially, making many condo projects and buyers ineligible for the first time.
When it comes to downtown Austin, FHA loans are the exception and not the rule. Many new condo developments require deposits and down payments beyond the FHA minimums, diminishing the advantages of an FHA loan. In addition, many units are priced beyond the FHA loan maximum eliminating these loans as a viable financing option. Finally, since the process has always been complex and painful, few projects go through the hassle to be certified.
The new rules - which are temporary - come after more than a year of more stringent standards from lenders, who, after suffering major losses on condos, began vetting and disqualifying condominium projects for purchase loans, regardless of whether home buyers qualified.
The temporary rules are effective for most of the coming year and will help the marketplace transition into a new set of tougher guidelines that bring FHA into closer alignment with the project underwriting practices of Fannie Mae.
Earlier this year, Fannie implemented a slew of new regulations governing condo projects that some claim have strangled the market by stigmatizing condo loans in tough markets such as Florida.
Similar to Fannie regulations, the FHA is also now singling out those markets for special attention by approving projects itself, rather than lenders. Burns said lenders and investors were reluctant and even "scared" to lend money, prompting the agency to step in as a way of calming nerves.
Exclusive: October Downtown Condo Sales
November 09, 2009 21:57 Filed in: Sales Data
We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for October, 2009. For the fourth month in a row, MLS sales were higher than the previous year's numbers. The most recent numbers suggest that the bottom of the downtown Austin condo market was likely hit this spring. Over the last few months, sales, prices, and price-per-square-foot have all been on the rise.
In the month of October, 13 downtown Austin condo units were transacted on the MLS: 4 more than in October of 2009 with a 5% higher price per square foot. The percentage of asking price remained constant year-over-year at 94%. Average days on market for units that sold came in at a painful 151, a 40% increase over last year and tied for the highest number on record.
As always, the results show the weakness of the MLS. While 13 units sold through MLS, additional units likely sold at Spring and other new projects outside of the MLS. In peak months, we know that dozens of units have been transacted outside of the MLS at projects like Shore, Spring, and 360. As ratio of resale units to units increases, the MLS will begin to show a more accurate picture of market transactions.
Over the last few months, an amazing proportion of sold units have been priced under $250K. This trend started to reverse in October as only 3 units sold for less than $250K v. 6 units in this price band during September. Similarly, 5 units sold for more than $450K including one for $915K in Austin City Lofts and one for $1.37M in the Nokonah. The Nokonah unit sold for $452/sf --- the highest $/SF we have seen on the MLS in more than a year.
All in all, the numbers show renewed strength in the downtown resale market. For the full details, visit the AustinTowers | urbanspace Downtown Austin Condo Market Index.
| Month | Sales | Avg. Price | $/SF | Avg SF | Avg Year | % Ask | ADOM |
| Oct-08 | 9 | $456,839 | $307 | 1,483 | 1991 | 94% | 108 |
Oct-09 | 13 | $444,173 | $323 | 1,376 | 1988 | 94% | 151 |
Change | 44% | -3% | 5% | -7% | -2.54 | 1% | 40% |
In the month of October, 13 downtown Austin condo units were transacted on the MLS: 4 more than in October of 2009 with a 5% higher price per square foot. The percentage of asking price remained constant year-over-year at 94%. Average days on market for units that sold came in at a painful 151, a 40% increase over last year and tied for the highest number on record.
As always, the results show the weakness of the MLS. While 13 units sold through MLS, additional units likely sold at Spring and other new projects outside of the MLS. In peak months, we know that dozens of units have been transacted outside of the MLS at projects like Shore, Spring, and 360. As ratio of resale units to units increases, the MLS will begin to show a more accurate picture of market transactions.
Over the last few months, an amazing proportion of sold units have been priced under $250K. This trend started to reverse in October as only 3 units sold for less than $250K v. 6 units in this price band during September. Similarly, 5 units sold for more than $450K including one for $915K in Austin City Lofts and one for $1.37M in the Nokonah. The Nokonah unit sold for $452/sf --- the highest $/SF we have seen on the MLS in more than a year.
All in all, the numbers show renewed strength in the downtown resale market. For the full details, visit the AustinTowers | urbanspace Downtown Austin Condo Market Index.
Analysis: Downtown Condo Supply & Demand
November 05, 2009 20:12 Filed in: Market Analysis
Over the last ten years, the Austin metropolitan area population has grown by 500,000 people. Over the last three years, 100,000 more people have moved to Austin than have left the city. In 2008 alone, the Austin population increased by more than 60,000 people.
In addition to explaining why it took 50 minutes for me to drive from Round Rock to downtown Austin this evening, this population explosion provides very important context for the downtown condo market. As Will Wynn, the former mayor of Austin, said about the portion of the metropolitan area population living within the city boundaries: "We have 88,000 more people here than we did 5 years ago. Experts predict at least another 75,000 in the next 5 years. And we've got only 400 new downtown condos remaining for sale for the next 5 years. That's right, only 400."
Over the last year, it has been common to hear the Austin condo market referred to as “overbuilt.” This is an easy claim to make: any new unit is an excess unit in a market like this. What is important to note, however, is that it takes three to five years to bring a new project to market. With capital markets frozen, it’s is unlikely that additional projects -- besides those currently under construction -- will hit the market for another five or six years.
This leaves us with the available inventory in projects currently under construction as the total supply for years to come. If you look at the buildings currently rising, projects like the Austonian, BartonPlace, the Four Seasons, the W Hotel & Residences, and the recently completed Spring, there are actually less than 1,000 units currently under construction in downtown Austin. The best estimates suggest that there are approximately 300-350 unsold new condo units in the pipeline for the Austin market. This is the total available inventory for the next half decade. These units will sell out and the market will be tight before new units are able to be funded, planned, and constructed.
It is important to remember that the fundamentals of downtown living remain strong: people are moving to Austin, downtown is being rapidly transformed into the center of the community, and people from across the region are looking at downtown Austin as a great place for a second home. As downtown Austin reaches a critical mass, the downtown migration is likely to accelerate.
While the downtown Austin market is doing better than almost any other market, there is no doubt that there are more units than buyers right now. Especially on the high end, for million dollar units, inventory absolutely exceeds current demand. But the market is turning — the bottom was likely reached in the early summer. Now, we're seeing sales numbers begin to increase. While it is still a buyer's market and deals can be found, this dynamic will not last forever.
The difficulty in adding future downtown condo supply makes it likely that the current condo slump will reverse sometime in the next 6-12 months. Given that many of the most prominent projects are not scheduled for completion until next year, people who want to live downtown will be limited to unsold units in the most recent projects and resale units in other recent projects until that time.
In summary, while it remains a buyer's market -- fundamentals suggest that the market may be nearing an inflection point. For units priced below $500,000, it's probably a good time to take a deal. For units over $500K, and especially units over $1,000,000, idiosyncrasies in the jumbo loan market and reduced demand will create buying opportunities for a while to come. But sometime in the next 12-18 months, it likely that the downtown Austin condo market will sell out completely.
In addition to explaining why it took 50 minutes for me to drive from Round Rock to downtown Austin this evening, this population explosion provides very important context for the downtown condo market. As Will Wynn, the former mayor of Austin, said about the portion of the metropolitan area population living within the city boundaries: "We have 88,000 more people here than we did 5 years ago. Experts predict at least another 75,000 in the next 5 years. And we've got only 400 new downtown condos remaining for sale for the next 5 years. That's right, only 400."
Over the last year, it has been common to hear the Austin condo market referred to as “overbuilt.” This is an easy claim to make: any new unit is an excess unit in a market like this. What is important to note, however, is that it takes three to five years to bring a new project to market. With capital markets frozen, it’s is unlikely that additional projects -- besides those currently under construction -- will hit the market for another five or six years.
This leaves us with the available inventory in projects currently under construction as the total supply for years to come. If you look at the buildings currently rising, projects like the Austonian, BartonPlace, the Four Seasons, the W Hotel & Residences, and the recently completed Spring, there are actually less than 1,000 units currently under construction in downtown Austin. The best estimates suggest that there are approximately 300-350 unsold new condo units in the pipeline for the Austin market. This is the total available inventory for the next half decade. These units will sell out and the market will be tight before new units are able to be funded, planned, and constructed.
It is important to remember that the fundamentals of downtown living remain strong: people are moving to Austin, downtown is being rapidly transformed into the center of the community, and people from across the region are looking at downtown Austin as a great place for a second home. As downtown Austin reaches a critical mass, the downtown migration is likely to accelerate.
While the downtown Austin market is doing better than almost any other market, there is no doubt that there are more units than buyers right now. Especially on the high end, for million dollar units, inventory absolutely exceeds current demand. But the market is turning — the bottom was likely reached in the early summer. Now, we're seeing sales numbers begin to increase. While it is still a buyer's market and deals can be found, this dynamic will not last forever.
The difficulty in adding future downtown condo supply makes it likely that the current condo slump will reverse sometime in the next 6-12 months. Given that many of the most prominent projects are not scheduled for completion until next year, people who want to live downtown will be limited to unsold units in the most recent projects and resale units in other recent projects until that time.
In summary, while it remains a buyer's market -- fundamentals suggest that the market may be nearing an inflection point. For units priced below $500,000, it's probably a good time to take a deal. For units over $500K, and especially units over $1,000,000, idiosyncrasies in the jumbo loan market and reduced demand will create buying opportunities for a while to come. But sometime in the next 12-18 months, it likely that the downtown Austin condo market will sell out completely.
Exclusive: Strong October & September Downtown Condo Sales
November 02, 2009 22:05 Filed in: News
In the year between the summer of 2008 and the summer of 2009, a typical month saw 8 downtown condo sales captured in the Austin MLS. In four of those months, only 4 units sold. In the best month, 13 units sold.
All of this has changed in the last two months. Between September 1 and October 31 -- a two month period -- 28 downtown condo units ranging in price from $110K (Greenwood Towers) to $1.4M (Nokonah) were sold according to the MLS. In September alone, 15 units sold during the month. This is the second highest number we have seen in the history of the index --- second only to the 22 units sold in April, 2008 during what was probably the market peak.
During the last two months, units have sold in a broad range of existing buildings including Greenwood Towers, 1700 Nueces, Railyard, Milago, Brown Building, 360, Shore, Westgate, Plaza Lofts, Brazos Lofts, Nokonah, 5 Fifty-Five, and Austin City Lofts -- an amazing cross-section of the downtown market.
While a handful of units sold for more than $500K, it should be no surprise that many of the units sold in lower price brackets. In fact, 17 of the 28 units sold for less than $300K and, amazingly, 8 of the units sold for less that $200K.
Here are some of the key statistics on the 28 units sold over the last 2 months:
We'll update the index soon with all of the monthly data through October. . . stay tuned!
All of this has changed in the last two months. Between September 1 and October 31 -- a two month period -- 28 downtown condo units ranging in price from $110K (Greenwood Towers) to $1.4M (Nokonah) were sold according to the MLS. In September alone, 15 units sold during the month. This is the second highest number we have seen in the history of the index --- second only to the 22 units sold in April, 2008 during what was probably the market peak.
During the last two months, units have sold in a broad range of existing buildings including Greenwood Towers, 1700 Nueces, Railyard, Milago, Brown Building, 360, Shore, Westgate, Plaza Lofts, Brazos Lofts, Nokonah, 5 Fifty-Five, and Austin City Lofts -- an amazing cross-section of the downtown market.
While a handful of units sold for more than $500K, it should be no surprise that many of the units sold in lower price brackets. In fact, 17 of the 28 units sold for less than $300K and, amazingly, 8 of the units sold for less that $200K.
Here are some of the key statistics on the 28 units sold over the last 2 months:
| Statistic | SF | Listing $/SF | Listing Price | Sold $/SF | Sold Price | DOM |
| Min | 472 | $189.15 | $115,000 | $180.92 | $110,000 | 1 |
Max | 3,025 | $527.00 | $1,400,000 | $452.23 | $1,368,000 | 600 |
Average | 1,091 | $320.89 | $371,836 | $300.08 | $344,970 | 11 |
We'll update the index soon with all of the monthly data through October. . . stay tuned!