2008 Austin Real Estate Market in Review

Residential in Review

Housing typically leads Real Estate Recovery with Commercial following. Here’s a look at the Fourth Quarter of 2008 as well as 2008 Totals to provide a glimpse at the Austin Residential Market.

Residential – New Homes Residential Strategies, Wednesday, December 31, 2008 Press Release

  • New Home Starts
    • 4Q08 – Builders started 1,459 new homes, 51% less than in 4Q07.
    • 2008 Annual – Starts fell below 10,000 to 8,987, compared to 13,624 in 2007, down 34%.
  • New Home Closings
    • 4Q 08 – Builders closed 2,289 new homes, compared to 3,259 closings in 4Q07, down 30%.
    • 2008 Annual – Closings totaled 10,933, compared to 14,809 in 2007, down 26%.
    • Finished Inventory totals a 2.9 month supply (2.5 months is considered optimum).

Residential – Resales Real Estate Center Texas A&M

  • Resale Closings
    • 4Q 08 – MLS reports closings of 3,922, compared to 5,486 in 4Q 07, down 29%.
    • 2008 Annual – 20,199 total homes were sold, compared to 25,151 sales in 2007, a 20% reduction.
    • 2008 ended with a 5.4 month inventory of houses, compared with 4.2 at the end of 2007.

Developed Residential Lots Residential Strategies, Wednesday, December 31, 2008 Press Release

  • 4Q 08 lot supply = 31,306 units, 218 units less. First lot supply decrease in (2) years. Starts are now outpacing lot deliveries.
  • The current lot supply stands at 42 months. 24 months is considered equilibrium.

2008 Commercial in Review

Retail led the Austin Commercial Market in 2008 with Office & Industrial #’s down from 2007. Here’s a look at 2008 in review.

Office Office vacancy rose to 19% overall in 2008 up from 14% in 2007 according to Oxford Commercial. 3.6 mil SF of new inventory contributed to this additional vacancy.

The office market is expected to remain flat through the first quarter of 2010. Vic Russo with Oxford Commercial expects that much of the vacant space will be taken by relocations to the area and not from local expansion.

Retail (Austin American Statesman 1/17/09, by Shonda Novak)
The Austin Retail market finished 2008 with 93% occupancy, the highest rate in the state.

New retailers for 2009 include Sprouts Farmers Market, Newflower Farmers Market, Nordstrom Rack outlet center and Buy Buy Baby a subsidiary of Bed Bath & Beyond.

Jeff Townsend with Endeavor Real Estate Group forecasts that it could be 1.5 – 2 years before we see any new retail construction.

According to NAI Austin, year end vacancy was 18% which came close to but did not surpass the high tech bubble years of 2002-2004 when vacancy was @ 21%.

However, the number of SF absorbed was at its lowest annual total since 2005.

Absorption is expected to remain flat in 2009.

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