Part of the explanation for the low starts is that 2008 ended with a lot of finished inventory that builders needed to sell. The good news acccording to Mark Sprague with Residential Strategies Austin is that
“builders have cut back on starts and focused on selling this inventory in the 1st quarter”.
Quarter 1 closings fell to 2,145 units, a 31% decline from the first quarter of 2008. The Central Texas housing market remains healthy compared to other parts of the country with a 5.3 month inventory of new homes compared to a six (6) month supply which is considered balanced.
The first quarter median price for a new home in Austin was $220,876, up 7% from 2008.
Because starts are down, homebuilders have reduced the number of new lots they are developing. As a result the market runs the risk of a shortage of lots as the economy begins to rebound. Terry Mitchell, a local developer believes that this could occur in one year to 18 months from now.
PMI Mortgage Insurance Co.’s first quarter 2009 economic and real estate trends report lists the Austin metropolitan area as the 17th most stable housing market among the nation’s 50 largest cities. As a result the Austin housing market is at “low risk” for a home price correction. All four of Texas’ other major cities are in the top ten of the list.