Austin Housing Market Cooling Amid Condo Woes

For the last two years, the Austin housing market has been one of the country’s hottest. But analysts say that is changing.

One of the hottest parts about the Austin housing market has been the rise in condos, and there are 100 additional projects slated to take place.

While there hasn’t been a dramatic slowdown in the condo craze, analysts are starting to worry that there may be too many condos, too soon.

Right now, 1,200 units are under construction, but analysts report that the Austin housing market can only absorb about 550 units per year.

Pricing for these condos are matching those in Miami and Chicago.

“Am I concerned? Let me just say, that we’ll keep an eye on it. There’s no doubt in my mind, there’s just so much that could come on the market. If they all came on the market, there could be 7,500 units,” said Mark Sprague with Residential Strategies.

That is, of course, why they don’t all come on the market at the same time.

It bears mentioning for the Texas mortgage seeker, though:

If you’re looking to buy a condo, make sure you find out how many investors are purchasing in that building. They can create a false sense in the real estate market that buildings are selling out.

According to analysts, the condo market is going to continue to be hot. You’ll be seeing multi-family home units, where units are attached, coming on the market as well.

In the meantime, the number of homes being constructed has slowed down since this time last year.

“One of the things we’re seeing now is the national picture is causing the market to slow down dramatically here,” said Sprague.

Homes that were appreciating at a record rate are slowing down.

This has led to construction of new homes falling by 35 percent since this time last year, in places such as Leander, Kyle, and Hutto.

Sprague said that it is “plateauing.”

“If we hadn’t had that surge this time last year, we wouldn’t be going ‘Oh the market, what’s happening to the market?’ It’s just a natural occurrence,” said Sprague.

Some call it the trickle-down effect from California.

That’s where homeowners were selling and getting record profits, and in turn are buying in the Central Texas housing market.

“Those buyers are not as aggressively purchasing anymore,” said Sprague.

This is causing the housing market to slow down.

“Is it now the time to sell your house?” said Sprague, “If you can hold your house, I would sit on your house for a couple of years. It doesn’t have rapid appreciation, but it’s still worth more than it was two or three years ago.”

The problem for buyers is getting a home mortgage, especially first-time home buyers. Lenders are backing away from the very popular interest-only loan.

“It’s now the time to get into an entry level house, it’s going to be harder and harder to qualify,” said Sprague.

In fact, 25 percent of buyers who purchased a home in January 2006 would not qualify for that home mortgage loan today.

Most Texas home loan products are used for homes priced around $200,000. The national foreclosure rate is up sharply, as one out of every 92 homes is now a foreclosure.

However, if you can qualify, the market is favoring buyers.

“Now is always time to buy, because as you know, values never get any cheaper,” said Sprague.

SOURCE: KXAN-TV