Texas Hill Country Blog

MORE MARKET UPDATES FOR 2010
July 30, 2010

 When real estate prices are going up there are two areas where you see more inventory come on the market:  city lots & rural developments.  A supply and demand issue.  When slow markets begin to turn to   better markets there is typically not enough inventory for the demand of new homes or real estate for those people who have been saving their money in the slower economy. 

Fredericksburg & Gillespie County experienced a lot of new city developments and single family rural subdivisions coming on the market over the past ten years with a number of these being developed as late as 2006 and 2007.  The economy was already showing signs of a slowdown by 2007, even more in 2008, then finally the low point in 2009.  Thus far in 2010, it is looking to be a better year; obviously, we’ll know more when the year is over.

Lot inventory remains high in the city of Fredericksburg although the Months of Inventory is lower.  This lower number is because certain developments have not put their properties back into the “MLS” even though the lots remain for sale.  We could give you the data that unit sales for lots is up a strong 27+%, but the real story behind this is only 8 lots sold in the city of Fredericksburg in 2009 and only 11 have sold thus far for 2010 thru June.  The long term comparison is to the high year in lot sales with 53 lots selling in 2006. 

The building community is feeling the pinch in the market as much as anyone.  There is very little ‘spec’ building taking place with the amount of home inventory available to buyers.  There is currently  16 plus ‘brand new’ homes for sale in Fredericksburg.  Home builders are not financially in a position to speculatively build a home “hoping” it will sell, when all indicators show the number of homes on the market and the time it is taking them to sell.

Another aspect of the lot market is that Fredericksburg is still a retirement community to many of our buyers.  These buyers are coming from other markets in Texas or out of state and they must sell before purchasing here. 

At this time, there is no new city lots being developed.  Lenders watch these same statistics and they aren’t willing to put money out when inventory is at high levels.  In typical real estate fashion, the day will come when lot inventory will again be low and the demand will be stronger.

Rural Tracts in the Gillespie MLS are those   properties that are located in a platted development and  typically range from 2 to 20 acres, although they could be larger.  Rural Tract sales in 2009 and 2010 mirror the lot sales mentioned above.  Months of Inventory was lowered because sales were just slightly higher and   inventory didn’t increase much either.  The high year of tract sales was in 2007 with 45 units compared to 13 in 2009, and 14 in 2010.

Just like lot developments, Gillespie County had a large number of rural developments come onto the market beginning in the late 1990’s.  In a good  economy people tend to move away from town getting a small of piece of the country for peace and enjoyment.  As the economy turns and slows, typically people stay closer to the town because in an overall sense the cost of living is somewhat less. 

 More on ranches next week.    

GILLESPIE COUNTY YEAR TO DATE 2010
July 23, 2010

The positive news is that sales are up over last year in Gillespie County.  The number of sales is up over 17% and the dollar amount is up almost 30%.  This shows that our local market is stable and up to now has been able to withstand the downside impact of the rest of the country. There are two underling reasons for the numbers to be up and stable: one is fewer new properties are coming on the market.  This means some sellers are waiting out the market until it gets better or they may be aware that there is too much competition in the price range of their property.  Second  the total number of active listings is 5% less than this time last year, which ties into both sales and fewer new listings.Residential homes are still the strong point of the  local overall market.  Homes account for over 50% of the total dollars.  People always need housing.  There are over 300 homes for sale in Gillespie County.  Nearly 50% are out of town on acreage and these homes usually sell for a higher price.  The overall average sales price for homes in town dropped 10% year over year in 2010.  This further shows that more homes out of town sold in 2010 thus far and for a higher average than last year.2009’s Inventory of Homes in town stood at slightly over one year which means if no more homes came on the market, it would take one year for all homes currently for sale to sell.  In 2009 there was a 5.4 year supply of Homes Out of Town.  This number has dropped to a more manageable 12 months.  This was brought about by some homes selling and some seller’s taking their homes off the market.For now, we remain in an price driven market where the majority of homes selling are those under $300,000.The rest of the story on the residential market is that we are not near the “high sales years” on homes in or out of town.  Our report clarifies that sales are up over 2009, but we are 40% below the highs of 2006. 

One point that we have noticed during the forty-five years of Fredericksburg Realty’s existence is that when times are good people tend to move onto acreage, and when times are bad, they tend to move back to the city.

There are sellers who keep hoping for the market to come back.  Even though the new listing and active listing inventories have reduced, there is still too much inventory and too few sales for us to reach the levels of 2006 and 2007.  When the months of inventory is around the area of 6 months, we will experience a very stable residential market.  We are only half way there. 

THE UPS, DOWNS, & SIDEWAYS OF OUR REAL ESTATE MARKET
July 13, 2010

The Gillespie County Multiple Listing Service serves the real estate industry in Gillespie, Blanco, Mason, Llano, Kimble and Kerr Counties.  This service is computer oriented so that all listings in the system are available to all member agents.  Because of the immense technology available to the industry a lot of data can be viewed and studied both in current Listings and past Sold properties to determine market conditions.

The data used here was complied showing results from the first six-months of 2010 in comparison to the same time period for the past six years.  Many people know the market was at an all time peak in 2006 with nearly 400 unit sales that accounted for $62,000,000.  After the financial crises on Wall Street, 2009 was the new low point with just 212 unit sales accounting for $29,000,000 in sales.  Many of the analysts watched on television seem to always try to put a ‘positive’ spin on the market by giving you year over year or month over month data.  Today the public is much smarter than they are given credit for.  Everyone wants to know the story behind the data so hopefully we can give you this as we look at the 2010 market and where things are.

We have preached that one of the problems in real estate here and nationwide is the amount of inventory or current listings for sale.  Year over year the local MLS shows that there is approximately 1550 properties for sale.  While that number isn’t much over the 1501 for 2009; it is nearly double that of the low in 2005 of 802 properties.  Sales were booming in 2005, 2006, 2007 before the slow down came.  This means many properties were selling within days or weeks of coming on the market.  This kept the market active, prices stable, even causing prices to go up as demand was stronger than supply. 

The opposite comparison to this category is too study Sold properties.  For 2010 260 properties have Sold year to date.  Compare this to 399 Sold properties in 2006.  In 2006 a property was selling for every two on the market.  Today, one is selling for every 7.4 on the market.  This creates selling pressure on serious sellers.  If you want your property to sell, you must be very competitive on price.  In the New Listings Category, 282 new listings came on the market from Jan. 1, 2008 through June 30, 2008.  During that same time in 2010, 437 new listings came on the market.  The 437 is actually under the 2009 of 528 which could be showing that some excess inventory is being removed, but the numbers are nearly 25% over 2008 while sales are down just about that same amount creating a 50% disparity.

The positive part observed in the above is that inventories have leveled and in some cases even come down.  There is still too much inventory, but positive signs are out there, unit sales are up.  Real Estate is cyclical; it has always been this way.  Markets go up for 6-7 years, they go down for 6-7 years, and they remain stable for 6-7 years.  We are in the down market now.  With the lowest interest rates of all time, one might expect better sales activity; however, there is a lot of caution at the moment.  When people are unsure, they stand still.

60% of the sales data in the categories discussed  from the MLS is from Gillespie County sales, next week we discuss the numbers in our county.

Enjoy your summer,

Sherman D. Durst

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