Understanding Austin Texas Real Estate Statistics
The program hosts and guests on the CNBC network know a lot about the financial world. I often watch some of the shows to see what is happening and to see what I can learn. The terms they use show me how little I know! However, when the Dow is headed up, I know that is in the right direction. If it is going down, I understand what that means also.
Basic real estate language is (for me, at least) simpler than the financial lingo is. Having an understanding of some basic terms can be helpful to both buyers and sellers in deciphering local and other news reports on what is happening in the real estate market. Here are some of the commonly used terms:
List Price: What the seller is asking for his property. The MLS stats table for the Austin Sendera subdivision (Austin Board of REALTORS®, 1.1.09 through 3.31.09) includes data for both the list price (LP) when the home went under contract and the original list price (OLP). It is not unusual in this market for sellers to lower their list price during the listing to attract a buyer.
Sales Price: The amount a home sold for. In Texas, the sales prices of specific properties are not public knowledge, but they can be accessed by your Realtor® to help you decide on a price for listing a home for sale or for making an offer on a home that is for sale. One of these estimates of value is usually called a Comparative Market Analysis, or a CMA. Many Realtors® offer to do a CMA as a free service for homeowners.
Note: For tracking the movement of the real estate market in an area (whether a neighborhood, an MLS area, a city, etc.), some other stats are also used.
$/sq. ft.: How much a home sold for per sq. ft. of living area. Square feet is usually defined by air conditioned space and measured by external dimensions. Garages are usually not included in this calculation. MLS listings typically display the square footage that is in the county tax record. Sometimes the number of square feet in the tax record does not match the actual square footage of the home, and the square feet listed may show the source to be appraiser, owner, etc.
Median Sales Price: The sales price in the middle of the range of sales prices. In this group of numbers [1, 3, 4, 7, 9, 11, 15], 7 is the median. Three of seven homes in Sendera sold for less than $206,700 and three homes sold for more than $206,700.
Average Sales Price: The total of the sales prices of all homes sold divided by the number of homes sold in that period. The time period may be a month, a quarter, etc. In the Sendera table, the average sales price for the 7 sales is $204,243. While other regions of the USA have seen some dramatic drops in property values, those in the Austin area (Sendera included) have held up pretty well. The average sales price can be skewed in a neighborhood when one property sells for far more than others.
Note: Both median and average sales prices are useful for following trends in the Austin real estate market, especially in a particular neighborhood. More specific information is needed to establish the value of an individual home.
Days on Market (DOM): The number of days from the time a home is listed for sale to the day it goes under contract. Both median and average DOM are reported. The graph below, from the Austin Board of Realtors® Feb. ’09 Residential Sales Report, shows that the average DOM in the Austin market has increased to its highest level in recent years. (Based on information from the Austin Board of REALTORS® for the period 1.1.03 through 2.28.09.)
Months of Inventory (MOI): The number of homes available for purchase divided by the number of sales per month (an indication of how long it would take to sell them all). When the data for this blog was collected, there were 21 homes for sale in Sendera. Based on the 2.333 average sales per month in the past quarter, the MOI for Sendera is 9 months. 5-6 months is typically referred to as a balanced market. If the MOI is less than 5, the market is typically a seller’s market. More than 6 months’ inventory is referred to as a buyer’s market. The MOI will vary as the market trends play out. In Sendera in the year 2007, homes sold at an average rate of 7 per month. The MOI indicated that the neighborhood market was then a seller’s market.
Note: the MOI depends on the time period used to view the market trend. The Austin Board of Realtors® uses the previous 12 months of “solds” to calculate MOI. On this basis (58 sales in the past 12 months), Sendera’s MOI would be 4.34 months (21 active listings/4.833 average sales per month). The current market turnover is slower than this, but it should pick up as we enter the main home selling season.
Summary: If you want to sell or are in the market to buy a home, it is best to get as local a snapshot of the market as you can. Why? If you are looking in south or southwest Austin for a 3-bedroom home built after the year 1999, you will have many options. The options will need to be narrowed down to a specific neighborhood, home size, price range, feature set, etc. That’s when a CMA comes in very handy. It will allow you to see what similar or comparable homes have sold for in that neighborhood and what properties are currently on the market there.
Hopefully, these definitions and examples are helpful.
If you are thinking about buying or selling a home in the Austin Texas area, I would like to assist you. You can reach me at (512) 913-1557. 
Jim Gilbert, REALTOR, Heart of Austin Homes. Licensed (#0536692) to sell real estate in the State of Texas.
