Austin Home Prices On the Up

The local housing market continued its rapid growth last month, increasing over 30% versus the same time last year. Coupled with the slowly rising mortgage rates, Austinist thinks this is potentially bad news for those looking to buy a place in town. From the Austin Business Journal:

Keeping in step with an Austin housing uptick, October 2005 single family home sales jumped almost 30 percent over the same period last year. According to the Austin Board of Realtors, the Austin market saw 1,999 single family homes sold -- an October sales record. Homes sat on the market an average of 67 days, about 13 percent less time than last year. Single family properties sold for a median price of $160,650. The number of active listings fell 17 percent to 7,654.

Consider our first-hand experience: last month we went to check out a condominium off of Kinney Ave, less than a half-mile in back of Flipnotic's. The then-going rate for a 1100 square foot flat was roughly $150k, which for the proximity to downtown and neighborhood was fairly reasonable. Three days ago, a slightly larger but mostly similar unit went on the market in the same complex - at an asking price of $40k more! Is that a reasonable jump for, say, four weeks? Hardly. We're guessing that the allure of living in South Austin, the current shortage of interesting properties and the huge influx of people from the coasts (New Orleans included) are all contributing to this housing bubble.

Is it about to burst?

Traditionally, when mortgage interest rates increase there is a corresponding decrease in housing prices -- it's one of the few means of leverage that homebuyers can count on. The fact that the market hasn't corrected itself at this point leads us to assume things are headed for the worst. But of course, we're amateurs at this game.