OK. We did the math. Below is DAB’s analysis of the inventory of condos in Downtown Austin.
776 residences were delivered in 2008
670 +/- units have sold
106 unit surplus.
This is a net absorption of over 600 units in one year. The 360 Condominiums has only 2 units left.
789+/- units under construction in downtown Austin
+/- 350 of the 789 units are under contract
545 +/- units remain in downtown through at least 2013.
There are no projects coming online that are not already under construction. It takes 2-3 years to build a project and it is unlikely a developer will get construction financing for another 12-18 months.
To put things in perspective, Miami area is delivering approximately 60,000 high rise condominiums during this development cycle. Miami MSA is approximately 2,387,000 people. That is a ratio of 1 condo for every 40 Miami MSA residents.
The Austin area is delivering approximately 1565 high rise condominiums during this development cycle. Austin MSA is approximately 1,600,000 people… that is a ratio of 1 new condo downtown for every 1,022 Austin MSA residents. A single project in downtown Miami is larger than the entire number of units being delivered in downtown Austin over a 6 year period!
charles, that’s ludicrous. Like us, Florida has no income tax. They do have a fairly high sales tax, which benefits them more than us since they levy it on tourists (who also pay other assorted taxes while visiting that locals largely escape).
The only ‘development’-related ‘taxes’ are impact fees, which most people would regard as eminently fair anyways (they tend to slightly discourage suburban sprawl by making sure the prospective new residents pay a chunk of the cost they impose rather than making current taxpayers pay the full bill).
Comparing Austin’s condo market to Miami’s is truly apples to oranges. Nevermind that the real estate apocalypse in Florida started in 2005 (shhh, don’t tell anyone) but you had 22,000 *empty* condos in downtown Miami at one point in 2006. And they were still developing a ludicrous rate.
It should also be mentioned that Florida has no real source of tax revenue other than from development. This is why the Florida Legislature is the best leg that developer money can buy. Gov Bill Crist just signed a bill that has developers dancing the aisles of the leg and environmentalists scratching their heads and wondering where they went wrong.
I hope Austin can be smarter. Sounds like it might be.
There is one unaccounted for figure. The number of these that will be up for resale at the 12 month period, when the first wave leases are up and the sales restrictions go out.
I know there were supposed to be investor/rental limits on these units, but in reality they could never be enforced. A person only needed to track the amount of rental adds for the 360, milago, the shore and others to see the truth. A large portion of the sold units are rental/investor units and will be up for sale. In addition a large portion of the units sold still have not closed several years later now and sit unoccupied. When these eventually fall through, there will be a glut on the market of homes that sold at the time of completion, but only 12 months later are right back on the market. Not to mention that many great properties are offering between 10 and 40% off of the sales price now.
It’s still to early to see what the actual market prices will be for these units. No doubt in 10 years all of them will be nicely valued, but in the first five years after completion of construction, we will see corrections.
Thanks for the information in this post and, in general, for a great blog. It’s good to see real numbers and real data. It’s interesting to contrast your results with the comments on any Statesman article having to do with downtown condos since these comments almost exclusively (and gleefully) predict an implosion of the downtown market . . . without any real data or analysis.
The one followup question I would have for you is can you compare the Austin condo ratio with those in Houston or Dallas? It would seem that these markets are closer in building culture than Miami. I wonder if Austin would still be ‘under-represented’ in downtown condos compared to Houston or Dallas.
Again, great article except I think you forgot to carry the 1 in your equation on the board. Ha!
Nice post. Another interesting comparison: there are over 10,000 single family homes listed for sale in Austin right now and there were around 8,000 single family homes built in Austin last year. The condos get a lot of publicity, but the housing glut in Austin is single family houses, not condos.