WHEW…
In May, we saw at least four articles suggesting that more downtown Austin buildings are forthcoming: Block 51, Austin Energy building on West Ave, City planning a new parking garage, State capitol considering more density. We haven’t seen that many speculative media reports about downtown development since 2006.
We’ve been hammering the point that there is no more new inventory under $400 per foot. It’s gone. But, don’t get caught up in the hype about new construction, at least not yet. Even if the data suggests that there is capacity for more new attainably priced product (2bds/2ba+ for under $400k), the capital markets aren’t racing to provide financing.
Conversely, there’s a robust resale market working like a well oiled machine. The difference between average asking price and average sale price is shrinking. Last month, across 22 transactions, this spread was ~4%. Timid buyers and sellers should take confidence in this stability. To drive home the point even further, we witnessed at least two bidding wars last month. Many buyers are longing for the days of 2008 and 2009 when 25-30% discounts were being offered.
Area “DT” – MLS defined market area for downtown Austin – has such diverse product that average numbers cannot be used without qualification. For instance, it is necessary to qualify the age, location, and level of amenities when comparing Cambridge Tower to 360 Condos. ($226psf vs. $385psf, respectively)
Average price for area DT was $283.91 per foot, based on data collected from 22 transactions recorded in May. That is down from May of 2009 when pricing was $303 per foot across 13 transactions; however, the spread between list price and sale price in 2009 was closer to 10% – much more volatile.
The MLS data does not include private developer sales (Spring, Austonian, W Hotel, Four Seasons). Multiple sources have shared with us that the W entered into approximately 10 deals in May, and will not accept offers with more than a 5% discount. The Austonian recieved their certificate of occupancy and is planning it’s first closing next week. No news from the Four Seasons.
Registered DAB subscribers may access the complete May 2010 transaction report.
-Jude
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