Home values in the Doss attendance zone for the 1st quarter of 2018

Where does the time go?  It seems like just yesterday we were wrapping up 2017, and here we are at the end of the 1^st quarter of 2018.  

Here’s a quick look back at our overall neighborhood real estate activity in 2017, as well as a deep dive into the 1^st quarter of 2018.  For purposes of this report, we focused only on the part of Northwest Hills that feeds into the Doss Elementary attendance zone. 

SALES ARE UP

Only three months into the year we’ve already sold more than half the number of properties as were sold in 2017.  As of the beginning of April, another 18 single family homes are under contract, with 10 of those going under contract their first week on the market.  Another 13 condominiums and townhomes in the Doss area were pending at the start of April, with 7 of those under contract the first week.  It looks like we are on track for a banner year of home sales in the ‘hood.

PRICES ARE DOWN

And while overall sales are up, so far this year prices for single family homes are down compared to this same time last year.  Keep in mind that of the 11 single family homes that sold this quarter, 6 were fixer-uppers, which drives the average sales price down.  Long-term, the average sales price for single family homes is actually up 40% the last five years, with the average sales price climbing from $564,538 in January 2012 to $789,190 in December 2017.   

A SHIFT IN HOME TYPE

Also notable is a shift in the types of properties that are selling in the part of Northwest Hills that feeds into the Doss Elementary attendance zone.   

In recent history single family home sales outpaced other types of housing in the neighborhood.  That is changing as we see an uptick in condominium sales this first quarter.  We’ve been following Northwest Hills closely for years, and this is the first time we remember condominium and townhome sales outpacing single family homes.  But why? 

First off, affordability.  Condominiums and townhomes are filling the gap as home prices in our neighborhood continue to rise.  The lower prices of the condominiums and townhomes are attractive to those that want a strong school zone at a lower cost (at least, lower compared to other choices in Central Austin).  Plus, our neighborhood is ideal for those that want to be close to downtown or the Domain.  We’ve had a couple of buyers this year that chose condos in our neighborhood because they want to skip the long commute and were looking to the future of their children’s education.  

Second, lack of inventory.  We don’t attribute the increase in condo sales to a lack of interest in single family homes.  Rather, we believe it’s a result of our lack of inventory – specifically a lack of homes that are updated with reasonable quality.   In this quarter alone we personally had two clients choose homes in Westlake over Northwest Hills (one for $1.2 million and the other $1.4 million).  While both clients preferred Northwest Hills, both families could not find homes in our area that fit their needs.  In today’s market most clients are looking for something that is updated and move-in ready.  Food for thought if you are thinking of selling your Northwest Hills home this year. 

WHAT’S SELLING?   

Single family homes in the Doss attendance zone that are nicely updated and in move-in ready condition start around $775,000 and are quickly headed to $800,000.  That’s around $300 – 355 a square foot. 

Condominium sales in the Doss area are hot.  Eight of the 13 condos for sale went under contract within 5 days of being on the market.  Prices for these properties ranged from $170,000 for a 1 bedroom with 717 feet close to Epoch Coffee all the way up to $674,900 for one of the 2,400+ square foot units at The Bluffs with downtown views.  In turn, townhomes are ranging in price from $339,500 (at Chimney Corners and sold in 8 days) to around $437,000 (at the North Hills Club Townhomes and sold in 30 days).

Highs & lows

Of the 11 single family homes that sold in the Doss attendance zone so far this year, two of them were priced over $1 million.  One of them was just two bedrooms (yes, you read that right), but it was incredibly well done with amazing sunset views.  This quarter’s least expensive home sold before it ever went on the market.  That one was a fixer upper on Laurel Ledge that sold for around $400K.  

The economics of where we are headed

Given the age of most of the homes in our neighborhood, the economics of fixer upper properties – like the one on Laurel Ledge -- is useful in forecasting where our local neighborhood market is headed.  Consider this generic example.  Fixer uppers that are approximately 2300 square feet will sell for around $500,000 - $550,000.  Depending on the level of updating done, it’s going to cost around $200,000 to modernize these properties, especially if it includes replacing the cast iron plumbing and doing complete bathroom and kitchen remodels.  Last year’s data tells us that these single family homes sold for $690,000 - $720,000 or around $300-$320 a square foot once they are updated.  That’s not a lot of margin for a seller… 

If we look at that same example from the perspective of a builder or a buyer, it can be more economical to purchase the home for lot value, then build a larger 3,500 square foot home in its place that will likely sell for closer to $1.2 million.  To be clear, we’re not advocating this approach, but it points to the likely direction our neighborhood is headed. 

For now, however, we expect to see a high level of real estate activity in Northwest Hills through at least June.  If past real estate patterns hold true, we will start to experience a normal seasonal slowing in the 3^rd and 4^th quarter of the year.  And remember, these are just stats.  Every house is different, and every sale is unique.  Please reach out to someone with extensive experience in the Central Austin market to consider how this data can impact your personal situation.      

LIKE WHAT YOU READ?  LET’S TALK. 

We live and work in Northwest Hills, and you’ll likely see us at the morning Doss drop off.  We’d love to grab a coffee with you.  We can discuss the perils of cast iron plumbing and aluminum wiring that’s so prevalent in our neighborhood, go over the three steps that sellers should take to optimize their sales price, or just shoot the breeze.  Either way, we’re looking forward to it.  Schedule a consult now. 

© Homesville Real Estate 2018