So I've been poking around Austin to buy a property for the last few months. First, I'm frustrated by the fact that Austin has this "non-disclosure" rule whereby sales are not reported and available to buyers. Well, at least realtors can get you MLS sales data right?
Well, there are two things wrong with MLS sales data:
1. It's self reported. That means you are depending on realtors to voluntarily report the prices. They have some fairly powerful incentives not to report the right number which makes me suspicious. (In California where I live all sales are recorded under penalty of perjury at the county recorder. So, even if you sell it to your brother the market knows the price)
2. Lots of people are trying to sell real property without listing it in the MLS. This includes builders and the big realtors. This didn't make sense to me until today. The reason they give is that they don't want to disturb their tenants (by getting the highest price available?) with all those pesky buyers coming around.
Of those two, #2 bothers me the most. In fact, some of the condo buildings downtown don't want to put any of their real prices in the MLS and if you do buy one for less than the publicly listed price, they make you sign a gag clause as part of sale. Now that smacks of market manipulation.
I personally experienced a similar thing with the builders of new homes further out. They will advertise the base price of a home in the MLS and then throw in 100k in upgrades so they don't have to advertise a fully equipped home at the real prices. I'm not sure what they end up putting in the MLS since they aren't advertising a specific home. My guess is nothing.
I also think that they are trying to sell homes in high end areas like Barton Creek as "pocket listings" as well. I've run into several realtors who mention, in hushed tones, that they can show me this or that property which isn't listed and get me a "great deal". This sale, presumably at a lower price, would be hidden from future buyers allowing future sellers to sell to suckers who believe the MLS data. (Go look at see how few sales there are in Barton Creek. That's evidence that sales at 2010's admittedly lower prices are being concealed)
Folks, this a deliberate attempt by the real estate industry to AVOID SETTING NEW COMPS in a falling market. It is an attempt to withhold valuable market information from buyers in order to protect builders and existing homeowners from falling prices. I am convinced of this.
Unfortunately, all of this self serving protectionist behavior serves to decrease investment in Texas real estate.