2008 Downtown Condo Property Assessments: Shockingly Modest Growth

This week, Travis County posted 2008 property tax assessments. Across the City of Austin, the assessed value of the average single-family house increased by a significant 12.82%. This is a big jump during a period during where actual property values seem to have increased only modestly.

With the new assessment data available online, AustinTowers analyzed Hundreds of downtown condo units in projects such as the Nokonah, Plaza Lofts, and Milago to better understand the current downtown valuation trend. Because units are easy to compare and some sell each year, city assessments for condo units in large projects tend to be relatively accurate.

With the new assessments, we found that values increased by an average of 3% for most of the established projects lie the Nokonah and Plaza Lofts. For newer projects such as the Milago, values increased by a higher rate — closer to the City average of 13%. In the newer projects, it was the least expensive units — those that were valued under $300,000 last year – that showed the greatest increase this year with some units increasing in value by as much as 40%. Conversely, some of the most expensive units in the Milago — which is not a high luxury property — saw values remain flat or even dip slightly.

None of these trends are unexpected, here is the summary analysis of this year’s downtown Austin condo assessments:

– Demand remains strong for affordable units. As construction costs rise, very few affordable condo units are coming on the market. As a result, the value of the least expensive units is rising quickly. Condo units priced under $250K should continue to see appreciation.

– As new high-end projects such as the Austonian, the Four Seasons, the W, and 21c capture the imagination of buyers, prices for the old generation of luxury units have remained relatively flat. Prices for high-end units in non-luxury buildings have declined.

– The broad downtown Austin condo market lagged the City as a whole with small increases of around 3% as supply and demand became more balanced during the year.

– This is the second consecutive year of modest increases in downtown Austin condo values after a sharp rise between 2003 and 2006. During this peak period, for example, values in the Nokanah increased by an average of nearly 70%. Last year, Nokonah values increased by a much smaller 5%.