There are confusing signals about whether the Austin real estate market has fully recovered from the recession. Although prices appear to have largely stabilized, I believe we’re another 12 to 18 months from seeing renewed appreciation in residential values. Financing is still tough to get; the government incentives ran out in April; and there is a steadily increasing [number of] owners who are waiting for signs of improvement to list their properties. This pent-up supply will keep values in check until the supply is absorbed by increased demand. And although the larger national economy is slowly shrugging off the recession, the stock markets and employment situation remain extremely volatile.

How does Austin’s real estate market compare with other U.S. cities?

Although it’s been a rough few years, Austin was among the least-battered of all real estate markets since the financial crisis of 2007 for three reasons: We didn’t experience the overheating other markets experienced, keeping housing affordable to the majority of Austin residents. Texas limited homeowners’ ability to take out home equity loans to 80 percent of their properties’ values, which prevented homeowners from over-extending themselves. Austinites’ focus on patronizing local small businesses — the Keep Austin Weird campaign, for example — has kept a lot of local residents’ money in our city, as opposed to being shipped off to a corporate parent somewhere. This local focus has helped to keep our economy and property values propped up during the recession.

What residential property types are selling best?

Entry-level homes and first-time move-up homes, priced from $120,000 to $250,000, are selling the quickest. The federal tax credit that expired April 30 was an excellent stimulus for homebuyers, so a lot of well-qualified first timers were able to purchase. But most properties over $300,000 are still a relatively tough sell, and property sales over $500,000 are anemic, as jumbo loans are still expensive. Interestingly, a relatively large number of homes in the $1 million range have traded hands recently in all-cash transactions.

Which Austin submarkets are strongest?

South Austin has been a tremendous success story over the past three years. Prices in most neighborhoods have not lost any value, and several continue to appreciate. As the flight from the suburbs has intensified and an increasing number of amenities are located near downtown, people are realizing that South Austin is close to the activity, and the well laid-out roads allow for access to downtown in just a few minutes from most neighborhoods. Key Central Austin neighborhoods, such as Hyde Park, Tarrytown and Travis Heights, continue to hold their value, though the higher-priced homes in these neighborhoods are still selling slowly.

Which submarkets are weakest?

Luxury homes by the lake and in generally far-flung suburbs have taken the largest hit, and many spec builders in this niche have given the homes back to the bank. Suburbs in general, particularly those in the eastern and far northern parts of Central Texas, have taken a big hit, as many of these entry-level buyers used subprime loans and could not afford their mortgages. There is a national trend towards living closer to downtown areas, and Austin is no different. As long as gas is expensive and this trend continues, the farther suburbs are bound to continue suffering.

What trends are you seeing in the market that have surprised you?

Recently, I have been disappointed to see the extent to which activity has fallen off since the tax credit expired in April. My feeling was that the momentum from earlier this year would continue into the summer. Unfortunately, to date, it has not, and we’re looking at a slow summer. I have also been pleasantly surprised to see how little distressed property sales have negatively impacted property values in Central Texas. In 2008, there was a lot of doom and gloom about what would happen to values. But as the dust has settled, it looks like the area may lose about 10 percent or less off its peak.

Has foreclosure impacted the Austin area? Are there opportunities to buy foreclosures?

We’ve definitely seen our fair share of short sales and foreclosures, particularly in the suburban areas referenced above. But such sales remain a small percentage of our overall sales — less than 15 percent. In some markets, such as Phoenix and Las Vegas, short sales and foreclosures represent a stunning 80 percent of all home sales. Because we’ve weathered the storm fairly well, only a few neighborhoods have taken a significant hit due to distressed sales. Savvy buyers can and are buying foreclosed properties at prices as much as 10 percent off neighboring comps. But we strongly recommend to clients to only make offers on properties once they have already been foreclosed on by the bank. Trying to buy a short sale, or at the auction itself, is stressful, to say the least.

What does your crystal ball suggest for the future?

People buy houses because they need a place to live. People move to Austin because they find a better job. So at the end of the day, the only real factors that influence residential real estate values are job creation, in-migration to the area and the quality of those jobs. As those who live here know so well, Austin is a city that everyone seems to want to move to, including entrepreneurs and owners of existing companies [who are] sick of high taxes. As long as we continue to encourage economic growth in the area, including wooing more high-paying, knowledge-work employers like Facebook, Samsung and renewable energy companies, we will likely see growth that beats other areas. I see 2010 and 2011 as recovery years where sales volume is reasonable but not brisk. By 2012, demand should finally catch up with supply, and we should start seeing some attractive appreciation. We’re right now in the same place we were in 2003 — two years after the bust and two years before the next boom.