Downtown Real Estate on the Decline?

myFOXaustin(AUSTIN) - "We love the downtown life, UT, Sixth Street, restaurants," are the reason Mary Ellen Pietruszynski wants to move downtown. Mary Ellen and her husband have been doing their research and now they are prepared to buy, but not at market value. Sunday they joined hundreds at a Kennedy Wilson auction of 30 luxury condos on 5th Street and Sabine. "It was an opportunity to really gauge the market," says Pietruszynski.

Inside this ballroom it's buyers who name the price, a number that is far below what was originally quoted.

"Over the last couple of years the market has been slowing down," says Rhett Winchell, president of Kennedy Wilson. He says this is their third condo auction in Austin. His company is in talks with other builders for future auctions mostly because what takes about 1 and a half years to sell, is sold here at their auctions in under an hour.

According to Winchell it doesn't just benefit builders, but residents that may live in mostly vacant buildings. "They won't be competing with a builder on a resale program if they had to sell their property," says Winchell.

Urban Space realtor Kevin Burns agrees. He says although Austin's real estate wasn't hit as hard as other cities it was affected. It's why downtown condo developing has slowed down.

In 2008, 776 units were built. Almost the same number will be completed from 2009 all through 2011. "There are between 400-450 residences left to be purchased in what is under construction right now and what has been completed in the course of the last two years," says Burns. With no new projects in the works Burns expects a shortage of condo's in the next year as more and more people relocate to Austin. "We still have a lot of catching up to do as far as the size of Austin vs. the number of people downtown," says Burns.

After Sunday's auction The Sabine will join other developments that are 90% full. Contributing to that will be Mary Ellen who scored a 2-bedroom 2-bathroom 8th floor unit originally priced at $530,000. "We came in with a certain price so we were able to get this unit we were interested in at a price lower than what was our high," says Pietruszynski.

That price was her winning bid in the mid $300's "We know we got a good deal," she says.

In Sunday's auction one of the top floor condos went for $351,000 that's about $200,000 below market price. The most inexpensive was a 600 sq. ft. unit for $160,000.