Bubble in the Austin Housing Market?

March 27th, 2015

Questions to consider when analyzing if a market is in a bubble

 

David Tandy, Gracy Title CEO, spoke at the Keller Williams Southwest Market Center this week with an Austin market and economy update. We love getting analytical over here and delivering pertinent and timely information to you regarding the Austin housing market and economic trends.

So what causes a housing bubble? 5 factors and how Austin rates:

  1. Easy credit– Do we have easy credit now? Do we have unqualified buyers who should not be purchasing a home? No!
  2. Speculation– Do we have excessive or unhealthy investor activity? No! Are builders overbuilding? No!
  3. Slow Job Growth– Has Austin’s Job Growth slowed? No! Will it slow down in the near future? Projected strong growth.
  4. Lax urban planning controls– Is it easy to overbuild in Austin? No!!
  5. Constrained supply and high demand– Do we have limited inventory? YES! But has that caused a bubble? Not yet.

Questions about the Austin housing market or for more info, stats and graphs from David presentation? Give us a call.

New Construction in Austin

July 23rd, 2014

The National Assoc of Home Builders says so far this year there have been 8,810 new home permits issued in Austin metro area.  That’s a lot of construction. Considering how fast-paced our Austin market is right now with low home inventory, new construction is where the market is in Austin.  The Austin MLS shows 1, 165 homes built in 2014 currently for sale in the Austin area today.  (note: builders may have 50 homes planned and actually list a few at a time in the MLS.)  See below for a snapshot of the geographical distribution of the 1,165 posted as active in the Austin MLS today.

Snapshot of new construction in the Austin MLS 7.23.14

Snapshot of new construction in the Austin MLS 7.23.14

Should you wait until next year to buy in Austin? A little math.

June 10th, 2014

So you are debating buying now or waiting until next summer.  Many variables to consider.  Here’s one:  if interest rates go up (they will) and prices keep going up (I think so), here’s the math …

Buying a $400k home today at 4.7% vs buying the same home a year from now at $425k at 6%

  • $2,074 vs $2,548 monthly payment …
  • that is $474 a month …
  • or $5,688 a year

Could rates be at 6% a year from now?  Considering that we have been at historically low interest rates for 2 years, yes, it is likely (and very much predictable) that rates will go up.

Consult with your favorite real estate professional to outline your best strategy.

 

Building Bottleneck in Austin: Queued Up for Tape & Float

June 24th, 2013

Waiting in Line

In my 14 years in real estate in Austin, I have seen a few build booms.  We are in one now.  Bonus.

Every time there is a build boom, and I am assuming this goes for any city in the country, the build resources get pushed to the supply / demand limits and you get a few bottlenecks.

Today’s build bottleneck in Austin:  tape and float.

Everyone building or remodeling in Austin right now, everyone, is in line for tape and float.  Everyone has a queue.

Our build project (Nalle Custom Homes, Stuart Sampley Architect) has been moving along quite nicely.  We cannot complain with our progress.  At times it actually seemed really fast & we were struggling to keep up … that’s cool.

So we are now at drywall.  Drywall is up.  Yippee!  Everyone says drywall means 8-10 weeks out.  Yea!  But we just have drywall.  No tape & float.

We’re ok with this, plenty of other things going on at the house such as trenching for permanent electric & plumbing lines, exterior trim work, digging the pool, fence etc.  We’re just in line for tape & float.

Tape & float is one of the finer skills so you do not necessarily want Joe Tape Schmoe.  You want to good guys.

Hope we’re up in the queue maybe this week.

The Austin Energy Audit & Sellers’ Obligations

May 24th, 2013

austin energy audit

I have had 3 calls already this week with buyer, seller or Realtor questions regarding the energy audit and if and when it needs to be provided to the buyers. The ordinance applies to properties 10 years or older that are both in Austin and that receive electricity from Austin Energy. Yes, condos too.

Here are the highlights of what you need to know:

• First, be informed: http://tiny.cc/ATXenergyaudit
• Results of the audit must be provided at least three days before the end of the option period
• Seller non-compliance with the ECAD ordinance, Austin City Code, Chapter 6-7, is a Class C misdemeanor
• Sellers can do an Energy Audit exemption self-check
• Exemptions include … within 10 years before the sale, the home received:

  •   At least three energy-efficiency improvements through the Austin Energy Home Performance with ENERGY STAR® program or an equivalent Austin Energy program. These improvements include: increasing attic insulation to R38; installing solar screens, solar film, or low-E windows; adding radiant barriers in the attic; replacing or insulating ducts; reducing air infiltration and sealing ducts; and installing new qualifying HVAC systems.
  •   A total of $500 in rebates through the Austin Energy Home Performance with ENERGY STAR® program.
  •   Energy-efficiency improvements through the Austin Energy Free Home Improvements program, which is offered only to customers with low-to-moderate incomes.

Some agents will write the requirement in to the contract … such as “seller to provide Austin Energy Audit report within 5 days of contract execution.” This type of statement in the actual sales contract, while not legally necessary as the owner already has an obligation per city code, can help clarify the buyers’ expectations.

Connect with Austin Energy or your favorite Realtor for more information.

 

 

Home Buyers in Austin 2013: why your timing is very very good

May 2nd, 2013

Buyers … although the market is competitive and you may lose a house before you get one, your timing is actually very very good.  Here’s why:  we call it the affordability factor.

The affordability factor is the calculation of how much home you can afford taking in to consideration current interest rates, your loan qualification and the current market.  I think we all can agree on a couple things in Austin: 1.) prices are going up & have a high likelihood of continuing to do so (see economic forecast post) and, 2.) interest rates will go up (hint: they are at an all-time historical low; I heard a news report just this morning anticipating rates at 4% by the end of the year).

I suspect we will look back on 2013 4, 6, 8 10 years from now and recognize it was a sweet spot in the Austin market.  Here is the historical perspective on affordability:

  

So, Mr. & Mrs. Buyer, here is why your timing is so good:  that $200,000 house today could be worth $220,000 a year from now and let’s say interest rates move from the current 3.5% to 4.5% a year from now (a very realistic scenario) … here’s what the math looks like:

Interest rate 3.5% 4.5%
Purchase price $200,000 $220,000
PI payment $718 $892

That’s $174/month

Interest rate 3.5% 4.5%
Purchase price $300,000 $330,000
PI payment $1,077 $1,337

That’s $260/month

I can think of a lot of things I would do with $200 – $300 per month.

Leasing?  Choosing to renew your lease for another year could be costly.  Rents are going up. Occupancy rates, super high.  Do the math.

Sell and then buy?  If you’re a move-up buyer, the savings opportunity exists on the bigger house too.  You may get $10,000 more for your Crestview bungalow next year, but that move-up house in Northwest Hills or Driftwood could be $30,000 more next year.

Austin, TX Economic Outlook: No Longer a Secret

March 12th, 2013

clip_image002 clip_image004 clip_image006

Austin as we know it today

Last month I had the honor of listening to David Tandy, CEO of Gracy Title, talk about the Austin economy, the Austin real estate market outlook and where we’re going. Hold on … the Austin we know today will not be the Austin of 2023. Some of the numbers I will reference in this post include articles, posts & research from the Austin Business Journal, 2013-2014 Angelos Angelou Economic Forecast, and the Austin Chamber.

F1

My biggest takeaway was that the Austin growth, momentum, economic outlook numbers are quite possibly understated. The main premise here is that most of the economic forecast, growth projection numbers were researched and posted PRIOR to the F1 Circuit of Americas airing in November (which had an estimated $483M economic impact to Austin) where 600 million people worldwide heard about Austin, TX and what an amazing city we are. Austin is no longer a secret.

The Numbers

  • At a 2.9% growth rate, we are the fastest growing city in the US.
  • In 2013, there will be 60-70,000 people moving to Austin. This growth will continue.
  • For every 2.5 people, we need one housing unit (home or apartment) which equals a 28,000 demand this year. This demand will continue.
  • In 2012, we created about 12,000 housing units, demand was 28,000; we currently have a 30,000 housing deficit. This deficit will continue.
  • low supply, high demand = sellers’ market

California

Californians are moving to Texas, a lot of them. Recent headlines involve Governor Perry’s poaching tour of CA (real classy move, Gov). California’s tall state income tax, increasing sales taxes and suffering schools are fueling the 3rd coast migration. Besides #sxsw, watch for more CA license plates in TX.

Real estate tips for our new residents

First, welcome (ignore the don’t-move-here t-shirts). Second, we are still much cheaper than CA. And a few other things you should know:

  • no income tax in TX, we make up for it in property taxes (they will be much higher than you experienced in CA)
  • prices are going up
  • Multiple offers are commonplace right now and expected to continue
  • Find out about homes before they hit the market (we call this the silent market or pocket listings or, simply, coming soon). How to do this? A good Realtor has a solid network of Realtors and they exchange information all the time. You may want to consider aligning yourself with an office that has the largest market share in the area. (Shameless plug: Keller Williams Realty began in Austin, TX in 1983 … they dominate the Austin market, most listings, most sold, most luxury market, most agents.)

Summary

The growth in Austin over the next 3-10 years is going to be huge, dare I say explosive. Jobs are fine … best job growth in the country. We will continue to feel it with housing supply, multiple offers, increasing prices, affordability and traffic.

Buyers have to be very strategic and on-the-ball with making an offer. The demand & low supply is pushing prices up. There is a ton of CASH out there right now. Gracy Title says 30% of their closings right now are all cash. This translates to disadvantage for contingent and low down-payment offers.

Connect with your favorite savvy and qualified Realtor to customize your real estate strategy and successfully navigate Austin as we know it today.

© Julie Nelson and The Nelson Project at Keller Williams Realty, 2013-2015. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at Keller Williams Realty with appropriate and specific direction to the original content. Julie Nelson is a licensed Realtor with Keller Williams Realty in Austin, TX.  This article and other blog postings should not be construed as legal or professional advice.  Contact your favorite Austin real estate professionals in person for actual advice.  Julie can be reached at www.thenelsonproject.com.  Searching for homes?  We think this is the coolest Austin home search tool available.

Affordability Factor in Austin

March 12th, 2013

The affordability factor is the calculation of how much home you can afford taking in to consideration current interest rates, your loan qualification and the current market.  Affordability in the US and in Austin, TX has never been lower.  Here is an easy example: 

 

1992

2013

Interest rate

8.5%

3.75%

Loan amount

$150,000

$250,000

PI payment

$1,153

$1,157

So your payment on a $250k house today would be the same as your payment on a $150k house in 1992. 

Another way to look at affordability is the impact of increasing interest rates.  I think we all can agree that interest rates will go up (hint:  they have never been lower).  For every 1% increase in interest rate, you lose 10% of your buying power.  Here is an easy example:

Interest rate

4%

5%

Loan qualification

$400,000

$360,000

PI payment

$1,909

$1,932

This information is provided as a guide.  We recommend that you contact your mortgage specialist for a thorough personalized mortgage assessment. (Don’t you love disclaimers like this?)

 

© Julie Nelson and The Nelson Project at Keller Williams Realty, 2013-2015. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at Keller Williams Realty with appropriate and specific direction to the original content.  Julie Nelson is a licensed Realtor with Keller Williams Realty in Austin, TX.  This article and other blog postings should not be construed as legal or professional advice.  Contact your favorite Austin real estate professionals in person for actual advice.  Julie can be reached at www.thenelsonproject.com.  Searching for homes?  We think this is the coolest Austin home search tool available.

2012 blog in review

January 2nd, 2013

The WordPress.com stats helper monkeys prepared a 2012 annual report for this blog.

Here’s an excerpt:

600 people reached the top of Mt. Everest in 2012. This blog got about 7,100 views in 2012. If every person who reached the top of Mt. Everest viewed this blog, it would have taken 12 years to get that many views.

Click here to see the complete report.

Mother Lode of Austin Maps

June 24th, 2012

I spent an hour on the Google this afternoon looking for the best maps of Austin.  Austin neighborhoods, Austin area schools, Austin demographics, Austin politics, etc.  Holy cow, it’s the mother lode!holy cow

I found the City of Austin maps library!  The mother lode of Austin maps. 

Demographics, you say?

Here are a few easy Austin map references:

Austin Neighborhoods

Schools:

And a few random:

We’ll stop there.  Call us if you want in-person conversation, interpretation, input or opinion on any of this. 

 

Julie Nelson is a licensed Realtor with Keller Williams Realty in Austin, TX.  This map link list and most of her blog postings should not be construed as legal or professional advice.  Contact your favorite Austin relocation professionals in person for actual advice.  Julie can be reached at www.thenelsonproject.com.  Searching for homes?  We think this is the coolest Austin home search tool available.