SellAustinTexas

Here’s a snapshot of the current state of the residential market as of May and how we compared to last year. 1,891 single-family homes were sold in Austin last month, or 8 percent fewer than in May 2010.  The median home price increased 4 percent from May 2010 to $198,100.

Austin added 3,127 new single-family homes on the market in May, 2 % more than last year. There were a total 9,744 active single-family homes listed — new in May and existing — or 13 percent less than the year ago total.

Homes spent an average 81 days on the market – 27% longer than May a year ago, but the lowest figure since October. At the same time, pending homes sales were up 53% year over year to 2,156 in May.

It seems last year’s tax credit created demand earlier, causing the market to peak in the spring. The considerable increase in pending sales from May could indicate Austin is returning to a typical seasonal cycle.  While sales are still down, the increase in pending sales and the decrease in days on market shows a rising demand for homes in Austin.

Another important fact to note: a total 1,269 leases were signed in May, 4 percent higher than the same time last year. Tenants paid a median $1,250 monthly in rent, which is about 4 percent higher than last year.  The increase in leases and the increase in rent show a rise in demand in the lease market as our population increases.  This makes landlords very happy!

If you have questions on the Austin housing market and whether or not it’s the right time to buy or sell, feel free to give Chuck Stephens, our buying expert, a call at 512-947-8077 or drop him an email at cstephens@cbunited.com.  To see current inventory, visit our web site www.dmtx.com.

If you are considering buying a home in Austin, the time is now.  Home prices have not dropped in the past few months.  In fact, they are increasing.  Mortgage rates remain at an all time low.  Most importantly, demand is increasing.  We are at an equilibrium in the market as far as buyers and sellers and the supply of good lots and homes is getting very tight.  If there were a time to make a move and invest in a home – the time is now.

The most important factor in selling a home is the price.  There’s 3 different categories of prices and every home on the market falls into one of them.

#1:  Overpriced. Most buyers think all homes are overpriced.  That’s because they are looking for a great deal – a steal.  And rightfully so.  We all want to get a deal. But, it’s just not true.  Homes that are overpriced in this market stick out like a sore thumb and most likely won’t even fall onto a buyer’s radar screen.  This happens for several reasons.  The seller bought it 3 or 4 years ago and has to get back what they put into it or the seller makes a few thousand dollars worth of improvements, calls it a remodel and tries sell it at an inflated price.  It is often the fault of a real estate agent not being honest with a seller about the market and instead allowing the seller to dictate the price – not the market.

What to do?  Go ahead and make an offer based on the market.  Sometimes a seller needs a reality check before making a price adjustment.  Maybe you won’t be the first one to make that offer and it could get accepted.

#2 Market Value.  Most homes are priced at market value.  Getting a good deal on a home at market value is a matter of timing, education and skill.  An experienced agent can work on your behalf to find a seller’s motivation, agent’s motivation and points beyond price that can get a deal done.  In this instance, offer less than the asking price and go from there.  More often than not, they will come off their price.  But as the Austin market gets tighter, we are seeing properties sell at or very close to their asking price.

#3 Undervalued. Getting an underpriced home is about being in the right place at the right time.  There are a lot of buyers out there waiting for that low priced deal to come along.  Deals go quick and a savvy agent can make sure you get in front of them before someone else.

It doesn’t take a rocket scientist to know a good deal from a bad one in today’s market.  Internet sites like AustinHomeSearch.com provide a great jumping off point to begin a home search. You can even compare homes to figure out pricing.  But when it comes to making the investment, it’s smart to have someone who has intimate knowledge of the market and can negotiate on your behalf to make sure the investment is the right one.

You probably saw the headlines last week – according to Standard & Poor’s S&P/Case-Shiller Home Price Indices, U.S. home prices declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010. The national index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.  These numbers make for some grim news stories but what are the underlying factors and how do they affect Austin’s market?

- One of biggest factors for these deflated numbers is the First-Time Homebuyer Tax Credit from last year.  There’s bound to be a fall since there is no longer such a major incentive for first time buyers.

- Many metro areas have an excess of inventory created by the housing boom and bust.  Texas does not.  In fact, in Austin, our inventory is at an equilibrium.  Homes that are priced well will sell.

- The Texas economy and Austin’s economy in particular are experiencing steady growth.  We have relatively low unemployment and a diverse economy in high growth industries – people want to be here.  Over 900 families are projected to move here a month throughout 2011.

- New construction in the Austin area is slow to almost non-existent due to housing developments not getting financing.  Lack of new homes will trigger an increase in home prices.  We have already seen an increase in the median home price from the 1st quarter of last year.  Home values are expected to increase by 4.6% next year, 14.6% in 5 years and 87.65% in the next 10 years!

Deflated home prices, low mortgage rates, lack of new construction and a big increase in population will create big increases in future home prices.  Don’t let the national headlines fool you – now is the time to buy!

Not only does this Spring in Austin and central Texas mean warmer weather, bluebonnets and heading to the great outdoors, it is alsolooking like a great Real Estate season here and in Texas.  With new construction of both homes and multi-family properties slowing dramatically and, according to the Austin American Statesman, central Texas employers adding 11,400 jobs from February 2010 to February 2011, the time may be right again to buy central Texas real estate.

A recent article in Fortune proclaimed “Forget stocks. Don’t bet on gold. After four years of plunging home price, the most attractive asset class in America is housing” .  With a historic drop in new construction and with housing prices down…now is the time to buy.  As the economy continues to grow and with rental rates still rising, buying and investing is up.  Because there is very little new construction happening..demand could start exceeding supply and prices will once again begin to rise.

Read Fortune’s article; “Real Estate: It’s Time to Buy Again” here

See Wells Fargo’s Texas Economic Outlook here

If you are ready to buy…whether first home, dream home or investments, start at www.DMTX.com where you can search all of Central Texas for your perfect home, ranch or waterfront property.

The past year has brought a lot of adjustments to the Austin market.  Here’s a year-end rundown on stats (compiled as of 11-30-2010):

Total dollar volume of single family properties sold: $4,180,259,992 – down 1% from 2009

Average price for single family homes: $194,000 – up 3% from 2009

Single family homes sold: 16,477 – down 6% from 2009

Average days on market: 76 – down 4% from 2009

Looking at the numbers, we saw the average price rise and the average days on market go down – both signs of improvement in the market.  However, the total volume went down in both number of dollars and number of homes.   These up and down stats point to a 2010 Austin real estate market going through a period of adjustment.  It will be interesting to see how 2011 turns out.

Here’s some recent good news in terms of the economy.  According to the Brookings Institution, Austin was one of only 15 major metropolitan areas to experience job growth in all 4 quarters of 2010. Forbes ranked Austin as the 10th most affordable city in the US. It notes our strong high tech job economy.

The 30 year fixed mortgage rate dropped to 4.72% last week, down from the previous week’s 4.79% and way down from 5.59% this time last year. Mortgage rates moved to new lows with another volatile week in the global financial markets. The primary concern revolves around the outlook for the global economy and the possibility of Europe’s debt dragging the U.S. into another recession.

Greece announced that the emergency loans it received will cover its obligations and help the country avoid defaulting on loans, helping to ease investor fears. For the week, this catapulted the Dow 279 points higher. If the stock markets continue this upbeat trend, we’ll see the demand for Treasuries start to wane, which will inevitably push interest rates higher. Although, with the way the global markets have been lately, that demand for U.S. Treasuries might not let up anytime soon.

It’s also looking highly unlikely the Fed will raise interest rates anytime soon, perhaps even until 2011. The uncertainty in the markets and the slow economic recovery will most likely keep mortgage rates low for a few more weeks.

These low interest rates combined with the high inventory of homes throughout the Austin area, provide the perfect opportunity for all home buyers to take advantage of this fantastic market.

Staged kitchen in Travis Country home

This recent sale goes to prove two essential elements in real estate.  If a home stands out among the crowd through pricing and presentation, it will sell.  Not only will it sell, it will sell FAST.  This home in Travis Country sold because we priced it right – at market value – and the sellers did everything right as far as staging and preparing the home to get on the market.  Things like paint touch ups, fresh mulch in the flower beds and “de-cluttering” the home went a long way to make this home stand out from the other homes in the area.

Manicured Yard

Pricing was the second essential element to make this one stand out from the crowd.  We priced this fairly for the market – not too high and not too low – and got very close to the asking price.  Overpriced listings don’t sell.  A home can be flawless and move-in ready but if it’s priced too high, it will sit on the market.

I’m not using this post to brag about our abilities (but I do think we do more than 90% of the realtors out there) but instead using it as an example of what happens when the fundamentals of pricing and presentation are properly executed.

Still thinking that house prices are going to decline further? Are you still anticipating the “deal of a lifetime” just around the corner? You’re about to be out of luck. It’s natural to look at the national economic news and think that we are going to see a further erosion in home prices but it looks like things are pointing up for Austin’s economy. We have seen a decline in high-end home prices but the average home price in Austin has remained relatively stable. The $8,000 first time home buyer tax credit is also about to run out (see the previous post). But by far the biggest reason: Interest rates are anticipated to go up and that is going to price a lot of people out of the market. Compared to the week prior to August 24, 2009, the national 30-year mortgage rate is up 4 basis points from 5.14%. Compared to three months ago, the 30-year rate is up 20 basis points from its average rate of 4.98%. Why are interest rates going up? The massive government spending has the potential to lead to long term inflation, causing interest rates to rise. Ted Jones, Senior VP and Chief Economist at Stewart Title explains it best:

“…let’s assume a loan amount today of $100,000 with a 30-year fixed-rate residential loan at 5 percent. Nationwide at the time of this writing, the average 30-year rate was 4.85 percent per Freddie Mac. Fannie Mae forecasts an average rate in all of 2009 of 5.13 percent. So the 5 percent is a reasonable assumption.

So if rates go up just 1 percent to 6 percent per year, then prices must drop at least 10 percent for that same buyer to qualify for the same monthly payment. A 1.5 percent increase in rates to 6.5 percent requires a 15 percent price decline, and a 2 percent increase necessitates a 20 percent price decline to qualify. Note: This 1 percent interest rate change to a 10 percent price change is only true when interest rates are 5 percent as they are today.”

Interest rates vs. price changes

Admittedly, at the same loan-to-value ratio, as prices decline so does the down payment. Since, however, many buyers select the price range of homes they consider buying based on their monthly payment potential, rising rates may force future buyers into less expensive homes and hence properties they find less desirable.

So, if you are waiting to buy your first home or if you are waiting to make that second home investment – don’t wait much longer! Postponing that purchase is going to price you out of the market and you are going to have to settle for something less or just wait for the next recession. Don’t get burned. Thanks to Ted Jones for letting us reprint part of his blog which can be found here.

Time is running out on taking advantage of the up to $8,000 Federal Housing Tax Credit for qualified first time home buyers. The tax credit is available for qualified first time home buyers purchasing a principal residence before December 1, 2009. That deadline is only 3 months away! If you are considering purchasing your first home, now is definitely time to get off the fence and buy. Interest rates are low, it’s still a buyer’s market for residential real estate and the government is offering an $8,000 tax credit. Don’t let this opportunity pass you up!

According to the Austin Board of Realtors, last month, June ‘09, Austin’s home sales were at their highest level in a year.

 April’s sales in ‘09 were down 18% from April ‘08. May ‘09 sales were down 19% from May ‘08. But June had a 4% decrease from ‘08, the smallest decrease since the 2% drop in  June ‘o8 from June ‘07.

Also in June, Pending Sales (sales set to close in July) were up 4%.

Reasons for the upturn include

• $8,000 tax credit (for homes closed on before December 1)
• Population increase – numbers of people moving from other cities or states
• People looking for lower risk investment opportunities (Real Estate is historically considered a strong investment choice)
• Builders have been building fewer new homes, affecting the balance of supply and demand, and putting more demand on resales.