SellAustinTexas

Austin Area Sales and Stats September 2011

Good news on the strength of our local economy and the strength of the housing market.  Inman.com recently reported on the thriving Austin economy, citing our big population growth, AAA municipal bond rating and, most importantly, the growing job market as the major contributors to our robust economy.

The article goes on to interview several area realtors who all come to the same consensus.  Rental rates are rising fast and homes that are reasonably priced, in good shape and close to downtown are selling fast.

September sales stats show that home sales are picking up.  1,480 homes were sold in September of 2011 as compared to 1,171 homes sold in September 2010.  Pending sales were also up significantly with 1,783 last month as compared to 1,502 in September 2010.  New listings continued the downward trend from previous months with 2,284 new listings this past September as compared to 2,505 in September of last year.

We are continuing to see a tightening of the market with new listings decreasing and sales increasing.  However, home prices are staying relatively flat.  That’s due to a tight mortgage market shutting out many potential buyers.  Although mortgage rates are very low, many buyers are still unable to get a loan because of strict loan qualification policies.  This creates a lot of pent-up demand.  In the coming months, mortgage rates will rise and banks will start to loosen loan qualification standards.  This will open the market to a lot of new buyers and we will see home prices on the rise.

If you are thinking of buying, now is the time.

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!

Low interest rates, large resale inventory and big incentives on new homes have been big motivating factors for home buyers recently.  If you have a steady income and good credit, now is the best time to buy a home, not only for a place to live but for future investment as well.

If you’re ready to make that leap to home ownership, there are 4 things that you need to do before even getting in the car to take a look at that first house.

1) Pre-approval for a home loan – If you are serious about buying, talking to a loan officer or mortgage broker and getting pre-approved for a loan should be the first step.  You will know how much home you can afford and begin to really focus your home search.  But most importantly, with a pre-approval letter from the bank, you will be able to submit an offer on a home more quickly as most home sellers require a pre-approval letter with offers.

2) Collect Pay Stubs, Bank Statements and Tax Returns – Banks need these in order to process your loan.  Keep the last 6 months of pay stubs, print out your bank statements from the past year and print out the past 2 years of tax returns.  Having these handy will speed up the loan process and help ensure all deadlines are met when you put a home under contract.

3) Don’t Make Any Big Credit Purchases – Your credit score is checked 2 times during the purchase of the home.  The first is during the loan approval process.  The next is right before closing which could be 30, 45 or even 65+ days after the approval process.  If there’s a big purchase that hasn’t been paid off, delinquent bills or anything else that might affect your credit it could create problems in getting the loan and in you getting your home.

4) Save Cash In Order to Pay Closing Costs – Depending on the type of loan you get, you’ll need to pay 10%-30% of the total sales price in cash at the closing table.  On top of that, there are other lenders fees, inspection fees and sometimes title company fees that you will need to pay in cash.  It’s smart to get a Good Faith Estimate from your loan officer or mortgage broker in order to know how much cash you will need at the closing table.

If you have more questions on the buying process, feel free to give Chuck Stephens, our buying expert, a call at 512-947-8077 or drop him an email at cstephens@cbunited.com

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.

Let’s face it, some homeowners have gotten in way over their head on their property and just need to get rid of it. There’s just not a lot of buyers out there and they can’t sell it for what they paid for it. That leaves them with two options: Short Sale or Foreclosure. Most people who are underwater on their loans opt for Foreclosure – defaulting on the loan and giving the property back to the bank. Often people have not fully explored all their options with their lender and are unaware of the Short Sale option. In simple terms, a Short Sale is asking the lender to take less than what is owed on the loan. This allows a homeowner to lower the selling price of their home to a price point that will get it sold and prevents them from defaulting on the loan. Here are some major differences between a short sale and foreclosure.

1) Credit Score – Defaulting on a loan and going into Foreclosure will result in a 200-400 point hit on your credit score. That’s big and it will affect not only your ability to get another home loan but any credit card limits, car loans and any other purchases made from credit. A Short Sale typically will reduce your credit score from 50-130 points – a much more manageable hit.

2) Future Home Purchase – A Foreclosure on your record will prevent you from obtaining a loan anywhere from 5 to 7 years. However, if you are not behind on payments and opt for a Short Sale, you are eligible to purchase another home under Fannie Mae in 2 years. The wait for an FHA loan is 3 years.

3) Deficiency Judgement – Another more immediate cost associated with Foreclosures and Short Sales is the deficiency judgement. This is the lender asking for you to pay them the difference between the sales price of the home and the value of the loan. The government and the lender see this as income and could have tax implications along with the fact that the lender still wants money from you. Typically, with Short Sales these days, the lender is willing to forgive that difference. With a Foreclosure, the lender is less forgiving and usually goes ahead and issues a deficiency judgement for that difference.

Although neither is a good alternative to hanging in there and making the payments, pursuing a Short Sale has much less of a financial impact than a Foreclosure.  Here’s a link to some resources for preventing Foreclosure.

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.

Austin

On March 2, Forbes released their list of metro areas in the U.S. with the best economic recoveries. Austin, Texas sits on top of the list along with Washington, D.C.

According to Forbes, “jobs have been lost nearly everywhere in the last three years, but between December 2007 and December 2009 the number of jobs in Austin rose by 0.98%; more than any of the other major cities we looked at.”

Economics professor Daniel Hamermesh points out Austin’s strong housing market as one of it’s biggest advantages. “The first advantage is that we haven’t had a housing boom, and therefore there isn’t much of a housing bust. The second advantage is that we have a diversified economy with lots of government and high-tech jobs.” The third advantage, Hamermesh says, it Austin’s desireability as a place to live: people stay even when “things go bad.”

The state as a whole fared well through the recession in the housing market.

Says James P. Gaines, Research Economist for the Texas Real Estate Center at Texas A&M University, “the housing market got lucky, if you want to look at it that way. We didn’t have excessive overbuilding, so we don’t have a big overhang of unsold new homes, and because Texas has among most affordable housing in the country, the demand sustained.”

“If one state is a poster child for economic recovery, it’s Texas,” writes Forbes.

Says Governor Rick Perry: “This Forbes ranking highlights the relative economic strength of our state’s major metropolitan cities, which is good news not only for the people who live in Texas, but for those looking to move to a state with a strong economic future. Texas continues to be the best state in the nation to live, work and raise a family thanks to our low tax burden, predictable regulatory climate, skilled workforce and principled, disciplined spending.”

Photo: View from the 555 Condo

Sandy Ranch

CNN Money’s article “What Housing Bust?” covers what areas of the nation have done well in the housing market, and why. According to writer Les Christie, areas with plenty of available developable land have smaller swings between home price highs and lows. This is because, when the demand for housing spikes, home builders are able to build more homes and keep the housing prices in check. Speed is also of the essence here, home builders need to be able to build quickly, thus, the need for available land.

“Elasticity of supply,” this is called, according to Mark Fleming, chief economist for First American CoreLogic. And Christie says, it is the definition of Texas real estate, and similar throughout all the metro areas.

“Texas is the poster child for these ‘steady Eddie’ states. House prices during the past three years rose in all 26 metro areas with gains ranging from 2.8% for Dallas, the second largest metro area, to 9.7% in Houston, the largest, to a whopping 32.5% in Odessa.”

This is part of what is causing the metro areas in Texas, including Austin, to grow so rapidly. Landowners in the Austin area should continue to see their investments in high demand for buyers and developers.