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The Fed reiterated last week that in March of 2010, they will be ending their Mortgage Security Buyback program, a big part of what has kept interest rates low throughout 2009. It won’t be a sudden drop-off, rather a slow decrease in these purchases until March, when there will be no more.

With the Fed no longer spending the tens of billions of dollars monthly on mortgage securities, we will only have the private sector to fill in the gap. When that happens, we can naturally expect mortgage rates to rise. “The difference in monthly mortgage payments of 5% or 6% can be measured in tens of thousands of dollars over the life of a loan,” one writer explains.

The Atlantic Monthly writes that the credit markets need securitization, and warns that it will only become more difficult to borrow money (and those loans will come at higher interest rates) as the Fed program ends. “If you think banks aren’t lending enough now, then you’d find a world with no securitization much worse. Yet, that might be what you get if the Fed ends its program.”

Why would the Fed remove such a successful program? The analogy of a bike with training wheels is often given – if you want an economy to strengthen, recover and stand on its own, at some point you need to take the wheels off. If the Fed keeps rates too low for too long, inflation will rise higher and you will expect to see rates rise anyway. Home loan rates will increase as demand is met, naturally, with or without the Fed.

We can expect the end of the first quarter of 2010 to be a telling time for the economy’s recovery, but the heavy favor of the buyer and borrower is going to change. These will be some of the last months we’ll see that are such great markets for buying a home or land. If you are considering buying, you should begin your search now.

Shows

Classic Holiday Movies at the Paramount

Ballet Austin’s The Nutcracker

“Santaland Diaries” (and more) at Zachary Scott Theater

Trans Siberian Orchestra

Lights

The Zilker Tree Holiday Festival

37th Street Lights

Lady Bird Johnson Wildflower Center

Shopping

Armadillo Christmas Bazaar

Keep Austin Bizarre Christmas Bazaar

Activities

Whole Foods Outdoor Ice Skating

Austin 360’s 2009 Holiday Guide

Courtesy of: The Dave Murray Team

There was one single second left on the clock. The kick wouldn’t be easy. The team was down by two points – this would give them the one point lead to win the game. Quarterback Colt McCoy inaudibly moved his lips into folded hands – probably praying. The ball was snapped, the play was clean – and kicker Hunter Lawrence just squeaked the football through the uprights. With that, the Longhorns of UT in Austin, Texas had won the game, the conference title, clinched an undefeated season and the spot to play in the national title game.

Moments like this one from last Saturday night exhilarate the residents of Austin, whether they are longtime football fans or locals who enjoy cheering for the home team and being part of the celebration. The unique, old traditions, city wide celebrations, and all the people involved in making a University of Texas game the spectacle it is are all part of the excitement of football season.

ESPN’s Doug Ward wrote about a Longhorns game day back in September (“The Eyes of Austin are Upon Texas Football,” 9/17/09). The southern Californian writer soon had that first-timers feeling of getting sucked into the atmosphere and the game. “On this, the first Saturday in September, there are 84,440 of us jam-packed into the stadium, approximately 84,439 of whom are wearing burnt orange, an unofficial stat that leaves me feeling a lot like a guy at a Halloween party without a costume,” he wrote. “But, at Texas, the sensation of being an outsider doesn’t last for long; even if you have no ties to the school, or the state. And even if you stick out more than an American tourist in Paris.”

Ward points out the variety of fans who enjoy UT games, and how family friendly the events are. As he says, “it’s there, at Darrell K Royal-Memorial Stadium, sandwiched on cramped bleacher space between a 5-year-old with an oversize, foam Hook ‘Em Horns hand and a pair of middle-age alums dripping in burnt orange and passion, that I feel the eyes of Texas upon me for the first time.”

As Ward explains, Austin offers many diversions that not only give it the “Live Music Capital of the World” title, but become part of the celebrations. “If, as they say, football is a religion at Notre Dame and a way of life in the South, here in the Southwest it feels a lot like one big party.” Football fans typically begin their day with tailgating, with tents and cars surrounding the university campus. Everyone from the children to the alumni can enjoy the warm weather, community, and good food at these pre-game events, whether formal or spontaneous. Inside the stadium, attendees enjoy the UT band performances (with “Big Bertha,” the one of the world’s largest bass drums), Bevo the Longhorn (the live steer is the easygoing UT mascot), the Texas sized cannon (“Smokey”), and “Godzillatron” the megatron replaying moments from the game. And after a win during one of the warm fall nights in Texas, celebrants can again enjoy the nightlife and the UT tower bathed in orange lights. “Then, many in the crowd will adjourn to Sixth Street, where an eclectic mix of musicians will play in some of the bars and clubs that made Austin’s music scene famous…They’ll have a tough act to follow.”

UT Football is just part of what makes Austin great – although, ask many locals, it’s a big part. We’re excited to cheer on our team in January at the national title game in Pasadena. Hook ‘em!

According to the EPA, the Energy Star program is celebrating reaching the one million mark throughout the nation. Even more exciting news for Texans, 28% of these homes are in the Lone Star State. The country’s fourth biggest city, Houston, tops the list of most Energy Star homes. Also appearing in the top 20 are San Antonio, and at #14, Austin.

Energy Star homes will save an average of $200-$400 this year on utility bills, and $270 million nationwide. They are at least 15% more energy efficient than regular homes and will save 4 billion pounds of greenhouse gas emissions. 

Call your Realtor today about your future Energy Star home. 

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.

The results are in, and Texans have voted to pass all 11 proposed amendments to the state constitution, including those we’ve reported on, for appraisal reform.

Proposition 11, which limits the government’s power to eminent domain, was hugely popular and passed by an 80-20 margin. ”The amendment bans governments in Texas from seizing private property and giving it to a private developer to boost the tax base,” reports KXAN News.

Over 43,500 residents voted in Travis County.

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If you’re used to not voting when it isn’t a big ticket year, or if you’ve never voted before, skipping your chance to vote this year may be a mistake you’ll be paying for, for a long time. Some of the propositions on Texas’ ballot this year deal directly with home values and appraisals, and it’s important that we understand what we’re voting for and why, even if someone would still decide it’s not important and not go. Even if you don’t own a home now, it may be an issue that affects you in the future. Here is a re-print of October 16th’s blog.

November 3^rd’s ballot in the State of Texas won’t have the same hot button races as a presidential election year, but the propositions on it will directly affect Texas homeowners and their money, right now and in the immediate future. The language can be tricky and there is misleading information floating around from misinterpretation, but it is important to understand the proposed amendments and vote.

Gabriel Lopez wrote a great column translating the amendments into simpler terms. The Houston Chronicle also offered an interpretation. There are a few amendments in question, namely, Propositions 2, 3, and 5.

Proposition 2

As it will appear on the ballot: “The constitutional amendment authorizing the legislature to provide for the ad valorem taxation of a residence homestead solely on the basis of the property’s value as a residence homestead.”

What it means: We’ve talked about the increases in appraisal rates in the state. Currently, “the central appraisers are using a practice called ‘highest and best use,’ which allows a property to be valued on potential use rather than current use,” Lopez writes. In other words, if this amendment passes, if an area is experiencing rapid commercialization, the land can’t be valued for the potential value – it will mandate “that a residence be valued only as a residence, regardless of what the ‘highest and best use’ is.”

“This amendment is intended to protect less affluent homeowners from situations in which rapid commercialization in their area threatens to drive up property taxes unreasonably year after year,” writes the Chronicle. “…such development can occur quickly and with potentially difficult consequences for homeowners. The measure would be strictly limited to residences qualifying for the home-owners exemption, thus eliminating the potential for use by speculators.”

Proposition 3

As it will appear on the ballot: “The constitutional amendment providing for uniform standards and procedures for the appraisal of property for ad valorem purposes.”

What it means: This amendment is another reaction to the state appraisal policies leading to inflated rates recently. It would require uniformity in appraisal processes statewide, allowing the state to have oversight and enforcement over every district. “This is important because state funding for public schools is based on the taxable property in each school district,” says Lopez.

Writes the Chronicle: “Unfortunately, the proposition has been plagued by Internet rumors that it is a back-door method to introduce a statewide property tax. It is no such thing, assures state Sen. Tommy Williams, R-The Woodlands, an author of the amendment. Williams says it is simply a means to achieve uniformity of appraising methods in the interests of more equitable appraisals in all areas.”

Proposition 5

As it will appear on the ballot: The constitutional amendment authorizing the legislature to establish a single board of equalization for two or more adjoining appraisal entities that elect to provide for consolidated equalizations.

What it means: The board of equalization would hear appeals from homeowners regarding their home’s appraisal value. It can be difficult to find qualified individuals for these boards in rural and less populated counties; this amendment would assist them. “It is written to be ‘permissive,’ which means a larger entity cannot force a smaller one to participate without its consent,” says the Chronicle.

Along with the Houston Chronicle, The Texas Board of Realtors endorses “yes” votes for propositions 2, 3, and 5. A quick, concise flyer is available here.

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