Austin Real Estate Blog

The real estate market nationwide has suffered for more than a year. Every day, we hear about more foreclosures on residential and commercial properties. There are some markets that have not been affected as harshly as others. Austin is just such a place. Though the market has certainly slowed during the last couple of years, it has not been as detrimental here as in comparable cities nationwide. People are moving here because Austin still offers jobs with security and the median home price remain affordable.

November and December of last year were the slowest sales months in Austin. The median home price has been steadily declining throughout the real estate crisis. Austin homes have not lost all value because the area has never boomed like cities in Florida or California, where the market crisis has hit the worst. While homes have lost some value, most mortgages here are still representative of a home’s value. The most difficult hump to get over in Austin has been the number of properties for sale. The supply has outweighed the demand for several months. That number began to decline in November of last year. Local realtors believe this is a good sign for the local market. This year is expected to be the beginning of the end for the real estate market woes.

The average price in Austin for the month of January was around $320,000. This is up from $314,000 the same time last year. The average actual sold price was about $265,000 as recently as February 14th. New listings are down by 14%, while pending sales increased by about 8%. Homes sold decreased by a staggering 43.24% when compared to January 2008. As the supply decreases, the demand will continue to rise and the market should begin to stabilize.

For Immediate Release Contact: Corinne Russell (202) 414-6921
February 24, 2009 Stefanie Mullin (202) 414-6376

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The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage markets and financial institutions.

RECORD HOME PRICE DECLINES IN FOURTH QUARTER;
ISOLATED POCKETS OF STRENGTH

WASHINGTON, DC – U.S. home prices posted record declines in the fourth quarter of
2008 according to the Federal Housing Finance Agency’s House Price Index (HPI). The
FHFA seasonally-adjusted purchase-only house price index, based on data from home
sales, was 3.4 percent lower on a seasonally-adjusted basis in the fourth quarter than in
the third quarter. This decline was greater than the 2.0 percent decline in the third quarter
and the largest in the purchase-only index’s 18-year history. Over the past year,
seasonally-adjusted prices fell 8.2 percent from the fourth quarter of 2007 to the fourth
quarter of 2008.

FHFA’s all-transactions House Price Index, which includes data from home sales and
appraisals for refinancings, showed significantly less weakness over the latest quarter than
the purchase-only index. The all-transactions HPI fell 0.2 percent in the latest quarter. It
was down 4.5 percent over the four-quarter period, the largest four-quarter drop in the
index, which extends back to 1975. These data reflect trends as of Dec. 31, 2008.
FHFA has also included its monthly house price index through December 2008.
Prices increased 0.1 percent from November to December on a seasonally-adjusted basis
after a downward adjustment for November and are down 10.9 percent since their April
2007 peak.

“Price declines continued in the fourth quarter although not as rapidly as some had
expected,” said FHFA Director James B. Lockhart. “We are hopeful the housing initiatives
announced last week by President Obama will begin to provide much-needed stability to
the housing markets.”

While the national purchase-only house price index fell 8.2 percent between the fourth
quarters of 2007 and 2008, prices of other goods and services rose 1.4 percent.
Accordingly, the inflation-adjusted price of homes fell approximately 9.6 percent over the
latest year.

Significant Findings:
Purchase-only Index:
1. Prices fell over the last four quarters in 44 states and Washington, D.C.
2. Four-quarter price declines exceeded five percent in 22 states and were in excess
of 10 percent in eight states.
3. All nine Census Divisions experienced price declines in the latest quarter. Prices
were weakest in the Pacific Census Division, which experienced a 7.1 percent
seasonally-adjusted price decline in the quarter and the West South Central
Division was strongest, with a seasonally-adjusted decline of 0.9 percent.
All-transactions HPI:
4. The MSAs with the greatest appreciation over the past year were: Decatur, AL
(6.6%), Monroe, LA (6.3%), Kingsport-Bristol-Bristol, TN-VA (6.3%), Austin-Round Rock, TX (4.4%).
5. Of the 20 ranked cities with the greatest price declines over the last four quarters,
all but one (Las Vegas-Paradise, NV) was in California or Florida.
6. The MSAs with the sharpest depreciation over the year: Merced, CA (-49.5%),
Stockton, CA (-40.2%), and Modesto, CA (-37.8%).
The complete list of state appreciation rates is on pages 15 and 16.
The complete list of city (MSA) appreciation rates is on pages 30–46.

Highlights/Technical Note
The quarter’s Highlights article updates an analysis that was provided in the last HPI
discussing alternative weighting systems that might be used in constructing the national
house price index. This release uses data through the fourth quarter to produce an
alternative, state-weighted national index and compares that index against the standard
Census Division weighted index. FHFA continues to study options for reweighting the
national index.

Background:
FHFA’s purchase-only and all-transactions house price indexes track average house price
changes in repeat sales or refinancings of the same single-family properties. The purchaseonly
index is based on more than five million repeat sales transactions, while the alltransactions
index includes more than 36 million repeat transactions. Both indexes are
based on data obtained from Fannie Mae and Freddie Mac for mortgages originated over
the past 34 years.

FHFA analyzes the combined mortgage records of Fannie Mae and Freddie Mac, which
form the nation’s largest database of conventional, conforming mortgage transactions. The
conforming loan limit for mortgages purchased since the beginning of 2006 has been
$417,000. Loan limits for mortgages originated in the latter half of 2007 through
December 31, 2008 were increased to as much as $729,750 in high-cost areas in the
continental United States. The American Recovery and Reinvestment Act, passed on Feb.
16, 2009, extended those limits for 2009 originations in places where those limits were
higher than those originally calculated for 2009.

This HPI report contains four tables: 1) A ranking of the 50 States and Washington, D.C. by
House Price Appreciation; 2) Percentage Changes in House Price Appreciation by Census
Division; 3) A ranking of 292 MSAs and Metropolitan Divisions by House Price
Appreciation; and 4) A list of one-year and five-year House Price Appreciation rates for
MSAs not ranked. Note that the Office of Management and Budget (OMB) announced
three new MSAs in late 2008: Cape Girardeau-Jackson, MO-IL, Manhattan, KS, and
Mankato-North Mankato, MN. Metropolitan area index series are now available for these
cities.

So, I read this and it validated my gut feeling about the market that we are in in Austin. (You can read the full report here) Austin has been virtually immune to the housing market woes that are causing widespread panic, loss, and foreclosure. That is not to say that we haven’t felt some impact to the curent economic turmoil, but moreso that we have seen a market adjustment to the hay days of 2006-2007, but that Austin is still growing and appreciating within our 4-7% “norm”.

I have to admit that watching the local and national news has started to skew my own view of the local economy. It’s too bad that there’s not a more balanced way to get the daily news. I suppose we have to chalk it up to misery, crime, drama, etc sells. Getting back to the report, I pulled these snippets from the full report and wanted to share them.

There are many people who would love to remodel their homes in order to reduce energy use and save money. It can be costly, however, and this can prevent some from doing so. Austin has recognized this problem and has created programs for low to middle income families who wish to help the environment while saving money each year. Austin already offers many rebates for energy efficient upgrades and remodeling projects. For those unable to take on a full remodeling project, there are options now available. Austin is offering free home improvement assistance for specific energy saving projects.

There are qualifications that must be met for assistance, including income and home value. Renters are not excluded from this assistance. The owner must sign off on the upgrades and the renters must have occupied the home for at least three months to apply. The city has set aside the materials needed for such things as attic insulation, caulking for plumbing features, and minor air duct repair. Included in the program is the installation of the materials if necessary. Such improvements will not only save the family money each year, but also reduces emissions that can be harmful to the environment. This program is just another example of how Austin has chosen to take environmental issues head on and become an eco-friendly community.

There are specific requirements that must be met to be deemed eligible for this assistance. Information for this program and many other money saving tips and rebates can be found at www.austinenergy.com.

HUD has just announced the new (old) FHA loan limits:

SFR/Condos – $288,750

2-units – $369,650

3-units – $446,800

4-units – $555,300

This essentially takes us back to last year’s loan limits!

Conventional conforming limits stay the same at $417,000.

FHA is expected to account for almost 40% of all loans originated this year.  If you have any questions on FHA contract, guidelines, etc., just give me a call!

Marie Funston

Senior Mortgage Advisor

Cell:  (512) 750-7270

Office:  (512) 691-6757

Fax:  (512) 343-1224

The city of Austin has been thinking about the environment for quite some time now. There are many incentives given by the city to encourage residents to reduce energy usage. Whether building a home, or remodeling, it is always a good idea to check with the city to see what it can offer. Recycling is another major part of Austin’s green thinking. The city has a goal of more than 50% recyclables within the next several years. Along these lines, the city is now offering a rebate for recycling your old refrigerator or freezer. They will even come and pick it up for you.

Over a lifetime of use, a refrigerator can produce up to 10 tons of carbon dioxide. This is a major contributor to greenhouse gases affecting our atmosphere. By recycling your old, but working, refrigerator or freezer, you are removing emissions equal to two cars out of the environment. Many homes may have an additional fridge or freezer in the garage for overflow. These units work up to 30% more while combating the hot Austin summers. By recycling your old fridge or freezer, you can save up to $250 per year in electricity and energy usage. It is also important to note that newer units are more energy efficient and can save even more than that.

As an added incentive, Austin is offering a cash rebate of up to $50 to recycle working refrigerators and freezers. More information about this program can be found online at www.austinenergy.com.

Austin has proven itself a city at the forefront of the green revolution since it has begun. Many local builders have educated themselves about, and put to good use, sustainable resources and green technologies. It takes more than that to be a successful builder, especially in an area where the recession hasn’t hit so hard yet. Many projects are in progress or in planning as the city focuses on rebuilding downtown. A developer needs to be aware of not only what is ‘in’ right now, but can look into the future at what will be needed. Green Synergy Projects has taken the time to do just that.

Green Synergy Projects is a development team based on Austin and places a strong emphasis on market research. The company takes on projects that are beneficial not just to themselves, but to area in which they are building as well. The company has expertise in a variety of developments, including multifamily, medical offices, and retail properties. The three principals in the company each have a solid background in business and financial planning. The company takes a hands on approach to the planning of each project. This includes the financials of each development with proven results.

As the name suggests, Green Synergy Projects focuses on environmentally friendly developments. From construction to completion, the company strives to meet the standards set not only by Austin’s Green Building Program, but the national Leadership in Energy and Environmental Design as well. Each design is created with thought to the environment and the reduction of greenhouse emissions and energy usage.

Homes are not the only buildings that can be built or renovated with the environment in mind. Commercial buildings from hotels to malls to public attractions have just as much “green” capability. If you’re in the commercial market, it’s your responsibility, as a forward-thinking member of society, to develop your projects with eco-conscious guidelines. You may not be able to create the perfect green building, but you will be able to, with a little work, turn a structure that would have sapped the environment of its resources into one that helps revitalize.

The first step lies in selecting a site. If you choose an area conducive only to waste, surrounded by energy-consuming buildings on all sides, you won’t be apt to go green yourself. You need a lot that will enable you, for as little extra money as possible, to install energy saving, fuel efficient and water conserving systems. You also want a location that is in a walkable area, to promote less car usage. It’s an indirect method but an effective one, so look to areas that have already gone green. In Austin, there’s no shortage.

Once you start building, your options stretch from the center of the Earth to the sky. To save land, you can put a portion of the building’s parking underground. For the lot that remains above ground, use an open-grid pavement system that is less than 50 percent impervious. On the structure itself, consider a solar-reflective roof or one that is vegetated, meaning it has plant life on at least half of its surface. The best option would be a combination of the two – 50 percent solar reflective, 50 percent vegetative. Both these steps – the roof and the parking – will help control heating concerns.

You also want to consider lighting. Exterior and interior lighting systems can either consume more energy than any other aspect on the building or effectively limit the toll you are taking on the environment. Ideally you should aim for reducing lighting density by 25 percent, but 15 percent is an excellent place to start. This can be accomplished in a variety of ways: You can install lighting controls throughout the building that adjust how much light is emitted in accordance to how much daylight is received. You can create different systems for different areas so that wings and floors that get more natural light than others don’t use the same amount of energy. Or you can simply start by using eco-bulbs. Avoid halogen; buy bulbs that won’t need to be replaced every few weeks. Shop smart to be smart.

Finally, think seriously about water conservation. Water is something we waste easily and often, but it doesn’t have to be. Just by installing a leak detecting system, you’ll be able to save a potentially enormous amount of water. Using efficient plumbing fixtures that are low-flow and above code will take you to the next level, and creating bathrooms with dual-flush toilets and waterless urinals will put you over the top.

It’s not difficult to be green in this day and age. When you begin your next commercial development keep these options in mind. You may not be able to employ every one, but you should have no problem instituting a few. And when you do you’ll join ranks with some of the country’s most reputable and profitable organizations. You’ll have created a building that will last on a planet that will too.

Downtown Austin is under construction. As the national commercial market continues to struggle, Austin is still a perfect spot for companies and investors. The workforce is strong here, and unemployment has stayed low despite the national increase. The city has undertaken several plans to better the area downtown for residents and businesses. The Downtown Austin Plan has five major goals, including keeping the area a competitive place in the region, and to reinvest in the public realm. To achieve its goals, Austin has become a mixed use development haven where residential and commercial properties are one in the same. The purpose of these developments is to help encourage more people to move within city limits where they will be at easier access to the steady workforce here.

One such development will be opening midsummer with a fully pre-leased property. The Capstar at Compass Plaza will be adding 115,000 square feet of residential and commercial space to W Fifth Street. This includes offices, apartments, and retail space and is the first major downtown office building since 2001. Major tenants for this building include BBV Compass Bank and Capstar Investment Partners LP. The building will also be home to Girling Healthcare Texas LP and DMX, Inc. The site was developed by Capital City Partners. There are several more mixed use developments in various stages throughout downtown. Austin’s economy and unemployment rates continue to be below the national average, making it a safer place for investing. As the city strives to maintain its place, more opportunities will arise to take advantage of all of Austin’s resources.

We are in a very tough economy right now. In the past couple of years, the housing market has been at the forefront of this. Home values have dropped so significantly in some areas, many homeowners face a current mortgage loan worth more than their home. Foreclosures have increased nationwide, and even the Federal Bailout plan has not seemed to help the market as much as expected. Banks have tightened their lending practices and have made it nearly impossible for those with less than perfect credit to purchase a home. Many investors have chosen to stay out of the market as they wait for it to get better. Most experts believe that the national housing market will begin to see increases sometime in 2010. In the meantime, some good news has recently been released in the form of a report stating that pending home sales have actually risen more than 6% since November of last year.

The National Association of Realtors reported that pending home sales for December were at 87.7 for previously owned homes. That is a 6.3% rise from November, the lowest month on record as 82.5. Realtors are hopeful this increase is the beginning of the end of the national market crisis, but do remain aware that the overall economy must also get better to fully pull out of the crisis. It is important to note that these increases were from the South and the Midwest. Pending home sales in the West and Northeast continue to decline. Sales of newly built homes are also low. While several investors are cautiously reentering the market, no one is quite prepared to go all in yet. There is more funding in the Federal Bailout plan that will hopefully help to better the overall market and help to stimulate the economy.

What Did Interest Rates Do This Week?

** according to Freddie Mac **

30-yr Fixed – Higher

This Week:  5.25%

Last Week:  5.10%

1yr Ago:  5.67%

15-yr Fixed – Higher

This Week:  4.92%

Last Week:  4.80%

1yr Ago:  5.15%

5/1 ARM – Relatively Unchanged

This Week:  5.26%

Last Week:  5.27%

1yr Ago:  5.21%

Highlight of This Week’s Major Economic Reports

The hot topic of the week centered on the ongoing debate in the Senate regarding the stimulus package, which may have reached a compromise totaling $780 billion.  The final vote in the Senate is expected in the next few days, and it would then go back to the House of Representatives for approval.

One key aspect of the proposed bill is a revision to the home-buyer tax credit.  Currently a first-time buyer $7500 tax credit to be paid back over 15 years, the new proposal eliminates the repayment requirement, doubles the amount to $15,000, and would be available to all home-buyers.

On the labor front, the latest figures revealed that another 598,000 jobs were lost in January, sparking the biggest monthly job loss figure since 1974.  The unemployment rate now sits at 7.6% — the highest since 1992.

What to Look for Next Week

With the economic calendar lacking any notable headliners, both the stock markets and bond markets will be directed by the results of – and reaction to – the stimulus package.  It is expected that a final bill will be voted on by both houses of Congress before the end of the week.

Short-Term Rate Outlook

Stable to Slightly Higher