Austin Real Estate Blog

It should be no secret by now that Austin and its surrounding areas have fared well throughout the recession. The city has been named to numerous Top Ten lists in magazines such as Forbes, and online on various websites. The plans for downtown reconstruction and remodeling will only serve to increase the city’s charm for businesses and residents alike. Austin did not share in the nation’s real estate boom several years ago, so while many comparable cities have faced huge losses in home values, Austin has not fallen quite so hard. There has been a slowdown in the real estate market, of course. Houses have sat longer than in previous years, but affordability and location have kept people looking to Austin for a place to settle.

This week, the Federal Housing Finance Agency released a report stating that Texas home prices increased by just over 2% in 2008. The Austin-Round Rock area actually increased home prices by 4.4%, according to the same report. January saw an increase in home sales for the area. While many economists believe that 2009 will be a bleak year, it is important to note that the Austin economy is in better condition when compared to the nation. The bottom of the real estate crisis is expected this year, with home values and prices beginning to increase in 2010, according to many experts.

Austin has maintained so well due to many factors. As previously mentioned, the housing bubble did not exist here. Homes in the last several years were in high demand, while supply was limited. Add to this the fact that Austin actually managed to create about 20,000 new jobs in the past year. The unemployment rate here is less than 4%. The Austin area is expected to emerge from this recession well above many other similarly sized cities throughout the nation.

Under the American Recovery and Reinvestment Act of 2009, approximately $10 billion in purchase funds are now available for the Rural Development Single Family Housing Guaranteed Loan Program (SFHGLP).

Beginning Friday, March 27, 2009, the Rural Development program will be re-activated!

Here’s a glimpse of what USDA can offer:

• 102% loan-to-value – this means $0 down + roll in closing costs
• Up to $417K purchase price
• No PMI
• Condos and manufactured homes allowed
• No reserves required
• Up to 6% seller contribution towards closing costs

Too good to be true?  Here’s the catch:

• Income limitations
• Geographic limitations
• Minimum 580 credit score required

Find out if your property or income qualifies.  Check out  http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do;jsessionid=3A9FDD1B237583EA9EE02934281E8C7A

OR … call me for more information!

Marie Funston
Senior Mortgage Advisor
Cell:  (512) 750-7270
Office:  (512) 691-6757
Fax:  (512) 343-1224

The housing market is where we first started to see the inkling of a recession. For several years, lenders had offered mortgage options for those with less than perfect credit, including adjustable rate mortgages and $0 down payments. The result of which is our current real estate market. Homeowners began having trouble keeping up with monthly payments and foreclosure listings began to skyrocket. Austin has increased as well, though not nearly as badly as other areas in the country. Home values have remained fairly steady in the area. The crisis has brought down loan rates for both new mortgages and refinancing options.

It is this side effect of the real estate crisis that has increased the number of new mortgage and refinances applications. According to the Mortgage Bankers Association, applications went up more than 11% nationally for the week ending March 6 from the previous week. That is up 5.7% from a year ago. Of these applications, about 68% are requests for refinancing. The low rates have given homeowners the ability to refinance at a rate of around 5% for a thirty year loan. Fifteen year fixed rates are closer to 4.5%, sparking the increase in applications.

As lenders begin to use more traditional methods of credit and loan practices, the real estate market is expected to level out. It is now considered a great time to buy for those able to do so. Many experts feel at this point that up is the only way the real estate market can go.

Austin has been called one of the Top Ten Recession-Proof cities, but that does not mean the city hasn’t been affected by our nation’s economic woes. February saw an astounding 67% increase in foreclosure listings from the previous month. While some of this jump has been attributed to the fact that the January auction was held on New Year’s Day, which caused some delay, that can only account for about 15% of the spike. There are over 1400 homes listed in foreclosure in the Austin area, according to the RealtyTrac website. Of those, over 700 are bank owned.

The housing market is where we first began to see the beginnings of a recession. States like California and Florida were hit the hardest, with homes losing more value each passing month. Austin had not had a housing boom like in these other states, so throughout the ordeal, the area has been fairly stagnant in terms of home values. It was the more creative loans that first allowed the foreclosure binge to begin. As many homeowners saw dramatic increases in payments, the foreclosures began to pile up. Throughout it all, Austin has stayed well below the national average for comparable cities. Businesses and families alike still view the area as better off economically than other parts of the country.

It is important to note that one month of increase does not mean it will continue. Many experts feel that this may be the bottom of the barrel, and it is only up from here. While the recession is expected to continue, the credit crunch and the countless homes being sold for taxes owed has allowed for more prepared buyer’s to take advantage of the market. Austin is expected to maintain its overall economic health.

§ § § § § § § § § §

From Green Building Talk

Getting Into Hot Water: Solar Water Heating Pays For Itself Five Times Over
An analysis of the engineering and economics for a solar water-heating system shows it to have a payback period of just two years, according to researchers in India. They report, in the International Journal of Global Energy Issues, on the success of the 1000-liter system operating at a university hostel.

The current focus in the developed world is on advanced technological approaches to alternative energy sources, such as photovoltaic cells for solar power and harnessing wind and wave with elaborate systems to generate electricity. However, the cost of such systems may be prohibitive for some applications in the developing world. They also often ignore the fact that a mundane process such as heating water might best be carried out using direct heat from the sun rather than including a waste energy-conversion step.

…

Read the rest at GreenBuildingTalk.com

§ § § § § § § § § §

From Associated Construction Publications

Construction Jobs Decrease by 104,000 in February

Construction employment fell by 104,000 in February with losses throughout the sector. This industry has shed 904,000 jobs since the recession began, with about half of the decline occurring in the past 4 months, according to testimony by Keith Hall, commissioner, Bureau of Labor Statistics, before the Joint Congressional Economic Committee today.

Although the stimulus package is expected to positively affect construction employment through “shovel-ready” projects, none of that has started yet.

The decline in construction employment mirrors declines in the rest of the labor market as the sharp and widespread contraction continued in February.

Nonfarm payroll employment fell by 651,000, following declines of 681,000 in December and 655,000 in January. Since the recession began in December 2007, job losses have totaled 4.4 million, well more than half of which occurred in the past 4 months. In February, the unemployment rate climbed from 7.6 to 8.1 percent, the highest rate in over 25 years.

…

Read the rest at Associated Construction Publications

§ § § § § § § § § §

I am pretty much addicted to magazines and newsletters about a few things. Green building, architecture, home stuff, computers, and real estate. I thought I’d finally put some of my subscriptions to wider use and share a few links every day on this blog and on my West Austin real estate blog. Be sure to check out both sites for links of interest and let me know if you suggest any other magazines for me. I currently subscribe to about 25 or so and always love to get new ideas.

§§§§§§§§§§

Interested in Green Building and Sustainable Living? I got this a few days ago. I’m going so if you want to go and meet up, I’d love to meet ya.

Designing for Food Resources
Food is among life’s most basic needs.  Our current food production model is centralized and sells to a global market.  Like any other massed-produced commodity, our food product is cheap, abundant, and easy. There are many problems with the current model, leaving our food resources far from secure or sustainable.  Food production, transportation, consumption, and disposal each have a huge impact on our carbon footprint.

On a local level, grassroots groups are working hard to reduce Austin’s carbon foodprint. This presentation explores ways in which our planning process, building infrastructure, and operations policies can incorporate goals for responsible food resources. Changes in our single-family homes, multifamily homes, and commercial buildings can lead to more sustainable, reliable, and environmentally-responsible food resources.

This seminar will feature three speakers:

• Pamela “Sweetpea” Hoover is the assistant grounds master at Natural Gardener and a certified teacher of the square foot gardening method.  Sweetpea will address attainable and appropriate food production in Austin on a single-family scale.
• Marla Camp is the owner/publisher of Edible Austin magazine and also sits on the board of the new Austin Food Policy Council. Marla will speak on local food production, consumption and education on a community scale.
• Justin Doak is the founder of BlueBin LLC, a sustainability guidance firm for the retail industry and a partner in Austin Refuel, a Texas-based company that has developed a closed loop waste-to-resource network. Formerly the Program Manager of LEED for Retail, Justin will address marketing and money-making strategies in food waste-management for Commercial retailers and developers.

A Question/Answer period will follow the presentations.

You can get the full details of the meeting at Austin’s Green Building site.

§§§§§§§§§§

PROJECTS READY, CREDIT NOT

AUSTIN (get the full story at Austin American-Statesman) – Large Austin projects set to begin construction are stalled because of the recession and frozen credit markets.

JMI Realty is ready to start work on the Hotel Van Zandt, a 327-room boutique hotel at the eastern edge of downtown on Red River and Davis, but cannot receive the financing to do so.

“We have lots of jobs ready to be created with this project, but until the banking environment improves, we will be on hold,” said JMI Senior Vice President Greg Clay.

In north Austin, Atlanta-based Novare Group and its local partner Andrews Urban are holding off on a 28-story tower that would house condominiums and the 145-room Twelve Hotel at Endeavor Real Estate Group’s Domain. The developers say the delay of the $100 million-plus project stems from the postponement of three major retail projects at the mixed-use Domain. These include new stores for Nordstrom, Saks Fifth Avenue and Whole Foods Market Inc.

§§§§§§§§§§

From the Niel Spelce Austin Letter ( I highly recommend subscribing for anyone trying to stay abreast of what’s going on in Austin)

The information was released midweek that seven states posted an unemployment percentage above 10%.Texas was not in the group of seven.In fact, it was among the best overall.

The totals, as well as some major shifts, provide an interesting comparison. Let’s start with a few of the best states.Wyoming was the only state, at 4.8% unemployment, that came in under the 5% mark.Texas was one of the best, at 6.8%, ahead of New York at 7.6%.

…

But some of the hardest-hit states appear to be reeling because of the suddenness of the impact. For instance, North Carolina (a state many consider competitive to Texas because of its technology industry centered in the Research Triangle) suffered the worst upswing in unemployment.At the beginning of 2008, its unemployment was a very reasonable 5.3% then, wham!, it hit 10.3% at the start of this year.A swing of five full percentage points!The number of workers looking for a job almost doubled.This is how you define “impact.”

…

So what about the other big states?How do they compare to Texas January 2009 total of 6.8%.In addition to those mentioned above, Florida recorded 8.8% unemployment, Illinois notched 8.5% unemployment, Massachusetts tallied 8.1%, Ohio nudged near the 10% mark with 9.7%, and Pennsylvania came in at 7.7%.It’s pretty clear that Texas still stands out among the states that matter for future leadership and growth.

§§§§§§§§§§

The United States has been gripped in an economic downfall for years. The first and most dramatic show of the dwindling economy has been the national real estate market. Home foreclosures have risen so dramatically that the Federal government has had to bailout several financial institutions and in the process of creating a new plan to help save homes. The national job market has equally been affected by economic woes, making it even more difficult for many people to even consider buying a home. For all of the hardships that we are currently coping with, it appears that opportunity is knocking for foreign investors.

Homes in many of the nation’s hardest hit areas are being sold for taxes due. This has encouraged many foreign buyers, as far away as Australia, to purchase several homes in the U.S. as investment opportunities. Homes have been listed for as low as $1. Australian vacuum cleaner manufacturer Theo Szinger has already purchased several homes in the Detroit, Michigan area for less than $5,000. There are many houses available now for mere thousands of dollars that less than two years ago had been valued at more than $200,000. Many of these homes are in excellent condition; the current owners are just unable to keep up with payments.

As Americans continue to struggle to keep their homes, foreign parties are expected to continue to take advantage of the deals now offered throughout the nation. Homes are now available for less than the price of a used car. These homes have become a good source of income for buyers.

Austin has been working intensely on creating a competitive downtown area that will encourage commercial and residential growth. A large contributor to this goal is the increase in mixed use properties downtown. Many have excellent prelease arrangements for retail space, office space, and apartments. While the nation struggles to maintain normalcy in a weakening economy, Austin has managed to stay above the curve in many respects. The real estate market has slowed here, but the area is not nearly as hard hit as most other comparable cities. Companies continue to seek out cities such as Austin for the potential to grow their business. Austin provides the perfect setting for employers and employees alike. The mixed use properties currently underway and pending offers even more incentive to help Austin grow.

Mixed use properties can evolve as the demands change. This is evidenced by the recent announcement by Stratus Properties, Inc President and CEO, Beau Armstrong that Austin’s Block 21 project may add up to 35,000 square feet to accommodate a potential new leaser. While many builders have decided to put new construction on hold while awaiting a change in the economy, Armstrong states his project will continue as planned. The property is about 44% leased, and should continue to fill as construction is underway. Armstrong is open for more changes if necessary. Sales have slowed in response to the economy, but Armstrong is confident that more will become interested as the property is built.

Austin is expected to fare much better than other cities during the economic crisis. More businesses are expected to take advantage of the healthier economy here. As businesses move in, employees will also filter in. The potential of increases will help Austin reach its goal of downtown growth.

The real estate market was where we first noticed a problem. Nationwide, homeowners began to fall behind on mortgages that may have been the epitome of poor lending practices. It has been a whirlwind for about two years now. According to a report by Foreclosure Listing Service, Inc. the numbers are set to rise in March for Central Texas. Despite what may seem like bleak numbers, the areas around Austin have fared well during this crisis, mainly because there was never a real estate boom here for the market to fall from. Though foreclosures are reportedly up again, many feel that 2009 will mark the beginning of the end for the crisis.

The report shows Travis County foreclosure rates up by 56% since March of last year. Hays County was up by 51%, and Bastrop County was up by 28%. The majority of foreclosures were for single family homes. Some commercial buildings were included in the auction listing for March 3rd, including Chinatown Center. Attorneys for the complex stated that the listing was made to gain leverage while in negotiations with its lenders and many stores within the complex were unaware of the listing at all. The increase in foreclosures stems from many factors, including poor lending practices, the increase in daily living expenses, and the stagnant wages of employees. In other words, the cost of living is increasing, but overall income is not.

Austin has seen harder times in the past. In the late 1980s, there were a reported 1200-1400 foreclosure listings monthly. Lenders have become stricter due to the defaults on subprime loans. A nationwide credit crunch has made it more difficult to finance a mortgage. Many experts feel that Central Texas has reached its peak in foreclosures, but are still adopting a wait and see attitude as the first quarter winds down.