Austin Real Estate Blog

Recent figures from the Mortgage Bankers Association suggest that the worst of the housing industry downturn may be over.  For the first time in three years, fewer homeowners are falling behind on their mortgage payments; this spells good news for mortgage lenders as well as borrowers.  While economists hesitate to say that the worst is over, the reduction in new delinquencies is generally regarded as a positive sign by housing industry experts and real estate agents throughout the country.  Even in Austin, where housing prices remained surprisingly resilient throughout the nationwide woes, these figures offer fresh hope that an economic upturn is on the way.

Current national figures estimate that fifteen percent of all mortgages are at least thirty days delinquent; this includes homes currently in foreclosure as well as seriously delinquent loans.  The worst figures are seen in the subprime mortgage field, where twenty-five percent of loans were thirty days or more delinquent.  The state of Texas has fared somewhat better as a whole than the nation, but fifteen percent of the Texas subprime mortgage market loans are seriously delinquent by sixty or more days, and many of these are currently facing or undergoing foreclosure proceedings.  Only two percent of all mortgage loans in Texas are currently in foreclosure, which represents a markedly better performance than the national rate of approximately five percent.  Texas is one of only seven states currently showing foreclosure rates of two percent of less.

Austin foreclosure rates have remained lower than both the national and state averages, with one percent of loans in foreclosure in December 2009.  These low figures will likely shield Austin from the brunt of the foreclosure crisis expected when banks finally begin unloading already foreclosed homes on the housing market.  Certain hard-hit regions are expected to see plummeting home prices due to the depreciation caused by this expected glut of homes on the market; as many as six million foreclosed homes may be sold by banks over the next three years, according to economic analysts at Barclays Capital.

The strong housing market and stable home values in Austin make it one of the most desirable places to live in the U.S.  Austin’s vibrant computing, healthcare and green tech sectors provide outstanding employment opportunities and have cushioned the Austin metropolitan area against the worst effects of the recession.  With mortgage delinquencies on the decline and the national economy showing signs of recovery, there’s never been a better time to consider moving in or moving up in the Austin community.

After a year of sluggish sales, Austin saw a large jump in November '09.

A last-minute scramble to take advantage of tax credits and low interest rates is credited with a 58% increase in Austin home sales in November 2009 over the same period last year. The increase in sales is the largest in over a decade, and offers hope for recovery in the beleaguered residential real estate market. While overall home prices in Austin continue to fall, the decrease has begun to level off and seems to be reaching a state of equilibrium, allowing anxious sellers a well-deserved sigh of relief.

Analysts point to the recently extended First-Time Homebuyer Credit and interest rates that have dipped below five percent as the primary causes for this significant increase in sales. Additionally, while median home prices in Austin have not fallen as sharply as some experts had predicted, appreciable reductions in the asking prices of many homes have led to a surge in bargain-hunting by home buyers who might otherwise be priced out of the market. The median price of a single-family residence in Austin has decreased only two percent over the past year, demonstrating the resiliency and stability of the housing market in the metropolitan area.

Most real estate experts are cautiously optimistic about Austin’s residential real estate market going into 2010. Sales are expected to continue to grow more slowly, with no repeat of November’s record-setting figures. The expansion of the federal tax credit for first-time home buyers and continued low interest rates will likely continue to attract buyers to the market, especially in entry-level communities. However, as the economy begins to rebound, interest rates are expected to return to over five percent, and home sales will slow as a result.

As consumer confidence improves, economic conditions in Austin and throughout Texas are expected to continue to rebound, providing employment opportunities and spurring additional sales of new and existing homes. Home prices are expected to increase as well in correlation with the anticipated growth in demand. With ultra-low interest rates, federal incentives, and the current undervaluing of homes on the market, most real estate advisors believe that now is the time to invest in residential real estate, before interest rates and values return to higher levels later in 2010.

Seymour Fogel Mural

The Starr Building located at 107 West 6th Street, Austin Texas, has been sold. CB Richard Ellis represented the owner in the sale of the roughly 77,000 sq ft office and parking garage. The building has been around Austin some 55 years and houses a famous (to art and architecture folks mostly) mural by Seymour Fogel.

The mural itself is very pretty. I hope that the folks who purchased it try and make the finances work without plopping another high rise in a downtown that already has enough “towerage”.

Kemp Properties purchased the property and has previously restored other buildings like the Brown building. I think that’s a beautiful building so we ca assume that the Starr Building is in good hands.

Take a look at some of the photos from the listing agents at CB Richard Ellis. It looks like it would be a perfect set for Mad Men!

Starr Building Interior

Starr Building Exterior

Selling your home during the holiday season can be challenging; winter is usually a slow time in the real estate market. The good news is that buyers who brave the cold are usually motivated to buy and looking seriously for their new home. This can work to your advantage in selling your home quickly and for the right price. By setting the stage properly, you can present your home to its best advantage during this joyous time of year; here are some hints to get you started.

Celebrate the season, not the ceremony
Make sure your holiday decorations are not overly faith-specific; religious themes can make some buyers uncomfortable. Opt for general holiday ornaments like a tree or lights, rather than a full-scale Nativity scene. Avoid excessive clutter or overly elaborate decorations; a clean, simple holiday display can let your home shine without overwhelming potential buyers.

Everyone loves a bargain during the holidays
While severely underpricing your home is probably not the best idea, pricing it just below the listings for comparable homes in your area will attract more attention and ensure your home is one of the first stops for buyers. It may sound simple, but if you price your home to sell, it’s much more likely to sell. In today’s market, opting for a realistic asking price can prove more effective than starting high and expecting to negotiate with buyers later. A lower initial price will attract more views and can help your home sell fast.

Say it with pictures (and video)
Clear, attractive pictures of your home will help attract buyers who otherwise might not be willing to journey out in the cold. An online video tour is even better, letting potential home buyers take a virtual walk through your home and attracting additional attention for your property. If at all possible, post pictures of your home’s exterior in different seasons; this will give buyers a better feel for your home’s unique appeal.

Offer a warm welcome
When it’s cold outside, a crackling fire in the fireplace can add a warm glow to your home and showcase an important selling point. For homes without fireplaces, keeping the temperature at a comfortable level and offering fresh-baked goodies like cookies or brownies can create a holiday atmosphere and add to your home’s appeal.

Fix it up and save
If there are any nagging home projects you have been putting off, the holidays are an excellent time to take care of them. Little improvements can make a big difference in your home’s appeal; prices are usually lower off-season, so investing a little now could reap large rewards at the time of sale.

You might want to think twice about the lamps you put out as you can see from the above video.

What Did Interest Rates Do This Week?
** based on Freddie Mac weekly average survey **

30-yr Fixed – Lower
This Week:  4.78% (lowest since April 30, 2009)
Last Week:  4.83%
1yr Ago:  5.97%

15-yr Fixed – Slightly Lower
This Week:  4.29% (record low)
Last Week:  4.32%
1yr Ago:  5.74%

Jumbo Fixed (Average 30-yr Fixed)
Last Week:  5.75%Previous Week:  5.75%

Highlight of This Week’s Major Economic Reports

Despite the nation’s economic challenges, there’s a lot to be thankful for this year.  For one, the housing market has started to see stabilization – thanks in combination to historic low interest rates and increasing affordability.  Then, there’s the first-time buyer tax credit, which was set to expire on December 1^st and has since been extended to April 30^th.  The original expiration helped to prop up home sales in October, which saw the fastest sales pace since October 2007, with existing home sales jumping over 10% and new home sales spiking 6.2% from September’s figures.

What to Look for Next Week

The latest unemployment picture will be framed with the release of November’s employment report.  Even though unemployment claims have slowly dropped in recent weeks, it’s expected we’ll see a rise in the 10% unemployment rate through the end of the year.

Short-Term Rate Outlook
Relatively Unchanged

Stay Informed:  What’s in the News

“America’s Fastest Recovering Cities” – Austin #3 from Forbes.com

http://www.forbes.com/2009/11/19/cities-recovery-unemployment-lifestyle-real-estate-top-ten_print.html

“Texas’s Existing Home Sales Climb, Prices Inch Up” from Texas A&M Real Estate Center

A total of 19,347 existing single-family homes were sold in Texas last month, a 15 percent increase from October 2008, according to MLS data compiled by the Real Estate Center at Texas A&M University.

The median price rose 1 percent to $143,300 during the same period, and the state finished the month with a 6.9-month inventory of existing homes.

Here is how select Texas cities fared in October (data current as of Nov. 24, 2009):

“US Job Losses to Bottom out Next Quarter: NABE” from CNBC.com

Economists expect the joblessness that has weighed down the nation’s economic recovery will start to slowly abate in 2010, but they predict consumers will continue to keep a tight rein on spending, according to a new survey.

“Fed Remains Cautious on Strength of Recovery” from The New York Times

The Federal Reserve’s new economic forecast and minutes from a session earlier this month reveal that policymakers continue to fret over whether the economy is strong enough to hold up without government stimulus efforts, such as the temporary fiscal programs for the housing sector. Concern about the recovery comes as Fed officials begin debates on when to start raising interest rates, which have been held at virtually zero since last December, and on ending their program to purchase $1.25 trillion in mortgage-related securities. The real estate industry fears an increase in mortgage rates, but the Fed also wants to focus on reducing its holdings and bringing its balance sheet back to normal.

Marie Funston | Sr. Mortgage Advisor | (512) 750-7270
9442 N Capital of Texas Hwy., Suite 1-600
Austin, TX 78759
Fax:  (512) 343-1224
Marie@austinmortgageadvisor.com

On November 5, 2009, Congress approved an extension to the First-Time Homebuyer Credit, including changes designed to open up this valuable incentive to still more buyers. The bill’s main architects, Senators Chris Dodd and Johnny Isaksen, crafted the credit specifically to target the troubled housing industry and promote economic growth throughout the real estate sector of the economy; the expansion is expected to allow still more first-time homebuyers to take advantage of this $8,000 incentive. Current homeowners can also qualify for a $6,500 homebuyer’s credit if they have owned and lived in their current home for at least five of the past eight years; the five years must be consecutive, and income restrictions apply. The extension runs from December 1, 2009 to April 30, 2010, allowing current homeowners to take advantage of the credit anytime between those dates.

National Capital where the homebuyer tax credit was extended and expanded

The extension represents a compromise between those looking to decrease the government’s already over-sized deficit and consumer advocates who touted the benefits of the existing credit, which has been credited with prompting anywhere between 200,000 and 400,000 additional sales nationwide. While economic analysts may disagree on the total number of sales, it is widely accepted that the existing credit has been beneficial to the housing industry in general and to first-time buyers, home builders, and mortgage lenders in particular. By providing an additional incentive for buyers, the credit helped maintain home values and prevent further damage to an already weakened housing market; the expanded and extended credit is expected to help even more.

This will represent a real boon to Austin homeowners who may have felt “stuck” in their old home and unable to move up to a more desirable property. By providing a $6,500 credit to existing homeowners, the credit doubles its value; homeowners can count on this incentive (or the $8,000 first-time homebuyer credit) to help move their current home, while they can also rely on the $6,500 to help them make the move to their new home in financial comfort. This measure is win-win for the Austin market and for the country as a whole.

Prospective home buyers should be aware of the April 30th deadline, however. It is unlikely that Congress will extend the credit past this date, although home buyers who have signed contracts as of April 30th will receive the credit provided they close within 60 days. With home prices at affordable levels and the economy on the upswing, there has never been a better time to buy in Austin; these valuable credits provide one more incentive to buy now.

Increase in construction billing is a positive sign, but spending will lag a while longer.

The big factor is time-lag between billings and construction spending, which is between 9 and 12 months. A score below 50 indicates a decline in demand, and the current U.S. score is 43.1 for September, 2009. But it reflects a slight increase from the 41.7 from August.

However, new construction inquiries are up, showing a nice 59.1 percent increase. This could be showing that the government’s stimulus program is working. Or, it could be showing the stiff competition in the business is resulting in multiple submissions. The outlook depends upon the reality of this number’s creation. The optimistic eye will be hopeful, pointing at the stimulus program. It’s believed that some big stimulus projects will be beginning soon, helping to counter the big decline in private commercial construction.

It helps to look at one other factor: The rating for inquiries is the highest it has been in 2 years. That is encouraging. However, the only way to be certain is to watch October’s numbers, which should help us determine whether or not this is just a temporary upswing, or just a hillock which we have glided over. Until November, we can’t be certain of the figures final application. We must proceed with caution; not with unbridled enthusiasm. Yet, being too cautious could spell more difficulties. It’s hard to know where to set your accelerator when your speedometer isn’t working.

The number 107 doesn’t seem like a big number when you are talking home sales. But when existing home sales increase; it can be a good sign. In Austin, that 107 totals 6%. That’s a 6% increase in sales from last September, and it does make the economy seem a little more rosy than it was.

The median price increased, too, on a single family home in the Austin area. It is small, but noticeable. A 2% increase can only mean good for the sellers, and since the prices are on the way up, it means that someone has a little more to spend. Total quarterly sales from last year are still down, but hard times for the housing sales may finally be over.

We must remember, however: we are approaching the end date of the $8000 tax credit for first-time home buyers. In order to qualify for that credit, a home buyer must close on the property by November 30, 2009. It can be a slow process, anywhere from 14 days to 2 months. We could see a spurt in the growth of sales until November 30th, and then a drop. Currently congress is reviewing several bills that would extend the tax credit, but to date, none have passed. Keeping an eye on congress will help gauge the next phase in housing development.  There are still a lot of possibilities. If the recession is finally coming to an end, it will be good news for everyone.

Hold on to your hats, Austin. The wild ride may not be over.

When you are preparing to purchase a house it is crucial to know how much house you can afford. One of the best means of learning that is by going through the process of prequalification. This empowers you as the home buyer to know where to look and what you can manage. It also arms you with the knowledge that when you purchase your home, it will not become more than you can handle in the future.

The first step to pre-qualification is gauging your annual salary. This basic information provided to a mortgage company informs them how much you could reasonably put into a loan, and how it will relate to your other living expenses.

The next part of the pre-qualification process assesses how long it will take to pay off the loan. With this in mind there are several additional areas to factor in. Specific formulas take into account cost-of-living increases, normal living expenses, your salary and often a slight overage. This facilitates creating the best timeline for repayment.

By the end of the process, the outline for the ideal loan will be laid out, including payments and structure. This enables you to move forward with your purchase confident from the beginning.

At no time will your qualified real estate agent make an offer on your behalf until you have named the price you want to offer. Before making any offer you should take the time to investigate some of the information below prior to settling on a price for offer. Your real estate agent will help you through the investigation process.

Below is a list of factors to consider as part of your investigation:

* Determine the local market

* Investigate how much the seller paid
If the seller purchased the house recently in the depressed market, your purchase price should hover near it.

* Learn what the seller’s balance is for their mortgage
This will allow your offer to consider if this is a short sale. Short sales often have a minimum to the offer they will accept. You will need to be aware of this.

*  Examine Comparable home’s sold
This includes homes that are near or in the same neighborhood with similar layout, square footage, and age.

*  Analyze List-Price to Sale-Price Ratio locally
This will inform you of the range the seller may be willing to operate within. Trends are often very clear and your real estate agent can provide you with a report reflecting this information.

*  Check Square Foot Cost Average
This article shows you how:  How to Calculate Residential Square Footage

*  Get a home history report and a Days on Market Report (DOM)

An important part of this process is to keep in mind this is a business transaction until your offer for purchase has been accepted. This fact in mind, have a counter offer and several other options in mind when you make the offer to begin with. This will make certain you will find the right house at the right price for you. Depend on your Real Estate Expert for this process and you won’t go wrong.