Austin Real Estate Blog

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.

Hamilton Pool Preserve just outside of Austin.

Current economic conditions may have put a damper on vacation plans for the foreseeable future; that trip to Paris or Hawaii may have to wait for another year. Here in Austin, however, we have a number of outstanding vacation opportunities with little or no travel involved. These luxurious retreats can provide all the amenities of a world-class hotel, allowing you to get away from it all while staying close to home. Here are some ideas to help you start planning your next vacation to the sunny climes and picturesque attractions of Austin, Texas.

East Austin’s Lady Bird Lake is the setting for the spacious Architect’s House and the smaller Architect’s Guest House rental properties; these luxurious properties offer lodgings for four at affordable rates, with the use of kayaks included in the nightly rental charge. A deluxe high-definition projection television is available in the Architect’s House for stay-at-home types, and pets are considered on a case-by-case basis.

To truly experience all that Austin has to offer, book a night at the Hotel Irons, which features Austin music, books, and art and serves up some of the best Austin originals including honey and barbecue sauce in its well-stocked pantry. Dogs and kids are welcome in this chic two-story house, and the heated swimming pool makes this a family favorite all year round.

The ultimate fairytale vacation is available at Bouldin Castle with its dungeon, moat, and stone ramparts surrounding a tower. The castle is a new addition to the Austin scene; originally built in 1940 as a Roman Catholic church, it was reimagined in 2007 as a classic European castle. Of course, the moat is really a lap pool, and the vast medieval hall area was once a place of worship, but guests at this elaborate establishment enjoy the illusion created by the medieval décor and atmosphere in this 4,200 square foot Austin castle.

By vacationing in one of the deluxe accommodations available in Austin, residents can enjoy the benefits of well-deserved rest and relaxation while exploring the many attractions that are available in this diverse cosmopolitan city. Take a tour of Austin’s many art galleries, go for thrills and chills on the Austin Ghost Tour, chill out at one of the many live music venues in the “Live Music Capital of the World”, spelunk through the Inner Space Cavern, or book a ride on the antique Austin Steam Train; whatever you choose, you’ll save money and enjoy the best of Austin culture right here at home.

Home builders are cautiously optimistic heading into the new year, according to a recent survey by John Burns Real Estate Consulting. The survey indicates that 57% of builders expect 2010 to be an improvement in terms of sales and revenues over 2009 figures. The extension and expansion of the First-Time Homebuyer’s Credit is anticipated to create increased demand for new home construction, while recent changes to the tax code have been advantageous to home builders as well.

The tax changes mainly affect net operating loss carrybacks; these tax mechanisms allow companies to offset profits in one year with losses in another, reducing their overall tax liability and allowing them to receive refunds for taxes paid in past years. These carrybacks usually are only allowed for two years, but the length of time has been sharply increased, allowing many firms to offset current losses against profits going back as far as 2003. This will provide more cash in hand for many financially-strapped builders and offer real help at a time when many home builders need it most.

Builders may get money back from taxes paid!

The survey follows on the heels of a recent prediction from Fitch Ratings that new construction and existing home sales will improve more than previously expected in 2010, due in part to the expansion of the tax credit and efforts by the government to stem the tide of foreclosures in recent years. Incentives and tax credits appear to be having a beneficial effect on the market, but many analysts worry that sales will slump as soon as the incentives are removed or phased out.

Austin builders are expected to benefit from the change in the tax code and the extension of the First-Time Homebuyer’s Credit. Austin’s real estate market has survived the recent housing crisis remarkably well; this is credited to Austin’s thriving economy and overall desirability as a center for culture and a great place to raise a family. While new building projects have slowed in recent years, the demand for new construction is still strong. Ironically, some Austin builders will benefit less from the tax code changes due to the fact they have fewer losses to offset against previous gains, and thus will not qualify for the full level of tax relief.

Taxes may be going up for real estate investments

Real estate investment providers could be adversely affected by a bill that recently passed the U.S. House of Representatives that would tax real estate assets at the higher “ordinary income” rate rather than the existing capital gains rate. The bill, referred to as the Tax Extenders Act of 2009, would exempt owners of real estate held for investment purposes, including rental properties; however, advisors, managers, finance experts, and other consultants and support staff would be taxed at the higher rate.

The bill specifies that gains derived from real estate investment would no longer be classified as capital gains; interest earned would be taxed at the higher rate, and investors who use their own capital will be exempt from the legislation. Investors who use other entities in order to finance their real estate investments, however, will be affected by the legislation, which is seen as a crushing blow not only to speculative investors but also to publicly traded partnerships and real estate portfolio providers.

Existing real estate corporations that directly fund and build their own projects will not be affected by the legislation. Service providers, fund advisors and real estate management companies are expected to be hardest hit, since they depend heavily on a narrow margin of profit to continue operations.

The bill specifies that earnings derived from an “investment services partnership interest” will be taxed at the higher rate. An investment services partnership interest is defined by the legislation as the interest held by an individual or corporate entity that:

• Advises the partnership regarding buying and selling of real assets
• Manages, acquires and disposes of real assets
• Arranges financing for purchasing real assets
• Engages in other activities in support of management, acquisition and disposition of real assets

If you oppose this bill you can send a letter to your congressman and/or senator.

Real assets include securities, commodities, certain options and derivatives, and real estate promotes held for investment purposes. Property managers and real estate investment companies will want to watch the progress of this bill closely as it moves from the House of Representatives to the U.S. Senate for consideration.

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.

Watch the whole thing. You’ll be glad that you did.

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

For individuals and families looking for an opportunity to give back to the community this Thanksgiving, there are a number of volunteer opportunities available in the Austin area. By giving some of your time and effort to help those less fortunate, you can build a family tradition of caring and social responsibility. Sharing is truly the spirit of the holiday season; here are some ways you can help.

Operation Turkey
This annual event provides a hot Thanksgiving meal to homeless individuals throughout Austin. Volunteers are needed to help sort, prepare and package food and deliver it to various sites that will be serving up these meals to the homeless on Thanksgiving Day. Sign up at volunteers@operationturkey.com or learn more at www.operationturkey.com.

Meals on Wheels
This well-known program delivers food to the elderly or housebound. This Thanksgiving, Meals on Wheels is in need of a few extra volunteers to package and deliver meals. Interested individuals can sign up or learn more at www.mealsonwheelsandmore.org/volunteer/current-needs.

Arc of the Capital Area
A non-profit organization providing assistance to developmentally challenged and disabled individuals, Arc of the Capital Area offers a variety of services to special-needs individuals and their families. On Thanksgiving, they are in need of several volunteers to pick up meals from H-E-B, package them appropriately, and deliver them to Arc clients. For more information, contact Genessee Klemm, Arc’s volunteer coordinator, at (512) 476-7044 or by email at gklemm@arcofthecapitalarea.org.

Salvation Army
The Salvation Army’s Red Kettle Campaign provides Christmas baskets and toys to needy families throughout the Austin area, as well as supporting a number of other charitable activities by the organization. Bellringers are needed for two-hour shifts throughout the holiday season. Those wishing to volunteer as a bellringer should contact the Salvation Army at (512) 437-4566.

Feast of Giving
St. Louis Parish Social Ministries will host a Thanksgiving Dinner for needy individuals and families at the St. Louis King of France Catholic Church at 7601 Burnet Road. Volunteers are needed to help cut turkeys and prepare the meals as well as greeting and serving the guests as they arrive. Clean-up crews are also needed after the event’s conclusion. Since this is a family event, volunteers as young as five are welcome to help with this annual event; 420 people were served at last year’s dinner, and turnout this year is expected to be even higher. Food donations are also accepted beforehand and, for perishable items, on Thanksgiving Day. Those wishing to donate or volunteer should contact Bea Dela Rosa at (512) 454-0384 ext. 199.

If you’re an agent you should do some research on the proposed RPR or Realtors Property Resource.

You can read about it here.

http://www.inman.com/news/2009/11/12/mls-buy-in-key-nar-database?page=0%2C4
and here
http://www.inman.com/news/2009/11/14/rpr-execs-under-fire-nar

Below is a snippet from the 1000watt blog posted on Inman. If you’d rather a more concise description skip down past the quote.

The NAR has taken over certain technology assets of Cyberhomes from LPS (formerly known as FNRES) in order to bring its RPR (Realtors Property Resource) project, as well as its consumer-facing play, HouseLogic, to market. To do this, they have created Realtors Property Resource LLC — a wholly owned subsidiary of the NAR.

Certain LPS executives, including Cyberhomes GM Marty Frame, will be making the transition over to NAR/RPR (see Inman News article). Frame will serve as the president of the new entity. Dale Ross, who was co-founder of MRIS, the nation’s largest MLS, will be CEO. LPS will also provide call center support and other services as part of the deal.

The RPR database will contain parcel information on nearly 150 million properties through a data license from LPS, which (along with First American) is one of the two major sources of public property data.

This is interesting news, but let’s back up a minute for those of you who have more well-rounded lives than I (my fellow online RE junkies can skip down to my take on what this deal means).

The RPR is the national property database initiative that the NAR has been quietly working on for some time. It has gone by a number of names over the past couple years, including “Gateway,” “The Real Estate Channel,” and the “Library/Archive.” It will aggregate tons of property data, including public records, in one place. This will be a Realtor-only database. The idea is to keep agents and brokers competitive amidst widespread data diffusion and other challenges.

HouseLogic.com is a NAR-owned public destination site that will be unveiled next week at the NAR EXPO. The site is part of the NAR’s long-term strategy to engage consumers on behalf of its members.

RIN is the “Realtors Information Network,” a for-profit arm of the NAR from which the RPR sprung. It was conceived for the purpose of creating an ill-fated online real estate service nearly 15 years ago. It was proprietary, something like a Prodigy or early AOL-type service. It blew up, costing the NAR millions. It was from that failure that the present-day Realtor.com was born, in 1996.

Thanks to Brian Boero and Inman for the above snippet.

If you don’t subscribe to Inman here’s the gist…

Sometimes it feels like this is my relationship with NAR...

REALTORs Property Resource in a Nutshell

Basically, NAR would love to create another cash cow like Realtor.com by taking our MLS data and building a system around it, then selling it to the likes of ANYONE WHO WILL PAY FOR IT including government agencies. Can you say appraisal districts? Hope everyone is ready for their taxes to go up once we expose our complete MLS data (even in aggregate).

A Better Idea

And you folks are Realtors like me…. Why doesn’t our MLS ever agree to give any of us all the data for free so I can sell it to other people? IDX feeds for members are $200 per year now (or thereabouts).

I’ve got an idea. Why don’t all the MLS systems around the country give me the data. Then, you know, I’ll build a website with your images, your listing data, and publicly available records and then I’ll sell the services to you and other entities for a profit? Of course your dues may go up a bit since you’ll have to hire someone at ABOR to handle all this data exchange, help NAR with any issues they have, etc, etc.

Sounds like a good deal, right? Who’s on board?

I’m not a data entry robot working to make NAR and their partners money while paying Realtor.com $50 a listing to “showcase” my data on their website, not to mention a website that is worthless without said data.

Who Wants Higher Property Taxes?

In Texas, we are a non-disclosure state and they want to sell the info to government agencies. Um.. I’m pretty sure that all the appraisal districts will love that. Personally, I think this is the dumbest thing NAR members could do to themselves. If NAR wants said data for their system our MLS should charge them accordingly. I think $100 per listing sounds about right. Then we could automatically get a featured listing in Realtor.com and have $50 profit that could go to reduce or eliminate our MLS fees.

Sounds more fair to me. NAR can go and partner and sell the data, but they need to BUY IT FIRST.

Aside from all this… Why do I, as an agent in central Texas need, or care about accurate valuation or data about property in Montana? I’m not licensed there. I don’t sell there. And NAR Code of Ethics Article 11 says I can’t because I’m not competent in the workings of real estate in Montana.

Why should my dollars go to fund a NAR company that makes profits for LPS Real Estate (an RPR partner) and allows the data that is our lifeblood to go out to whomever?

I’ve only been thinking about this for a few days so I could be wrong. I would love to hear what other folks at our board or at any board across the nation think. If you are for or against the RPR and have an interest in real estate other than being a salesperson please disclose it so we can get a read on where each stakeholder stands.

Joe Cline – REMAX Capital City