Investing in Austin, Part 2

1/9/20072:53:44 PM Link |  | Add comment

Investment Properties, Local Real Estate Information, Market Statistics, Mortgage, Real Estate

As I mentioned in my last blog on Investing in Austin, I attended a class on investing which piqued my interest because I found a source for 100% financing on investment properties.  Combine that with other strategies and you could be looking at being able to buy investment properties with no downpayment and no money out of pocket for your closing costs.  Before I get too far down that path, let me back up a little...

Most people I talk with want to buy investment property but most I speak with have something that is holding them back.  Here are the common obstacles and answers to those obstacles:

• "I don't know what to look for" - I do, I am the expert, and that's why I am here to help you.  As your Realtor it is my job to monitor the market and find the properties that I believe will work for you and your investment goals.  I also consider it my job to educate you to the point that you feel comfortable and confident in the decisions you make.
• "I feel unsure/insecure about the future of real estate" - That's an easy question to understand right now with the news dominating the national headlines.  Know this though, real estate in Austin has appreciated at an average rate of over 6.5% annually over the past 30 years and the outlook for the Austin market appears to be strong well into the future.  The 50 year growth trend line for real estate in the United States is also 4.5%.  If your investment goals include building wealth, investing in real estate should be a part of your investment strategy.
• "My budget can't handle negative cash flow" - I certainly understand, that is why I will help you find a property that will minimize those risks and help you structure the deal so that you can have positive cash flow in your first year. 
• "I can't afford the downpayment" - Most people believe they need 20% down for an investment property.  That isn't the case in most instances.  As I've mentioned, I now have a source for lending that can obtain 100% financing which means no money out of pocket for your downpayment.
• "I don't have time to manage it" - There are plenty of capable management companies in town who will manage your property for a small fee.  Frankly, I think its a fantastic idea to let someone else manage it.
• "I have past credit issues" - The lending industry has loan products for almost any situation.  Don't let this fear hold you back from exploring your options.

The reasons people buy investment properties vary.  Some of the main reasons for buy investment properties are:

• Accumulate wealth
• Retirement Income
• Capital Preservation
• Capital Appreciation
• Rental Income
• Career Opportunity

What reasons are important to you?  That is a critical question to determine so that you can assess what the best type of property is for you and what the best strategy is for you.  Not every property works for every situation.  Each client's situation is unique and every property is different.

Questions? Call me, James Brinkman, West Elm Properties,  at 512.698.3525 or email to Brink@WestElmProperties.com

That New Home Smell...

11/13/20061:16:14 PM Link |  | Add comment

Buyers, Home Buying, Home Selling, Local Real Estate Information, New Homes, Real Estate, Sellers

The smell of new paint. 

The feel of new carpet under your toes.

The smile that comes across your face as you look out at the new home you got to build and help design.

It's filled with your upgrades, your taste and your style and it's a very tempting draw for many buyers.  In fact, many buyers wouldn't do it any other way.

It's the new home.  Truly yours.

But do you know everything you need to know to protect yourself on this purchase?

Surprisingly, many buyers of new homes go it alone when they buy a new home.  The common scenario goes like this - You know you want to buy a home.  One evening or weekend you are out driving around looking at new home communities.  Maybe you've seen a subdivision or area that grabbed your interest.  Maybe you looked through the paper and tore out or circled the new home subdivisions that looked like they would fit your needs the best.  However you found it, there you are, walking into the new home model.  A friendly person greets you and you mention you are just looking around.  This person is sometimes called the sales counselor, sales consultant, on-site rep or builder's rep - I'll call them sales counsultant for now.  The sales consultant asks you to fill out a registration sheet just for their records and many times asks you if you are working with a Realtor and you tell the sales consultant that you are just looking around and not working with anyone at the moment.  You finish filling out their short information sheet and go peek in the model.

Oh wow!  Amazing.  It's beautiful. 

This is the home you want.

You walk back in through the sales office and the sales counselor asks, "So what did you think?" ...and before you know it you are signing an offer for the home and writing out an earnest money/security deposit check.

Hey, I understand.  Every time I go with my wife to a new home community for a builder event she will turn to me at some point and say, "let's move here!" 

Let me ask you this though - how many times have you went to buy a new car and not done some research as to the dealer's price or, as I did, signed on for Consumer Reports comparison service which helps guide you in determining a reasonable price?  Another question might be, how many times have you bought a home?

Many people go into a new home builder without a Realtor on purpose believing it will help them negotiate a better price for the home since the builder will not be paying a commission to the Realtor.  On the surface it sounds logical.  In reality it usually doesn't come to pass. 

For most homebuilders, if they do not pay a Realtor commission they take the money that would have been paid and put it back into the marketing budget.  The commissions are already factored in by the builder in their marketing budget and, if not used to pay a Realtor who will assist the buyer through the transaction, the money goes toward other marketing avenues - billboards, signs, commercials and the like. 

In other words, typically, the price to the buyer is the same, regardless of whether a Realtor is involved or not.

The sales consultant works for the builder and is an employee of the builder.  Don't get me wrong, most that I've met and worked with over the years are wonderful and friendly people and will deal fairly with you but make no mistake about it, they work for the builder.  They would love to put a contract together for you and they may be up front with you what they can offer in incentives and discounts but, in the end, their obligation is to their employer, the builder, not to you.

A Realtor, however, is there to represent you and your interest only.

So, now that you know it usually costs you nothing to have a Realtor work for you, let's explore a few of the reasons why it's not only cost efficient but also advantageous.

 1. A Realtor does the everyday - A home purchase isn't something to be taken lightly and it's something most of us do only a few times in our life.  As a Realtor, I do this everyday.  I understand the workings and details of the process from contract to closing, from the foundation pour to the handing off of the keys. 

2. A Realtor will have a better understanding of fair pricing for the area - Are you overpaying for the home?  Are you getting a good deal?  Has the builder sold other homes of similar size and quality for less or more?  I'll use this example - a fefw years ago I was working with a client in a neighborhood off of Bee Caves Road.  My clients found a home they wanted to make an offer on and the builder had several comparable sales in the MLS system.  The builder's list was $619,000.  The buyers and I looked through the comparables, looked to where we wanted to end up and submitted our offer - $480,000.  That's quite a bit different and the sales consultant/builder rep let me know so.  Our "final" offer was $520,000 and the sales consultant/builder's rep said there was no way they could sell the home for that price.  A week later we had the home under contract for $520,000 with some additional upgrades, nearly $100,000 below asking.  The majority of the comparables were above us and I know for a fact that another couple who went into the builder unrepresented paid tens of thousands more for their comparable home, but I was able to leverage the comparables and the market at the time into a great deal for my clients.  Will every home transaction be like this?  No, the market's changed, some communities have limited comparables, if any, and sometimes when the builder says it is their bottom line it is their bottom line.  But whether the pricing is fair or not is going to be something a Realtor will be more familiar with than the average home buyer.

3. A Realtor can meet with the homebuilder to make sure deadlines are met and the home is being built according to the buyers needs.  Sometimes it is difficult for the buyer to make it out to the home site during the day, due to scheduling or work for example.  I can be your advocate to help you out in certain situations.

4. A Realtor knows of special incentives and offerings from builders - Almost every day I get an email from one of the builders in the Austin area letting me know of special discounts and incentives as well as homes ready to deal for quick close out. 

5. Most Importantly - Having a Realtor means you have someone working on your side.  Not only can I help you with potential comparable sales information or at least determining whether the pricing is fair, plus the knowledge of what incentives are being offered, I can also negotiate from a non-emotional position since I don't have an emotional investment in the home.  Some buyers are uncomfortable with being too aggressive fearing it will strain their relationship with the builder's salesperson, a relationship that has to exist sometimes for 9 months.

Additionally in certain situations I can offer my own incentives and rebates to new home buyers.  For instance, I have a move-up program for people who are planning to sell their home and buy a new one.  This can result in my client paying very little out of their own pocket for my services.  Sometimes I offer other incentives so check with me before you even go looking for a new home.

You can check out an inventory of many of the new home builders in the Austin area right on the West Elm Properties website - Click Here to see the inventories as well as streaming video.

The Times, They are A-Changin'...

11/6/20062:17:15 PM Link |  | Add comment

Buyers, Customer Service, Home Buying, Home Selling, Local Real Estate Information, National Real Estate, Opinion, Real Estate

The time does go quickly.  I can't believe it has been over a week since I wrote anything so it looks like I have some catching up to do with you this week - so let's get started...

First, there are a few articles in the Statesman that I found of interest:

This article is about how the internet has changed the real estate business for buyers, sellers and Realtors.  This isn't exactly anything new or profound, but it bears discussion.  As I mention to every one of my sellers, 77% of homebuyers used the internet to search for a home in 2005, and this is a number that has been increasing every year.  I have noted a leveling off of sorts over the last couple of years as we reach some type of critical mass.  The more surprising facet is that nearly one-quarter of all buyers found their home through an internet search - a ten percent increase over the prior year.  This is one reason why I stress property presentation so much to my sellers.  If you look at my website, and in particular the exlcusive listings section, you will notice that I take a great deal of care and time on presenting each listing so that homebuyers can really grasp what a home is about.  Too often, in fact far too often, I see agents who have put no pictures or 1 photo or dark photos up on the internet or in the MLS.  I'm not sure what those agents are thinking when they do that.  It certainly is not going to make a buyer think that they want to see that home.  Time and time again buyers tell me that if there are no photos are bad photos of a property they skip right through the property and cross it off the list.  Additionally, I try to write a description of each property so that the home buyer can visualize what I can't really show in photos.  For the home seller, the goal needs to almost be 'not being eliminated' at this juncture in the real estate business.  With buyers controlling far more of what they see, which is a good thing, it is important to put on the best 'face' you can.  Many sellers need to ask themselves, is my agent really showing my home in the best possible light?  If the answer to that question is no, the seller probably needs to have a discussion with their listing agent or maybe even find another. 

Also of note though is that 81% of those buyers who used the internet to search for homes did use a Realtor.  Of course this brought out the whole "Realtors need to be prepared because we're no longer the gatekeepers of the information", which always makes me laugh.  Honestly, if all you, as a Realtor, could provide was which homes were on the market and the ability to show them, you really shouldn't be in real estate.  Of course, that is just my humble opinion.  A Realtor should be a resource for their client on the transaction, the market, the values and should make their client's lives less stressful and make the purchase as smooth as possible.  There are too many agents who actually interject themselves too much into the transaction and thus disrupt it or cause more drama than is necessary.  Maybe I'm just a little more prepared to embrace the changes in the industry, after all I did spend four years with eRealty or, as they were known in Austin at the time, the devil.  Of course that experience actually brought me to where I am today with my company.  Too often with these 'internet' real estate companies (you know who you are!) they lose sight of what is most important in a real estate transaction - trust!  Too much of the focus is placed on reduced commissions and, due to the reduced commissions, volume becomes the paramount issue because the profit margins are so slim.  In the end when you focus on volume the company starts to lose sight of the individual - the home buyer or seller - and, as my old broker who shall remain nameless used to say 'they just want you to treat them as johns'.  (Yeah, it sounds as horrible now as it did then.)  How disheartening that thought was.

My creation of West Elm Properties, Realtors was in direct response to my experience at eRealty.  I still wanted to be on the cutting edge of technology, to use it in any way that would benefit by clients, but I wanted to get back to the roots of the fact that the real estate transaction is a very human thing.  Buying or selling a home is one of the most stressful things to do and can stir up a whole lot of emotions.  Its important to not only use the best tools available for a buyer or seller but to also 'see' and understand the very specific, very unique needs of each client.  I really believe that having West Elm Properties helps me accomplish the marriage of the two facets new and old, better than any other company out there.

jb

Tidbits - Texas Gameday Center, Augie's condo,

10/24/20069:49:17 PM Link |  | Add comment

Around Austin, Downtown, Downtown Condos, Home Buying, Local Real Estate Information, New Homes, Real Estate

If you've been to a football game at The University of Texas this year, it's hard to miss the advertisement for the new Texas Gameday  Center coming over godzillatron.  For those longhorn fans who don't know, or <i>somehow</i> missed the ad, the Texas Gameday Center project includes the renovation of the 51 units in the Windsong Apartments to luxury condominiums as well as a 136 unit luxury condominium hotel located at Dean Keaton and Red Rive, just across from the practice fields.  The units at Texas Gameday Center will range from studios to 3 bedrooms, from 350 square feet to 2,000 square feet and the pricing is expected to be from $160,000 to $1,000,000.  The renovation of the Windsong should be complete by the start of the 2007 season.  The new building is expected to be ready by Fall 2008.  I read that it will include a clubroom for 'tailgating' before games (although I'm not sure how they are going to fit all of those grills and pop-up tents in the there - kidding, of course).  Two more smaller projects are planned for Lubbock and College Station.

If you are interested in more information on the Texas Gameday Center or would like buyer's representation, please email me or call me at 512.698.3525 and I will be happy to assist you.

Speaking of The University of Texas, it looks like Augie Garrido has put his condominium in the Nokonah up for sale.  The asking price?  $1.15 million.  The interior was designed by Dick Clark and the furnishings are included. 

The Difference Between Listing a Home and Selling a Home ... and St. Joseph, Realtor!

10/16/200610:22:30 PM Link |  | Add comment

Home Selling, Real Estate, Sellers

This is really a nice article on making sure you price your home correctly.  As the article discusses, most of us tend to be a little optimistic on our home's value.  As a homeowner, you've put a lot of time and hardwork into your home so it is certainly understandable.  I will admit that I try to get my sellers the highest possible price in a reasonable amount of time, and sometimes this involves stretching to a bit to see if we can eek out a little more than most Realtors would suggest.  Sometimes the strategy works and, because we've set up and staged the property correctly, we are able to get on the high end of the price for the neighborhood.  Sometimes the market just won't absorb the property at that price.  What I do stress with my sellers is that we need to be active in monitoring the market and adapting the price to reflect that market.  The statistics reflect that after the second weekend the amount of buyers viewing a home tends to go down each week from then on out.  It's important to capitalize on the traffic when it occurs.  On top of that, the longer a home stays on the market, the more stigmatized a home becomes.  In other words, buyers begin asking 'why hasn't this home sold?' and the bigger question ' why hasn't anyone else bought the home - what am I missing?'. 

Pricing a home right from the start actually helps you get the most from the home.  Many sellers say, "let's price it high and if a buyer wants to make an offer for lower they always can and we can negotiate it."  In theory it sounds great but over the years I have found that the majority buyers just won't do that.  Most buyers who feel a home is overpriced will feel that the seller won't consider more reasonable offers or, if they do, will not negotiate to a more reasonable price.  By the time the list price is brought down to a more reasonable price most of the buyers for that home are gone meaning many times the seller ends up with less for the home than they would have received if they had priced it fairly to start and gotten an offer in the first few weeks.

It really is a fine line to walk - getting the most for a home but not overpricing the property.  It is my own personal philosophy that much of that 'extra' you can get for your home actually comes into play before you list the home - the staging, the pre-marketing, the prepping of the home, etc.  You need to have everything in place the first day you put the home on the market to make a splash and to capitalize on the bounce you get from being the new home on the market.  If you don't do it this way, if all of the components just trickle into play after you've already entered the home into the MLS, then you end up missing on a good portion of your buyers and missing out on getting top dollar for your home. 

I also believe in my clients, both buyers and sellers, have every bit of information available to help them make their best decision.  For sellers this means a broad spectrum of comparables.  I will also narrow it down using the basics of standard appraisal practices so that I can give my own broker's price opinion.  With all that information, plus information on statistics from the market and their neighborhood I believe that we can find a price and a marketing strategy that will work best for the seller so that we can meet the goal - getting the best price in a reasonable amount of time with a minimum amount of stress.

.....................................

One more article for you tonight -

Can you help me sell my home, St. Joe? - It's not a new practice, but I've seen a few articles on it lately - must be the slowing market for sellers in other parts of the country.  St. Joseph, carpenter and father of Jesus, is also believed to be help sell homes when buried in the seller's yard.  There is more about the history of the practice in the article, but I found the various way that people believe St. Joseph should be buried to be interesting.  The most interesting method appears to be burying the statue upside in a hole in the backyard facing the home with his feet to heaven. 

Credit Scores in Texas

10/10/20063:12:20 PM Link |  | Add comment

Buyers, Closing Information, Lending, Mortgage, Real Estate

I recently read in the September/October 2006 issue of Texas Realtor magazine that Texas' average credit score ranks 50th among U.S. states.  The average credit score in Texas is 648.  In South Dakota, the highest ranked state, the average credit score is 711.  The 'brief' in the Texas Realtor magazine states that a person with a top credit score might pay $231 less per month than a person with a poot credit score based on a $216,000 mortgage.  I don't know why they chose $216,000 but it certainly demonstrates how important credit scores are to the lending process and how much these scores can impact the real estate market in Texas. 

If you are keeping track, the $231 per month is equivalent to $2,772 per year or, over the life of a 30 years mortgage, $83,160.  It's also said that an extra $6/month in mortgage payment buys you approximately $1,000 more house.  That's $38,500 more of a home that would be available to someone with a better credit score at the same payment. 

Texas Realtor magazine cited Experian and "myFico savings example using a 30 year mortgage with prevailing national rates in August 2006"

Your Home - Star of the Show

10/3/20063:26:11 PM Link |  | Add comment

Home Ideas, Home Selling, Opinion, Real Estate, Sellers

When staging your home the idea is to make your home the star.  There really is no goal other than that.  Staging is not about being clean or even primping the home but rather about arranging the home so that there is a flow to the home.

For all my real estate listings I work with a professional design consultant who uses the principles of feng shui and energy when staging the home.  He only works with one other real estate company in Austin and I have found his work to be very effective.  Many of the home staging companies that exist arrange the furniture to look nice in the room but do not necessarily take into account the flow of the buyer's eyes through the room.  Good home staging not only takes into account how to maximize the best features of a room, it also helps 'point' the buyers the direction you want them to move.

With that in mind, here are a few ideas I've picked up when you are looking to stage your home:

> Consider sightlines.  When the buyers walk in your front door do they have any obstructions in their sightline?  Try to remove tall or large objects from this initial view and keep a clear 'pathway' so that the buyer feels drawn in.  Tall or large pieces in the way of this initial sightline can have the effect of 'pushing' the buyers back out.  Having this sightline clear can also lend an impression of more space.

> Straighten the kitchen - The kitchen is a major player in the home buyer's thought process.  You don't have to do a kitchen remodel in order to improve the appeal of this space for a buyer.  Once again the goal is space - specifically, open space.  Clear off the counter as much as possible to create better visual lines.  This includes most, if not all, of your appliances as well as towels, cooking utensil caddies and cookbooks.  A very select use of decorative items may be used, but the focus is on 'very select'.  You might try fresh fruit in a bowl if it fits well into the space.  Clean off the refrigerator and remove items from window sills.  Buyers will look in your cabinets so be sure to keep those clean as well with at least some sightline to the back of the cabinet.

> Pay attention to the 'earth' elements in your house - In Texas there is not a lot of opportunity to use a fireplace and yet a good percentage of homes in Austin have a fireplace.  It is also true that many people ignore the fireplace when arranging their furniture.  Rather humorously (and I was guilty of this myself), the furniture tends to be arranged toward the television and the television tends to be on whatever wall you find the cable outlet.  Arrange your furniture toward the fireplace.  Create a setting - a 'warm' place for gathering and, if need be, move the cable outlet.  However if you are staging your home for sale consider just going without.

> Throw rugs - Throw rugs - I mean literally, throw them!  Actually rolling them up and putting them away will be just fine.  In most situations throw rugs make a space seem smaller.  The first place to remove them is usually the bathroom which, typically, is one of the smallest rooms in the home already.  Pull them from your kitchen as well.  In fact the general rule seems to be if they are not there to specifically define a space they probably need to go.  An example of this is a living and dining room with no other separation designated in the wall or floor features.  Even then it seems it is risky to use a rug if the area is carpeted as the rugs show their best on wood floors.

> Closets and other spaces that go dark - Do not stuff these areas.  Rather, be sure that the floors of the closet are clean and remove whatever you don't absolutely need and start packing it.  This goes for most cabinets and other storage type rooms or areas.  Buyers will feel the space in question does not have enough storage room if the cannot see the back wall.

> Garage - It seems the garage has become the keep-all in today's society.  If you have nowhere else to go with these items put everything you can in boxes and stack them UP rather than out.  The best is to have your garage show as its intended purpose - to house the amount of cars its designed for as well as see the walls of the garage.  The 'good' is to clear enough space to fit the cars and stack and arrange everything vertically up the walls.

Additionally, don't be afraid to pick up recent magazine on home decorating and copy ideas from the pages.  Don't go overboard, but if you see a way to create a space in your home based on similar space in the magazine, don't be afraid to try to arrange your room that way.  Many people suggest that furniture and decorations should match.  I personally don't think that is as important as the items in the room 'going' together.  Matching isn't as important as style.  If the style is identifiable and cohesive then you are probably in good shape.  If it is more of a hodge-podge mix and match situation then you should probably look at taking the room one direction.

More

• No dim bulbs!  Make sure the light bulbs all lighting fixtures are working. 
• You might like your wallpaper but more and more home buyers view it as dated, regardless of when you installed it.
• Your pets are your friends, but that doesn't mean the home buyers will like them.  Keep them out of the way.  If possible, keep as much evidence that they even exist (food bowl, litter boxes, crates) out of sight.
• Use fresh!  Fresh flowers, fresh fruit.  Avoid plastic fruits and silk flowers.  The impression you leave with each is subtle but lasting.
• Keep it clean.  Not only the floors and counters, it's time to get detailed.  Fan blades, light fixures, air vents, window sills - whatever collects dust or dirt, keep it out.
• Leave a light on.  Keep your front porch light on.  It's an invitation to home buyers.

When you are all done walk out of your home, walk to the street and then walk back in and view the home - not as the seller of the home but rather as a buyer.  Try to see the home with buyer eyes rather than seller eyes.  Feel how the home moves you - what directions you feel you should walk.  How does the home look to you?  Don't make excuses or reasons for the faults, don't grant yourself, as the home seller, the benefit of the doubt - the buyer won't.  Remove all the possible negatives you can identify, starting at the beginning.  Remember, the buyer is there looking for a reason to rule out the home - don't give them a reason!

What Boom?

9/22/20065:03:24 PM Link |  | Add comment

Buyers, Home Buying, Home Selling, Local Real Estate Information, Market Statistics, National Real Estate, Opinion, Real Estate, Sellers

Six years ago, in the summer of 2000, I sat in my car outside a home in Jester Estates waiting to meet a client.  It was a Friday morning, about 8:50AM.  The instructions posted in the MLS said the home would not be shown until Friday at 9AM.  When I pulled up to the home I thought I might as well be going to a party because of the amount of cars sitting outside the home.  Outside my windshield I saw no less than 6 other Realtors and their clients waiting in a scattershot, makeshift line in front of the house.  The listing agent might as well have put a number dispenser at the front of the house and a little “Now Serving Number” digital board over the front door.  As I got out of my car I thought to myself, “Well, this is no good”.

Demand.  I saw a lot of the ‘Demand’ side of supply and demand that summer.  I’ve mentioned it before, but I had 7 different buyers that lost out on a home in best and final situations in July of 2000 alone.  Being in a market with multiple offers, many significantly over asking and actual market value, is not the boon to real estate (and for that matter, Realtors) that many people believe it to be.  Buyers are frequently are disappointed or frustrated and many end up overpaying for the home in that market scenario.  (I, personally, tried to be diligent and make sure the prices my clients paid were supported by comparable sales.) 

While many were caught in the euphoria of the thought of never ending price escalation, I was stuck with the feeling that the Austin boom was about to come to an end.  The words of Dr. Stephen Pyhrr’s article “ Austin ’s Persistent Real Estate Cycle” were resonating.  He wrote that Austin has historically experienced ‘up’ cycles of 8-10 years and ‘down’ periods of 3-5 years.  In 2000, the last ‘bottom’ of the cycle, the beginning of that cycle’s ‘up', had begun in 1991.  We were well into our 9^th year of the ‘up’ and it was becoming evident that cycle had run its course.  The real question was starting to look like, how bad would be the down cycle?

At that same time, in California the market was just beginning to really heat up.

........................................

Six years later it’s hard not to see all the stories and articles about how the boom is over.  It has become one of the bigger business stories of the year and I would wager that most of the major media outlets have at least run one ‘Boom is Over’ in the past month or so.  Yesterday I ran across this article prominently featured on the MSN home page.  It is an article from Forbes magazine titled ‘How Low Will Real Estate Go?’ (Lacey Rose).  The first sentences in the article read, “Get used to it – the seller’s market is closing up shop.  The days of fat, fast home value increases are gone.  Pack away those flipping fantasies.  “The boom is definitely over, there’s no debate about that,” said Mark Zandi, chief economist of West Chester, PA – based research firm Moody’s Economy.com.  “Now the question is more how hard is it going to land, if it lands at all.” ”

So the boom is over, huh?  What boom?  Where have I been?  Last I check Austin went through its down cycle from the Fall 2000 to the Fall of 2004.  Here in Austin , we experienced zero growth, for the most part, between 2000 and 2004.  Since the Fall of 2004 we have seen steady growth, commensurate with that of a market in the beginning cycle of growth.  Growth, based on past history, that should continue through to 2012, maybe even 2014.

Even within the article there is a link title “How Low Real Estate Will Go In 15 Metro Areas” there are examples of markets that look like they will fair just fine during this ‘bust’.  The link graphs out the projected growth for the next 10 years in 15 different markets.  Seattle, Dallas and Houston all are projected to fair just fine during this terrible, terrible time (tongue firmly planted in cheek).  Boston, Los Angeles, Miami, New York, Phoenix and Washington are the only cities they show that appear to actually have a retreat in pricing at some point over the next 10 years.  For those keeping score, that’s 6 out of the 15 cities cited, and yet the article/link is “How Low Will Real Estate Go…”. 

I don’t think it is a big jump in logic to say that the stories we read and see, written for national consumption, are heavily influenced by the east and west coast in this country.  Is it too much to ask that broad brushes not be used when writing the stories though?  Of the 6 cities that actually appear to have price decreases on the way, only Phoenix does not fit the mold as a major east or west coast market.  It definitely appears that this is coloring the news and, in spite of evidence to the contrary in plenty of markets, is causing the writers and reporters of these stories to make such grand sweeping statements as “the seller’s market is closing up shop”. 

I’ve said it before and I’ll say it again: all real estate markets are local.  When a market is down in your town, I’ll find you a market that is up in another.  Point me to a seller’s market in one city and I’ll point you to a buyer’s market in another.  There is no ‘national’ real estate story when it comes to a national real estate market.  Yes, certain factors influence all markets.  A spike in interest rates will have some influence over all real estate markets, but the impact will be different depending on the local factors. 

In Austin we are influenced by technology and the state government, among many other factors.  When the tech options vaporized and the stock market fell in late 2000 and 2001, the Austin real estate market followed.  The record highs of the real estate market in Los Angeles and Miami over the next few years had absolutely no influence as to what was happening in Austin .  Of course it didn’t, why would it?  Yet we heard story after story about how the national real estate market was booming, just as now we are treated to the doom and gloom.  During the last few years, Austinites would ask, ‘What Boom?’ and now, just as easily, they can ask, ‘What Bust?’ 

So as you read and see these stories just remember some simple rules:

Real estate is local.  There are always some points of wisdom to be gleaned from the stories and they are a good way to know what’s going on in different parts of the country but, in the end, what happens with the real estate in New York City has little influence as to what is going on in Austin. 

Real estate cycles are just that – cycles.  They go up and they go down but over the long-term the growth trend line is up.  Nationally, the 50 year growth trend line is up 4.8% per year on average.  Over the past 30 years in Austin the growth trend line is up about 6.7% per year.  Real estate remains one of the best ways to leverage your money over the long term, regardless of the cycle at that moment.

 

Don’t buy into the hype and hyperbole that the reporters use in their stories and articles.  In the end, much of their job is to sell papers, magazines or whatever their medium might be.  The headline, ‘How Low Will Real Estate Go’ will certainly grab one’s attention a lot more than something more pedestrian.

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Six years ago, as I got out of my car outside a home in Jester Estates and got ‘in line’ with my clients I thought to myself what a wild scene it was and how it certainly could not be a good sign for where the market was headed.  My clients actually got the house that day.  There were multiple offers but we stayed within the comparables sales and, after an afternoon of ‘sweating it out’, we got the phone call that their offer had been accepted.  Just a few months later the word came out that Dell would be laying off employees and so began the past downturn in the Austin market. 

Six years later we are still here.  Jester actually did fairly well over the past few years and is a high demand area.  Austin made it through the down cycle and came back out and now we are at the beginning of our growth period.   And, at least for the next few years, the boom starts here.

.......................................

Here is an interesting report on the subject of market performance from First American if you would like to read more on real estate cycles of different market.

Austin Market Summary for July 2006

9/15/200610:17:00 PM Link |  | Add comment

Local Real Estate Information, Market Statistics, Real Estate

Nothing too different than what we've seen over the past year although the percentages aren't as large as they were in the past few months.  Much of the recent run up from the past year occurred in the first few months of this year so you actually see a little bit of a leveling right now from month to month (say from June's statistics to July's statistics).  This is to be expected.  In many neighborhoods values went up between 10-15% in between February and May and every market needs a leveling after a period like that so that people can 'catch up' to the new values.  I would expect the market to remain true to form, with not much appreciation the rest of this year but then another run-up in the spring.


Current Market Summary
July 2006 All Single Family Sales

2006 2005

2,721 2,446

+ 11%

All Active Single Family Listings

2006 2005

8,368 8,871

-  6%

Single Family Median Price

2006 2005

$178,190 $169,900

+  5%

Single Family Pending Sales

2006 2005

3,076 2,468

+ 25%

Busted

9/6/20063:08:12 PM Link |  | Add comment

Market Statistics, National Real Estate, Real Estate

Bad news travels fast.  We've all heard it time and again.  So when many of the recent real estate questions I field are related to the housing bust, I know exactly why I'm receiving them.

For the past few years, as the markets in many areas heated up, became sketchy, and then 'popped', resulting in declines in value.  Much of the media is coastally driven - meaning much of our national news comes from people with either an East Coast or West Coast perspective.  I heard and read many stories during the first part of this decade about how 'hot' the real estate market was and the double digit gains many of the major markets were experiencing.  All the while, Austin's real estate market was languishing behind a virtually flat growth trend line from Fall of 2000 to Fall of 2004.  Four years of nada.

More and more there are news stories discussing the slowdown in the real estate market, and the downturn that is actually occuring in many of the markets.  Many people will probably think of 2006 as the year the downturn began.  In all truth the slowdown in many markets began in 2004, according to the Standard & Poor's/Case-Shiller Composite Home Price Index, a housing benchmark that follows 10 major markets.  These markets are San Francisco, Los Angeles, San Diego, Las Vegas, Denver, Chicago, Boston, New York, Washington DC and Miami.

Fall of 2004 is also where I would put the 'bottom' of the last down cycle for Austin's real estate market.

Information released yesterday by the Office of Federal Housing Enterprise Oversight shows that prices declined in 61 of the 275 cities tracked.  Taking it from a local perspective, Austin ranked 123rd with an 8.42% annual growth rate between the second quarters of 2005 and 2006.  Many people might look at that and say, 'well, that's almost right in the middle, whoop-dee-doo'.  Understand that from the first quarters of 2004 to 2005 Austin ranked 7 places away from dead last in the results.  To go from 258th (only 265 markets were tracked at that time) to 123rd over the period of one year is pretty impressive.  When you take into account the historical perspective that Austin typically has worked in cycles of 8-10 years of 'up' and then 3-5 years of 'down', it would certainly appear that Austin is due to continue its climb up the rankings for several more years.

Just remember as you see and read these reports - all real estate is local.  As many of the markets around the country struggle and go down, many other markets will begin to thrive.  My thoughts are that the Austin real estate market should continue to do well for many more years and we will continue to see solid appreciation in Austin home prices through at least 2011.

Sunday Readings

8/27/200611:57:31 PM Link |  | Add comment

Around Austin, Cedar Park, Local Real Estate Information, Real Estate, Sunset Valley

Sunday's I try to do a little catch up reading from the Statesman website to see if there are any articles of interest that I missed during the week.

Here are a couple related to the ever-growing Austin market and real estate:

Cedar Park's first major retail center to open next year - If Cedar Park were a stock, and I was a stock analyst, I would have Cedar Park rated a strong buy right now.  Value priced, hit pretty good during our 'downturn' of 2000-2004, and poised with all sorts of positive signs showing its about to starting a nice ride up.  I have quite a few thoughts here, but I have to save some of them for my clients.

Last big development in Sunset Valley - Homes and retail.  Gee, starting to see a trend here in the Austin area!  Sunset Valley has seen tremendous growth over the past decade, including substantial retail development.  It's located in Southwest Austin near the Brodie and 290W area.  As the article mentions, there are only 475 residents actually in Sunset Valley (which is its own incorporated area), but there are more than 91,500 people living within 3 miles of Sunset Valley.  If you live in Southwest Austin, possibly in Legend Oaks, Western Oaks or Travis Country, and you need one of the big box retailers, chances are you can find them at that corner of Brodie and 290W.

First apartments for Mueller - Personally, this will be one of the more interesting projects to see take place over the next few years - the building on the old Robert Mueller (pronounced Miller, just so you know).  I've been getting quite a few clients who have been interested in the areas surrounding the old airport, such as University Hills and Vintage Hills, and its really starting to develop a cool, funky, yet affordable, vibe.  There are some very solid pockets within University Hills and Vintage Hills and the age of the houses is such that it's fairly similar to those areas running just north of Hyde Park, such as Allandale, Crestview and Skyview, but a little more affordable.  The mixed use plan for the old airport, hopefully, will add to the funky vibe.

Gas prices drive up Realtor's costs - Hmmmm, you probably don't care about this one as much as I do, do you? Ha ha.  I will say this though - this was the second thought (the cost of gas) I had after an experience this afternoon.  I had someone call last night on a listing I have in Round Rock and I set an appointment with them today at 2:30 to show them the home, on behalf of my seller.  I arrived at 2:25 and waiting until 2:55.  I left a message for the caller, and I want to believe the best of people, but after I had rearranged my day, thus missing out on a few hours with my family, and spent about $6 in gas getting there and back, it was a gentle reminder of how much I appreciate simple considerations, the fantastic referrals from my clients and friends, and how I need to continue to pre-screen.  So much of my business is from referrals from my past clients that there is an inate sense of trust right from the start and I know that I tend to carry that over to people who aren't referrals.

If you'd like more information about any of the areas that I have mentioned, or are mentioned in the articles, including Cedar Park, Sunset Valley, Legend Oaks, Western Oaks, Travis Country, University Hills, Vintage Hills, Hyde Park, Allandale, Crestview and Skyview, please feel free to contact me directly at Brink@WestElmProperties.com or you can use the contact page here!

Surf's Up! 2006 - Best Cities for Real Estate

8/19/200611:23:23 PM Link |  | Add comment

Buyers, Home Buying, Home Selling, Local Real Estate Information, Market Statistics, National Real Estate, Real Estate, Sellers

According to Mark Nash, real estate author of 1001 Tips for Buying and Selling a Home, the 10 best cities for real estate (both for investors and home buyers) are:

• Atlanta, Georgia
• Austin, Texas
• Boise, Idaho
• Dallas, Texas
• Houston, Texas
• Las Vegas, Nevada
• Phoenix, Nevada
• San Antonio, Texas
• Seattle, Washington
• Milwaukee, Wisconsin

If you would like to read more on it and his reasonings, you can find it here

I actually believe it seems like a fairly solid list based on what I've been reading as well.  I don't think it's any coincidence that the only city on a coast is Seattle.  That's not a knock on those coastal cities, it's just that after the run-up those cities have experienced over the past few years its only natural to expect a leveling off and cooling period. 

Also not surprising is that Texas landed 4 cities on that list and that Austin is one of those cities.  Being an expert in Austin real estate and the Austin real estate cycle, I did expect Austin to make the list.  While Austin's cycle does run independent from the rest of Texas, as has been shown over the past few years (and particularly evident during Austin's 'down' cycle from 2000-2004), there still is some degree of similarity across the state as to buyer demands. 

Of course, if I had to choose a city in Texas, I think Austin wins hands down, both for quality of life and appreciation potential.  Austin stands unique from those cities and although growth has changed some of the city's characteristics, the desire to keep austin weird still prevails.  Additionally, while the national 50 year growth trend line for real estate averages an 4.8% annual appreciation, Austin's average appreciation over the past 30 years is approximately two percent higher than that.

I fully expect for the next few years to see lists similar to this one, with the majority of the cities resting in the middle parts of the country.  Eventually attention will turn away and back to the coasts, but that is the nature of any cycle, almost like a wave that runs across the country.  For those ready to catch the wave, surf's up in Austin.

Austin's Persistent Real Estate Cycle - Part 1

8/13/20069:16:49 PM Link |  | Add comment

Buyers, Home Buying, Home Selling, Local Real Estate Information, Market Statistics, Real Estate, Sellers

This is the first in a 3 part blog on the real estate cycle in Austin, Texas.  Many people behave as if a certain economic situation will continue into perpetuity.  Many times this is played out all so evidently when a bubble bursts on a particular market, whether it be the stocks in the early 2000s or the real estate bubble that is occurring on the coasts, especially notable in Miami and California.  Operating from the standpoint that because something appreciated 'x' amount last year, it will do so this year, is not only foolhardy, it's just bad business.  It seems so common sense to even say it, but yet time and again I see people repeat the mistakes over and over, giving into greed and trying to make a quick buck, so it bears repeating - and understanding. 

It is with that goal that I undertake these writings, so that the information is out there for all who want it.  For a while there I thought this was really something I could show to my clients - a unique understanding of the Austin market, where it's been, where it is now and where it is heading - and something to hold on to.  In other words, something I could provide to my clients as an incentive for working with me that I feel few other agents understand.

However I've decided that particular line of thought is not the right place to be and is not where I feel good.  I don't want anybody making a decision without this information if at all possible, even if they aren't working with me.  I think it's important information to have for anyone who wants it and so, by writing it here, I hope it finds its way into the hands of the people who are searching for this knowledge and it allows them to make good financial decisions.

I cannot speak in depth on the cycles of the stock market, or even the real estate cycles of California, but I can offer some fairly detailed, yet pretty concise, information regarding the persistent real estate cycle of Austin, Texas.  It's been my home for over 30 years and it's a place that I love and love to understand.  I hope the information I share with you in this series brings you the knowledge you seek.

....................................................................................

In 1994 I was fresh out of college with my BBA in Real Estate/Finance and working for the broker, Doug Gurkin, at Keller Williams Commercial - Shopoff & Gurkin.  I mostly handled much of his real estate sales/listings for many of the small multifamily properties (duplex-fourplex) that his past clients, almost all of which were investors, were 1031ing out of their inventory while he worked diligently on another company he was involved with - Asset Recovery Fund.  On the side from that I did some work for the local CCIM chapter and, in particular, helped in putting together the book that was handed out to all who attended the CCIM's broker forecast. 

It was while working on the CCIM's broker forecast that I ran across an article from Dr. Stephen Pyhrr entitled Austin's Persistent Real Estate cycle.  If there was a more formative moment in my real estate career I'm not aware of it.  I believe I have referenced the article, and the findings of his research, to almost every client I have worked with since that time.

The article was written in the early 90s and it discussed the cycles within the Austin real estate market through the ups and downs of a couple of cycles.  Dr. Pyhrr then graphed out the cycle through the date of the article.  What he found was that Austin has a historical "up" period of 8-10 years and a historical "down" period of 3-5 years.  He then projected how the Austin market would behave through 1999 (at which time he put ???s). 

How did it all turn out?  I'll cover that, as well as more detail on the cycle, in Part 2.

If you would like a PDF of the article, feel free to email me at Brink@WestElmProperties.com and I would be happy to forward it on to you.