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The Crossland Team
Sylvia Crossland, Broker Steve Crossland, MPM (512) 301-5811 |
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Less demand for entry-level homes pushes Austin 2Q starts down
June 28, 2007
Looks like the new starter home segment of Austin’s sales market is slowing down a bit, which is great news for landlords. The renters who would otherwise be purchasing those homes are remaining in the rental pool. Also, many of the starter homes were being purchased by investors, which means the rental supply won’t be gaining that additional inventory, which is no doubt why we’re seeing strong activity in the rental market.
The $300K+ end of the sales market is still very strong. Overall, the ABJ article paints a good and accurate picture of what we are experiencing in our actual business.
Austin Business Journal - 2:30 PM CDT Thursday, June 28, 2007
The slowdown continues on new home starts in the Austin area as homebuilders put the brakes on entry-level product.Builders started 3,367 units in the second quarter, down 27 percent from second quarter 2006, according to the most recent report from Dallas-based housing consultancy Residential Strategies Inc. The start rate for new homes over the last 12 months is also down 12.6 percent to 14,568 compared with the previous 12-month period.
“Builders have reported to us that buyer traffic under $200,000 remains sluggish,” says Mark Sprague, Austin partner for Residential Strategies. “The $250,000 to $600,000 price points remain strong, but not as frothy as in recent quarters.”
Where are U.S. Home Prices Most Likely to Drop?
June 23, 2007
The PMI Mortgage Insurance Co. has updated its 2007 U.S. Market Risk Index, ranking the 50 biggest metropolitan statistical areas by the likelihood that home prices will be lower in a couple of years.
Mark Milner, PMI’s chief risk officer, notes that the new risk model “gives more weight to the recent volatility of an area’s price movements” and underscores the point that homeownership should once again be widely regarded as “a long-term investment.”
The introduction of risk ranks, which group areas with consistent characteristics together, is one other feature of the newly enhanced index.
Ranking highest on the index are such markets as Riverside, Calif.; Phoenix; Las Vegas; and West Palm Beach, Fla.
On the other hand, Texas, Ohio, Indiana, and Pennsylvania MSAs made up the lowest ranked group — or those dealing with a less than 10 percent chance of declining home prices.
Source: Realty Times
Mark Dotzour on the Texas Real Estate Market
June 22, 2007
Dr. Mark Dotzour, the Real Estate Center’s chief economist, discussed the Texas housing market on Tuesday’s edition of NewsHour with Jim Lehrer. The 12-minute segment is available online.
I’ve posted the transcript of Dotzour’s remarks below, but the video on the MacNeil Lehrer news hour website is worth the 12 minutes watching time to get a feel of the overall U.S. market and how well Texas is doing compared to the other regions discussed (New England, California, Michigan).
RAY SUAREZ: Mark Dotzour, how does Texas resemble what you just heard from Massachusetts and California? And how does it resemble the nationwide trends?
MARK DOTZOUR, Texas A&M University: Hello, Ray. It’s good to visit with you. We down here in Texas we have a real, unique situation going on right now. We’ve got a combination of very strong job growth. It’s basically double the national average. We’ve got home price appreciation that’s going up at an increasing rate in many of our metropolitan areas.
And at the same time, we’ve got population growth. I noticed just last year we had 570,000 new people come into the state of Texas. And at the same time, the home builders have cut back on production, as well, like you’ve previously heard. And so we’re in kind of an interesting position, where home builders are cutting back on their building, but inventory levels of homes for sale are quite low. And that’s why we’re seeing the good rates of price appreciation in many parts of Texas.
Central Texas home sales stay hot in May
June 20, 2007
This is from todays Austin Business Journal. I haven’t had a chance this month to do my own stats yet. The difference between the stats I run each month and the stats published by the Austin Board of Realtors, is that I filter out Condos and Townhomes and report only single family home sales.
Looks like May numbers are going to be good though.
Austin Business Journal - Wednesday, June 20, 2007
Austin area home sales posted their second month of increases in May.Single-family home sales hit 2,679 last month, up 2 percent compared with May 2006 and a record for the month, according to the latest Multiple Listing Service Report from the Austin Board of Realtors.
The median price for single-family homes was $183,160 for the month, up 5 percent from a year earlier. Active listings are also on the rise, up 8 percent from last year to 8,821. Meanwhile, high demand has pushed the number of days homes sit on the market down 7 percent to just 55 days.
“This is an exciting time for the local real estate industry,” says Charles Porter, chairman of ABoR. “While the national market is slowing down, Austin continues to experience steady growth. And a healthy housing market benefits the entire local economy.”
Home prices appreciated more than 10 percent in the first quarter of the year, according to figures from the Office of Federal Housing Enterprise Oversight. That’s more than double the national appreciation rate of about 4 percent. Across Texas, homes prices rose nearly 7 percent year-over-year.
Austin School Quality and Real Estate Values
June 19, 2007
One of South Austin’s last remaining new home neighborhoods, Olympic Heights, with homes (new and resale) priced below $200,000 is about to get a shot in the arm due to a favorable shift in the elementary school it attends. Olympic Heights kids may now attend the “Exemplary” rated Baranoff Elementary. Many young families intentionally seek out homes in areas that attend “Exemplary” and “Recognized” rated elementary schools over the lesser “Acceptable” rated schools. The problem is that homes attending these higher rated schools are typically too expensive for young families.
Sylvia spoke with an administrator at Baranoff Elementary and she confirmed that Olympic Heights will officially be in the Baranoff attendance zone as of 2008. Families can be transferred in early for the year 2007 by requesting a transfer from the central Austin ISD office. Since Baranoff is a “closed” campus, which means they do not accept transfer students, anyone from Olympic Heights must write on their transfer form “Olympic Heights Resident” and their transfer will be automatically accepted. There will be no bus service from Olympic Heights in 2007, so families must drive themselves. Bus service will begin with the 2008 school year. Olympic Heights currently attends the “Acceptable” rated Menchaca Elementary.
As the school switch becomes better known, I believe it will create additional demand for homes in Olympic Heights, and help the values in that neighborhood rise more than they would otherwise. We’ve sold 3 homes recently in Olympic Heights, and continue to recommend it as a neighborhood that should appreciate well in coming years.
So, have Realtors been paying attention and making sure to point out this very good news in their real estate listings for Olympic Heights? If a Buyer’s agent is performing a search for listings that attend Exemplary Rated Baranoff Elementary, will listings from Olympic Heights show up?
Read more
Travis County Tax Appraisal Values Still Rising
June 18, 2007
Sunday’s Austin Statesman has a front page story about rising tax appraisal values in Travis County, and how those value increases are affecting home owners who are being priced out of their neighborhoods. One lady, quoted below, now has property taxes alone of $1500/mo, which is probably more than her house would rent for.
This is the other side of the coin of a strong real estate market. We, as investors and Realtors, like the strong market of course. Especially after 4 years of mostly flat and falling values from 2002 through 2005. I don’t remember reading any newspaper articles during that time period about how good we had it when appraised tax values were not rising. Nor did I read any articles telling about the 25% to 35% drop in rental prices that renters of homes were enjoying, or how great it was for renters.
One thing I want to correct in the article is the stated assumption that landlords can simply raise our rents to cover increases in property taxes. We can’t. The rental market sets the rental value of your home, not your taxes or payment. In the “old days” (before the late 1990’s in Austin), annual property taxes and insurance could be covered by about two months rent. Today, investors should expect it to take 4 to 6 months rent to cover the annual property taxes and insurance. I’ve managed homes in Central areas where it took 9 month’s rent to cover. That makes it rough to achieve positive cash flow even if you own a home free and clear in one of those areas.
Here is the story:
Homeowners paying price as values rise
Travis appraisals hitting some especially hard.
AMERICAN-STATESMAN STAFF
Sunday, June 17, 2007On one end of Pennsylvania Avenue’s 2200 block in East Austin, a dirt yard and a “For Sale” sign sit in front of a new, three-story tan house with a rust-colored Star of Texas nailed above the door.
On the other end of the block, a pair of matching fourplexes are nearing completion, one green with lemon trim, the other lemon with green trim, both advertised for lease.
In the middle is the older, one-story home of Maria Ana Guevara, who is not happy about the situation.
“All the new houses in the area have been making my taxes go up,” the 55-year-old Travis High School custodian said. “I’m expecting them to go up again.”
Her home was worth $59,000 in 2002, according to the Travis Central Appraisal District. In 2005, it was valued at $75,000.
Today, it’s worth $117,745, according to the appraisal notice that arrived in Guevara’s mailbox in early May.
Austin Rental Market - May 2007 Update Stats
June 16, 2007
The average rental price in Austin is up 7.6% from May of last year to $1377. The Median rental rate is up 3% to $1175/mo. Days on Market is down 27% and number of homes leased is down 15%. In short, our Austin rental market for single family homes continues to chug along very well, with rents steadily rising. The drop in number of homes leased is, according to property managers I know, largely due to more renters renewing their lease instead of moving or buying a home.
When talking with investors about the Austin Rental Market, and putting into context where we are now compared to where we’ve been, I’ll often say something like “Austin’s average rental rates are still below the 1999 average”. As of April and May, rental rates are above the $1306 mark set in 1999. (see chart below). If we end the year with an average rental rate above $1306/mo., I’ll have to start saying “since 2000″ instead of 1999. It’s about time.
I don’t have the MLS area breakdowns this month as I’m swamped and don’t have the time to do those. But I’ll have a mid-year breakdown next month.
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Apr 2007
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May 2007
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May 2006
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Yr % Change
|
|
| # Leased |
554
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650
|
749
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-15%
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| Avg List Price |
$1320
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$1384
|
$1287
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7.5%
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| Median List Price |
$1195
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$1250
|
$1195
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4.6%
|
| Avg Leased Price |
$1310
|
$1377
|
$1279
|
7.6%
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| Med Leased Price |
$1195
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$1210
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$1175
|
3.0%
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| Avg Size SQFT |
1882
|
1910
|
1836
|
4.0%
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| Median SQFT |
1784
|
1817
|
1766
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2.9%
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| Avg $ per SQFT |
$0.70
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$0.72
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$0.70
|
2.9%
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| Avg Days on Mkt |
48
|
40
|
55
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-27%
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| Median Days on Mkt |
36
|
36
|
45
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-20%
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Below is the Year to Date comparisons for Jan-May 2006/2007. Austin single family homes only.
Read more
Does it matter what kind of car a Realtor drives?
June 15, 2007
I was out one evening last month with a friend of mine who is also a Realtor. We drove in his $50K Mercedes SUV, which, at two months old, still had the new car smell. He had written up two Buyer deals that day and remarked to me that he thought his new sled was helping his real estate business. “How’s that?” I asked.
He said he thinks the nice car establishes credibility and evidence of success and expertise. He senses that when he meets Buyers for the first time and takes them out looking at homes in the Benz, they seem to be predisposed more than before to trust and believe in his advice and opinions. Following the purchase of the new Mercedes, he’d been doing better than before. He thinks it’s because buyers take him more seriously than when he drove his older Chevy Truck or Honda Sedan.
I then asked, “How do you know Mercedes doesn’t just make you feel better about yourself, and it’s your positive attitude and elevated self image that is causing you to do better, and not necessarily the car?”
He conceded that I might have a point, but he thinks the car definitely creates a positive impression with buyers which translates into more written deals. I remained skeptical.
Read more
Showing Property Only After Offer Received
June 5, 2007
I’m making phone calls to preview a batch of homes this morning for an investor. One of the listings has showing access as “Appointment with Agent”. I called the agent and the conversation went like this:
Me: Hi. It’s Steve Crossland with the Crossland Team at Keller Williams. I want to preview {property address} today. Can we arrange that?
Agent: Uhh, well … we’re only showing that one after an offer is made.
Me: My buyer isn’t going to write an offer without me first determining that it’s a good candidate property. I can’t do that without walking through. Can we arrange it or should I scratch it off the list?
Agent: Scratch it off your list. Sorry. Our tenant won’t let us show the property.
Me: OK. Good Luck with it.
What chance does this home have of selling? About zero. If a tenant is uncooperative, or the home doesn’t show well with a tenant, the smart thing to do is not market the property until either the tenant moves out or the situation can be improved or at least mitigated to a workable degree. Simply refusing to show a home is a very tough way to sell a home. The Seller and the Listing Agent are both wasting their time.
Real Estate TV shows should be viewed with skepticism
June 3, 2007
Turns out “Flip This House” got flipped. One of the star flippers is nothing more than a con man who had his friends and family posing as buyers and who really didn’t fix or sell the houses he was shown to be flipping on Flip This House. Amazingly enough, the only episode I ever saw of Flip This House was this exact guy, the con man. I remember, watching him close the deal, thinking “that’s not how a deal is closed”. It looked too easy, and sort of fake. I wrote it off a dramatic re-creation, or reality TV hokeyness, but it turns out it was in fact all bogus.
Here’s the story:
‘Flip This House’ Star Accused of Fraud
Associated Press
‘Flip This House’ Star Accused of Fraud and Faking Work on Popular ShowATLANTA (AP) — On an episode of A&E’s popular reality series “Flip This House,” Atlanta businessman Sam Leccima sits in front of a run-down house and calls buying and selling real estate his passion.
Now authorities and legal filings claim that Leccima’s true passion was a series of scams that included faking the home renovations shown on the cable TV show and claiming to have sold houses he never owned.
“This is, indeed, a con artist,” said Sonya McGee, an Atlanta pharmaceutical representative who says Leccima took $4,000 from her in an investment scheme.
McGee and others say Leccima’s episodes of “Flip This House,” A&E’s most popular show, were elaborate hoaxes. His friends and family were presented as potential homebuyers and “sold” signs were slapped in front of unsold houses. They say the home repairs — the lynchpin of the show — were actually quick or temporary patch jobs designed to look good on camera.