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The Crossland Team
Sylvia Crossland, Broker Steve Crossland, MPM (512) 301-5811 |
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Austin a Home Flipper’s Market?
August 30, 2007
This news snippet below is the sort of thing that paints an unrealistic picture for investors who don’t take the time to properly study and analyze what they are getting ready to do.
Let’s take a closer look at what the article says…
Daily Real Estate News | August 30, 2007
Markets Where a Flipper Can Make a Buck
Flipping went out of fashion last year, leaving thousands of flippers in trouble in many areas, but an analysis by Forbes magazine shows that there are markets all over the country where investors can still turn a profit if they pick their properties wisely.
Really? I’d like to see Forbes send a journalist to Austin to find and flip a home. It’s not that easy. I’m not saying it can’t be done, but it’s very, very risky and there are a lot of owner-occupants and inexperienced investors out there willing to pay too much, which leaves the true number crunchers with little to pick from.
Forbes calculated whether a market is ripe for flipping by using data from Moody’s Economy.com to calculate a market’s rate of sales against inventory, and to determine supply and demand. Then it looked at current and new-home construction numbers through the end of 2008, based on data from the National Association of Home Builders; the magazine sought out markets where planned new home construction is low.
Then Forbes used price appreciation data from the NATIONAL ASSOCIATION OF REALTORS® to get a sense of short-term market direction. Finally, it examined Moody’s figures on investor share. The higher the share of investors, the more sellers outweigh buyers, which is bad news in a bearish market.
That seems like sound reasoning for identifying strong selling markets. But a strong selling market is very difficult to buy in. I was at a gathering of Austin investors/flippers last night, and it’s universally agreed upon by my group that few if any really good deals can be found in the Austin MLS. Most don’t even bother to look in the MLS for the deals they find. That means you have to be out there networking, prospecting or advertising to find motivated and ready sellers who value a 5-day close more than a top dollar sale.
My problem is, if I run into someone like that, I’ll talk them into letting me do a minimal amount of fixup and selling the home for them at a much better price. There are sellers for whom the sales process avoidance is valuable, but most are much better off listing and selling the home through the MLS where a better price can be obtained.
The results identified the following markets as the best candidates for flipping. Here are the best markets, along with the price in each market that would make a home a candidate for a quick turnover.
1. Seattle, $385,000
2. San Francisco, $759,000
3. Raleigh, N.C., $225,000
4. Houston, $150,000
5. Austin, Texas, $175,000
6. San Antonio, $150,000
7. Boston, $389,000
8. Los Angeles, $590,000
9. New York, $489,000
10. Portland, Ore., $295,000Source: Forbes, Matt Woolsey (07/26/2007)
Interesting that 3 of the 10 cities listed are in Central Texas within 150 miles of one another. Austin still has a good run ahead of us, though the frantic market of last summer has subsided back to just a normal good market.
Things every Austin real estate buyer should know
August 29, 2007
We’ve recently started providing an additional form to all of our buyers. It’s a notice provided by the Texas Association of Realtors called “GENERAL INFORMATION AND NOTICE TO A BUYER“. Though I like to keep paperwork simple and minimal, this form is helpful in bringing to the attention of buyers some of the things that may need further explanation or discussion.
Like anything in life, those of us who do something evey day can sometimes forget or become disconnected from nuances that others may not know about. We assume everyone knows about insurance, inspections, property taxes, etc., but that’s not necessarily the case with many buyers. Providing a buyer with this information brings these important items to their attention so they can ask questions and seek further information if needed.
Here is the content of the TAR Form 1506 (7/15/05)
Be an informed buyer. Make sure that the property you want to purchase meets your needs. The following information may assist you during your purchase.
ANNEXATION. If the property you buy is outside the limits of a municipality, you should be aware that the property may later be annexed by a nearby municipality. You may find information on the boundaries of nearby municipalities by contacting the municipalities directly.
APPRAISAL. An appraisal is a valuation of the property. An appraiser renders an estimate of value as of a certain date under assumptions and conditions stated in the appraisal report. Typically, a buyer’s lender requires an appraisal to verify that the loan is secured by property that is worth a certain amount. An appraisal is not the same as an inspection.
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Downtown & UT Tower View From Rooftop!!
August 28, 2007
This gave me a chuckle this morning. Comments that agents write in listings are often a source of amusement, but I’ve never seen one boasting of the view from the roof. There is not a rooftop deck or anything, just a normal house with a roof. But if you want to get out your ladder and climb up there, you’ll have, according to the comments written by the agent in the listing, a “Downtown & UT Tower View From Rooftop!!” That oughtta get it sold for sure!
I might add this house is about 15 miles from downtown and UT, so I’m not sure how good that view will be once you’re on the roof.
Stevie Ray Vaughan died 17 years ago today
August 27, 2007
Stevie Ray Vaughan died 17 years ago today. I miss seeing him play in Austin back in the 1980’s. Austin properly honored him and his music with a prominent statue on the shore of Lake Ladybird (formerly Town Lake) on the hike and bike trail downtown.
If you ever saw him play live, especially in a smaller venue, you know that it was something special, and hard to describe. Eric Clapton put it aptly in an interview. He said that Stevie (I’m paraphrasing) “seemed to go into another zone, into a different deminsion, and that the music seemed to be channeling through him from another place, beyond his consciousness”.
That says it pretty well.
YouTube has a lot of old videos of Stevie’s music, plus a loyal following of fans. This one is Stevie Ray Vaughan & Double Trouble - Live at the El Mocambo in 1983.
Deciding against tankless water heaters for our new home
August 27, 2007
Sylvia and I are in the process of building a new custom home in SW Austin. This will be our second custom (and new) home. All other homes we’ve owned have been resales. On the first one we built in 2003, we went $50K+ over budget by adding too many upgrades and making too many additions to the home, including an expanded second story. It was our first time building a home and we somewhat lost control over ourselves.
This time we’ve sworn to be more disciplined and to stay within budget, or to go over ONLY on things that are important to us or that add value to the home. We actually have a pre-established “over budget” amount that we’ve put into place mentally.
One of the items that remained undecided up until now, was whether to have tankless water heaters in the home instead of the traditional water heaters. After a lot of research, we decided against the tankless water heaters.
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Austin Rental Market - July 2007 stats update
August 26, 2007
The Austin rental market continues to see rising rents. The mortgage problems in the sub-prime mortgage loan market are helping rental markets in all parts of the U.S., as renters who should not be qualified to purchase a home are indeed remaining renters, as they should. Austin has the added benefit of a strong job market, which is bringing new renters into the Austin area. These newcomers are often qualified to buy a home but do not want to commit to a home purchase immediately, so they rent for a year or two while deciding where they want to buy, and making sure the new job works out. Thus, there continues to be an influx of quality renters.
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June 2007
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July 2007
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July 2006
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Yr % Change
|
|
| # Leased |
750
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791
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832
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-4.9%
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| Avg List Price |
$1370
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$1385
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$1324
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4.6%
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| Median List Price |
$1250
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$1250
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$1200
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4.2%
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| Avg Leased Price |
$1364
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$1378
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$1313
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5.0%
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| Med Leased Price |
$1250
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$1225
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$1200
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2.1%
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| Avg Size SQFT |
1897
|
1848
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1904
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-2.9%
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| Median SQFT |
1810
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1761
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1799
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-2.1%
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| Avg $ per SQFT |
$0.72
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$0.75
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$0.69
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16%
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| Avg Days on Mkt |
41
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37
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47
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-21%
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| Median Days on Mkt |
28
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29
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36
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-19%
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Stats Summary:
Average rents are up 5% this July over July 2006.
Average Days on Market for July 2007 was 37 days, which is a 21% decrease from July 2006.
Median Days on market is 29 days for July, which is a 19% decrease over last year. This means more than half of all homes leased through the Austin MLS rent in 29 days or less. This marks a return to a good landlord’s market, though there are still plenty of homes that do not rent quickly, either due to overpricing, poor condition, poor marketing by the agent, or all three.
Below is a breakdown of stats for YTD 2007 compared to the same period 2006.
Another Boneheaded new law from our Texas Legislature
August 24, 2007
I wrote a while back about a new law imposing a mandatory two day grace period for landlords in Texas, which will cause tenants to pay more in late fees that they currently do - exactly the opposite of what the author of the bill intended. Now we have a new law that is equally as stupid and will serve no purpose other than to make real estate transactions more complicated and confusing.
At present, a Seller in Texas has no obligation whatsoever to make any repairs or improvements to a property being sold. It doesn’t matter if it’s out of code, falling down, roof leaks, etc. All property is sold as-is except for those repairs agreed to in writing between a buyer and seller.
House Bill 2118, which goes into effect Sept 1, 2007, creates several new points of which Sellers and their agents need to be aware. I’m going to discuss the main effects these will have on the home buying selling and process.
The new law says that Sellers may be required to install smoke detectors for the hearing impaired. If the new purchaser or a member of their family is hearing impaired and asks the seller to do so as part of the contract the seller will be required to install new smoke detectors. The buyer must request this in writing within the first 10 days of the contract and have a letter from a physician. The expense is negotiable between the buyer and seller.
Lest I appear to be hostile toward the hearing impaired, let me just say that I’d make the same arguments I’m going to make if a new law required hand rails at tubs and showers for elderly buyers, or required sellers to install wheel chair ramps for the mobility impaired. The point is, if a buyer has a special need or requirement of their new home, they are free and welcome to make those changes after they own the home and at their own expense.
So let’s break this one down.
You are a seller and you receive an offer on your home. Within 10 days of the effective date, you receive a written notice from the buyer requesting that you install smoke detectors equipped for the hearing impaired.
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Austin Condos - First signs of pullback from developers
August 24, 2007
In today’s Austin Business Journal there is news about the first sign of something we knew would eventually happen. The question has been asked “are there enough condo buyers to buy all of these Austin condos scheduled to be built?” The answer I’ve heard from various sources (economists, builders, Realtors who specialize in condos) is “no, there won’t be enough demand, but the developers know that and many of these projects simply won’t be built, or will be postponed”.
That makes sense, but I haven’t actually seen a project get pulled until now.
From the Business Journal article:
Some developers reevaluating area’s booming condo market
In what may be the first sign that all is not well in the booming local condo market, one of the developments slated for South Austin is unlikely to happen as planned.
Sound familiar? I wonder if more may follow.
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Real Estate ‘Pretenders’ dropping like flies
August 23, 2007
I learned a new term this week at the Keller Williams camp in Austin. Agents from declining markets that have turned into Buyer Markets referred to the real estate “pretenders”, who are now dropping like flies in the tough markets. This year will be the first year in a decade that membership in the National Association of Realtors (NAR) declines. Austin saw this in the 1980’s. In 1986 there were over 5,000 Austin Realtors. Then the market tanked. 18 months later, there were less than 2,000 Realtors in Austin.
So who and what is a real estate pretender? They are agents who jump into hot markets and ride the wave. These can include discounters, newbies, scammers and legitimate Realtor hopefuls wanting to crack into the business. They are referred to as pretenders because they are not truly running a real estate business, but instead are just surfing a wave. They can get listings and sell them, or find buyers willing to write offers, but are not operating in a business manner that will survive a downturn. When the wave dies, so does the business, and the agent goes away.
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Is Downtown Austin Living going to be too loud?
August 23, 2007
I came across this news snippet today, regarding noisy downtown living. I’ve wondered about this as Austin grows and builds all of our downtown condos. This article says that downtown residents in St. Petersburg FL, which “has turned into a trendy boomtown full of restaurants, bars, coffee shops, and new residents”, are fed up with the noise.
It’s something to at least think about if deciding to live in a downtown urban setting. Here is a link to the story: