So June 2008 – Crossland Team

Archive Monthly Archives: June 2008

My Interview on Keye42 News last night

I received a call from a KEYE42 News reporter yesterday wanting to interview me about the impact on gas prices on suburban areas further away from Austin. I said “ok”. The link to the piece they showed is below.

Keye42 Real Estate Interview

The interesting thing to me about these interviews is how the final piece generally conveys the message intended (by me) but still misses the mark somewhat. The “$50K cheaper 30 miles out” came from an example I gave the reporter comparing the commute for a state worker who lives 8 miles from downtown in South Austin, in a 2,000 sqft home that costs $200,000 versus that same downtown worker who bought a 2,000 sqft home 20 miles further out in Hutto for $150K ($50K cheaper, 30 miles farther).

The Hutto home owner will save about $300/mo. on their loan payment by saving $50K on the purchase price of the home. But that owner will commute 40 miles round trip further each day (28 miles from Hutto to Austin vs. 8 miles from South Austin).

At 20 mpg and $4/gal, that home owner gives back $175/mo. of their lower house payment to fuel costs. The $4/day toll eat up another $85/mo. That drops the total savings of the cheaper, further home to about $60/mo before factoring in the extra wear and tear on the vehicle, added depreciation from higher miles, the value/cost of the additional hour each day commuting, etc.
Read more …

Posted by Steve
10 years ago

Living in a World of Low Accountability and False Pride

I had to hold accountable a sheetrock guy the other day because he spent money advanced for a job on his personal bills instead of the job. Then he whined and complained when I temporarily fired him and refused to advance further funds.

There is a process I follow when holding others accountable to the agreements they made and this guy seemed truly stunned at my response to his request for more money, as if everyone else in his life tolerates and accepts his lack of integrity and his lame excuses.

I went to the job site, which happens to be my Mother’s garage, Saturday to see for myself the situation being described by him as a problem. We are replacing all the sheetrock in my Mom’s garage ceiling because the old sheetrock had started falling down in chunks and I decided it would be best to redo the entire ceiling rather than try to patch it back together. My Mom hired a guy out of the Christian Yellow Pages and signed a contract stating 1/3 payment up front and the remainder upon completion.

It turns out the 2×4 ceiling joists across the width of the garage were butted together with another short 2×4 scabbed across the top of the butt joint and the three pieces were joined with a nail plate. This is a structurally poor setup and the joists were sagging at the butt joints (which no doubt contributed to the original sheetrock falling down). We got a carpenter to come look and all agreed that we needed to marry some new 2x6x12 joists to the original 2x4s which would eliminate the sagging and provide a solid, stable and level ceiling structure upon which to install the new sheetrock.

The carpenter said he’d install the joists for $300 plus materials. I agreed and I wrote a check for $500 to the sheetrock guy, from which he was to pay the carpenter and retain a small $200 advance due to this being the second delay caused by unexpected framing issues.

Monday morning the sheetrock guy called me to ask if I was going to be able to come over and write a check to give the carpenter. “Oh great”, I thought. “He is one of those kind of contractors”.

I had had my suspicions because on my two earlier encounters with him he made multiple mentions of how good and honest he is, and that he’s a Christian. Listening to him, I detected neediness, false pride, insecurity and desire for approval, which is often a red flag indicating incompetence. And nothing against Christians, but my past experience tells me that people who throw their faith out there as some sort of advance guaranty, intending it to be pre-validation of their integrity, often turn out to be unreliable and flaky. Fact is, some of the best and most skilled contractors I’ve ever known were foul mouthed smokers who drank too much and lacked any pretentiousness.

So, would this sheetrock guy validate my judgments of him? Here is how the conversation went:
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Posted by Steve
10 years ago

Austin Real Estate Market – May 2008 Update

The average sales price for houses in Austin increased 5.14% in May from $259,958 in May 2007 to $275,711 May 2008. Sales prices had been flat or falling since Feb 2008, but May has us heading the other way again. We continue to have a large number of “failed sales” listings though, and days on market continues to creep upward. In short, there are a lot of mixed signals in the sales data. Here is a brief summary followed by charts below.

• Number of homes sold is down 24% from 2,630 May 2007 to 2,006 May 2008.
• Average sold prices in Austin were up 5.14% over the same month last year to $275,711.
• Median sold price was up 7.01% over the same month last year to $199,925.
• Avg sold price per square foot is up 4.02% over May 2007 to $124 per sqft.
• Avg days on market is up 11 days (22%) from 50 last year to 61 this May.
• Median days on market is unavailable because our $1M/yr MLS software, MLXChange, won’t produce it this month. I’ll leave it at that before I go off on another “MLXChange Sucks” rant.
• Number of “Not Sold” (exp or withdrawn) is up a whopping 56% over the same month last year.

Austin Real Estate Market Update for May 2008
All Austin / Central TX MLS Areas – Houses Only

Apr 2008
May 2008
May 2007
Yr % Change
# Sold
Avg List
Med List
Avg Sold
Med Sold
List/Sold %
Avg $ SQFT
Median DOM
not avail MLS
# Expired
# Withdrawn
Not Sold
Not Sold %
On the Market (houses) as of June 23, 2008:
12,466 = Active Res Listings in Austin MLS (12,066 last month)
10,335 = Total Single Family Homes listed (9942 last month)
1870 = Condo/Townhome/Loft/Garden Homes listed (2026 last mo.)
97 = Mobile/Manufactured Homes (97 last month)

For the Year-to-Date numbers, the sales prices for Homes in Austin are about even for Jan-May 2008 over Jan-May 2007.
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Posted by Steve
10 years ago

Location now has more weight in home selection

I have my first anecdotal evidence that gas prices will hurt values in far flung areas and help real estate values in closer areas of Austin. I just helped someone relocate from Wimberley to Austin. The reason for the move? Gas prices have made the commute costs unacceptable. For this individual, the tipping point was reached and the decision was easy.

Wimberley is about 40 miles SW of Austin and is a beautiful, serene place to live. My client had lived there for 7 years, on the Blanco River, in a beautiful setting, but decided to move back into Austin because of gas prices. “I’ll save $350 a month on gas” is what I was told. The tipping point.

Another example; last weekend, I drove my 12 year old daughter out to Elgin to be a “mother’s helper” for the day, keeping her 4 year old cousin occupied and entertained while his parents could actually get a few things done and have grown up conversations. I chatted with my sister in law for a while before I left. I asked “so, do you guys still enjoy being out here in Elgin”?
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Posted by Steve
10 years ago

Missed Flip Opportunity or Prudent Caution?

A couple of months ago I made an offer on a home to flip. I’m not actively looking for homes to flip in Austin, and I don’t help buyers locate flip opportunities, but when I come across a candidate property that I like, I’ll make a run at at. All of my attempts the past several years have fallen short. This is mainly because I have a formula for evaluating flip candidate properties, and I stick to it. The result is, my offer is never accepted because someone else is always willing to pay more.

On the most recent lost project, which is a few blocks from where I live, I stopped in yesterday to meet the buyer, who turns out to be a contractor, and take a look at what’s being done. I was impressed with the work and the approach being taken. I had a couple of assumptions before I even stopped in.

Knowing that the home sold for $30K more than I offered, and that my numbers are fairly accurate estimates, I assumed the eventual buyer 1) was a hands-on contractor with better remodel cost points than I can achieve (not doing any of the work myself) and 2) used a higher more optimistic ARV (After Repair Value) than I did.

I was right on both accounts. I plugged in $225K as a resale value after repairs and, sure enough, the contractor thinks he can sell it for $250K.

Let’s look at my basic math:

Winning Buyer
Purchase Price
Remodel Cost
Silent Costs
Total Cost
Finshed Value

Let’s go through the numbers above.
Read more …

Posted by Steve
10 years ago

Southwest Austin Future Looks Solid

This article about real estate in Southwest Austin was emailed to me today. It supports what we’ve been telling investors and buyers for almost three years now – South and Southwest Austin are the places to buy real estate in Austin.

Nicely written, the article is from the online “Community Impact Newspaper“.

Here you go:

Lots of people want to move to Southwest Austin and that is a good thing for the local housing market, according to Ryan Robinson, the demographer for the City of Austin.

In 2004, he completed his last major forecast that predicted some of the city’s greatest numbers would move to Southwest Austin by 2010. From 2000-2010, he estimated the most people, 10,254 new residents, would come to the 78748 Zip code, near IH 35 and Slaughter Lane, alone. With only two years left until those estimates expire, he thinks the projections are on target, and as a result, homes will continue to sell, despite the national trend.

“Austin is today one of the healthiest housing markets in the country,” he said. “We’ve always been the envy of many other cities, but we find ourselves in a really good position right now.”

That is true, he added, especially for Oak Hill and the Circle C area.

“Oak Hill, I would say, as a sub-region is healthier than Austin and if Austin can maintain its relative economic health over the rest of the country then I don’t see anything that tells me that Oak Hill is not going to maintain its position as being one of Austin’s better, stronger neighborhoods,” he said.
Read more …

Posted by Steve
10 years ago