Want to Avoid an HOA Neighborhood in Austin? Be Careful

HOA Rules Austin TX Real EstateIn early 2007 I got fed up with the deed restriction violations in my SW Austin neighborhood. This was a neighborhood with no Home Owner’s Association, and thus, no formal enforcement mechanism to keep bonehead neighbors in line.

This all came to a head when one neighbor decided to install a mobile home on their newly purchased 2 acre property. They did install the MH and they moved in. The plan was to live in the mobile home temporarily, for a year or two, while they built a new custom home, then remove the MH. The neighbors were outraged at the mobile home, which was a clear violation of deed restrictions. Tempers flew, rude signs were placed at the property, the email list caught fire with discussions, and a neighborhood meeting was called.

“Good!”, I thought. Under the umbrella of addressing the mobile home being placed on the property, we could also discuss the fact that nearly every other home in the neighborhood was also in violation of the deed restrictions, though in smaller ways.

In my neighborhood of 2+ acre homes, fences were in disrepair and/or too high, or made of wood, mailboxes broken and never fixed, driveways crumbling, yards never mowed, out-buildings that didn’t match the main home in appearance, remodel and construction projects that were started, abandoned and left as eye-sores, and several large commercial metal buildings had been built in back of properties.

The neighborhood was going down hill and becoming shoddy. Remember, without an HOA, and outside city limits, there is nobody to whom these violations can be “reported”. The County does not enforce deed restrictions. You have to actually hire an attorney and sue your neighbor in order to address violations. My home, which we had built in 2003, was the newest home in the neighborhood and I felt its value was threatened by the lack of upkeep in the neighborhood. This neighborhood meeting would therefore be a perfect opportunity to see if that could be turned around.

At the meeting, a succession of neighbors got up and railed against the mobile home. When I got up to speak, I spoke not against the mobile home or its owners (who attended the meeting and took all the heat), but instead asked the simple question “do we want to enforce deed restrictions or not? We can’t say that we want to ignore all deed restrictions except this particular one restricting mobile homes”.

And then I rattled off the aforementioned list of actual, current deed restriction violations on various neighborhood properties and wanted to know if anyone cared about those. To me, we needed to have this discussion of the underlying issue and then discuss the mobile home and other violations in the context of a shared understanding of whether or not the deed restrictions should be observed equally by all home owners.

I nearly got booed out of the meeting. “That’s different”, someone said. “This isn’t Circle C”, another blurted, to which I responded, “yes, that’s obvious to anyone who drives through and sees how shoddy the neighborhood looks”. Another neighbor shouted at me “we all moved out to a neighborhood like this because we want to be left the f**k alone and not be hassled by Yard Nazis”. To that I responded, “but you’re not leaving this family alone, now are you? You’re hassling them. You’re all saying that you don’t care about following the rules, but you want this one family alone to follow the deed rules – the same deed restriction rules that most of you are breaking yourselves – because you think their particular deed violation is a whopper, but that your own lesser violations are ok. You can’t have it both ways”. This perfectly logical and fair reasoning fell on deaf ears.

Finally someone said if I didn’t like it I could move. I already knew that. I went home that night and told Sylvia we were moving. I didn’t want to live around these rednecks and their declining neighborhood anymore.

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Austin Real Estate Market Update – Sept 2009 Stats

Austin Real Estate sales values for September 2009 are even (up 0.04%) with the same month last year. The number of homes sold is actually up 0.61% from the same month a year ago, no doubt due to a surge in the lower priced homes caused by the $8,000 home buyer tax rebate. More on that in another article. Let’s take a look at the September chart.

Austin Real Estate Sales Market Update – Sept 2009
Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data

Aug 2009 Sep 2009 Sep 2008 Yr % Change
# Sold 1706 1639 1629 0.61%
Avg List $255,966 $257,361 $255,585 0.69%
Med List $195,750 $194,900 $189,900 2.63%
Avg Sold $246,372 $246,185 $246,079 0.04%
Med Sold $190,000 $188,500 $185,000 1.89%
Sold/List % 96.25% 95.66% 96.28% -0.65%
Avg SQFT 2200 2144 2120 1.13%
Med SQFT 1973 1919 1909 0.52%
Avg $ SQFT $111.99 $114.83 $116.08 -1.08%
Avg DOM 72 67 66 1.52%
Median DOM 43 40 48 -16.67%
# Expired 492 529 819 -35.41%
# Withdrawn 897 794 910 -12.75%
Not Sold 1389 1323 1729 -23.48%
Not Sold % 44.88% 44.67% 51.49% -13.25%


Median sold prices are up almost 2%. The sold to list price gap is 95.66%, which is slightly less than the 96.28% a year ago. The “Not Solds” (expired and withdrawn) remain high at 45%, but are down significantly from Sept 2008 when more than half (51%) of all listings departing the Austin MLS were failed sales efforts.

Overall, nothing surprising or unexpected with the Austin market for September. Let’s take a look at the Year to Date stats for Austin.

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Who is Really Getting the $8,000 Tax Credit in Austin?

As the November 30 closing deadline for “first time” home buyers in Austin and across the U.S. approaches, buyers are creating price bubbles in South Austin in the sub-$200K range. Perhaps other areas as well, but I work South Austin mostly so it’s the area with which I’m most familiar. We have one buyer who has now repeatedly lost out on homes below $150K in South Austin. Most recently, an offer of $5,000 over the list price still wasn’t enough to beat the other multiple offers. Which begs the question, who’s getting this $8,000 tax credit anyway? It looks to me like sellers in South Austin are getting some or all of it as buyers scramble to compete for a limited inventory of close in, affordable homes in South Austin.

There are currently 158 homes for sale in the 78745 zip code of South Austin (MLS area 10N for the most part). Of those 70 are pending. Normally, in a balanced market, we’ll see 1 Pending listing for every 3 to 5 Active listings. South Austin 78745 currently has a huge Pending/Active ratio of 70/88, or almost 1 Pending for every active listing. If we limit the search to homes with list prices below $200K, the ratio is 55 Pending to 41 Active, or 1.34 Pending sales for ever Active listing. That’s what I call an “inverted ratio” (greater than 1.0), meaning the market is absorbing homes faster than they are being provided by Austin sellers.

If we limit to the search to homes priced below $150K, the ratio is a monster 17 Pending/6 Active. That’s almost 3 Pending listings for every Active listing. Wow!

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What you need to know vs. what you want to hear

blog-consultation
If an investor or buyer wants to purchase a home and is ready to write up the offer and move forward, what should a good Realtor do? Unfortunately, many will of course write up the deal immediately and mentally deposit the commission, and perhaps already have it spent. This isn’t the type of Realtor you want to work with.

Instead, you want a Realtor who will ask a lot of questions and provide more information. One who will, in a sense, make you justify why this purchase is the one that best accomplishes the outcome you seek.

Purchasing real estate is an emotional decision, but one which must be supported and justified by non-emotional considerations, namely the financial side of the equation. In helping the number of buyers we have, Sylvia and I observe, as one would expect, that different buyers operate from each end of the spectrum, from emotional to financial, and at all points in between. But no decision made entirely based on emotion or numbers can be the best decision. A balanced blend of the emotional and financial considerations will result in the “smartest” decision.

Some buyers are so fixated on the “numbers” that they are blind to other realities, such as the fact that the cheap crackerbox starter home being contemplated is way too far from everything and comes with serious risks due to it’s stage in the neighborhood life cycle, poor schools and unpredictable and undefined development of the surrounding areas.  But it’s “cheap”, and that seems to override the thought process if left unchallenged.

Others fall so in love with a property that they engage in a willing suspension of scrutiny on other important considerations, and operate instead from a place a happy denial. The home doesn’t fit with the stated criteria or needs, it’s over priced and it has misfit attributes such as a super steep driveway or backs up to a very busy street, yet the buyer fixates on something mundane such as, “it has a magnolia tree … we had a magnolia tree growing up and I’ve always wanted a home with one. My mother loved Magnolia trees”.

This is the point of recking for the Realtor. As a buyer, do you want to “hear what you want to hear” or do you want to “know what you need to know”?

Should the Realtor say, “oh, I love magnolia trees too, and if your heart is saying this house is the one, then let’s do it!”

Or should the Realtor say, “you can purchase and plant a 10ft tall magnolia tree at any home for about $200-$300, so let’s not allow that to be a deciding factor”.

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Austin Rental Market Update – August 2009

The Austin rental market continues to be strong.Average and monthly rents continue to rise. Days on market is low. But, even with recent gains in prices, we are nearing the end of a decade in which rental prices for landlords will have remained virtually flat. Let’s check the historic graph below before we get into current figures.

austin-rental-market-200908

If we draw a straight line from 1999 to now, and you own the average rental home, and in 1999 you assumed a 3% per year increase in rents over time, that increase didn’t happen, but your property taxes, insurance and maintenance expenses sure did go up a lot. What we see above isn’t good from a landlord standpoint, but if you’re a renter, you’ve had a nice 10 year run of good rental values in Austin. At present, our rental values are still below where they were in the dotcom boom era of 2000 and 2001.

And if it’s any consolation, had you invested your real estate money in the stock market in 1999, you’d be a whole lot worse off than a decade of flat rents. At least real estate values have come up. We’ll look at that in a minute.

Currently in Austin, average rents for single family homes are about $1,500 per month and the median rents are $1295/mo. See the chart below.

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