What is your Austin home worth, right now? When considering a sale, it’s generally worth “market value”, defined loosely as the highest price a buyer would pay, and that a seller will accept in an open, competitive market. This assumes neither buyer nor seller are under any undue stress or duress external to the transaction itself.
Many homeowners want to know their home value even when not considering a sale. Such as when protesting assessed property value at Travis County. Or maybe you are just curious, or you want to update your Net Worth spreadsheet with a current value.
If you don’t want the “market” to determine your home value, because you don’t want to sell, there now exists a plethora of “Automated Valuation Model” (AVM) tools that will tell you the supposed value of your home online based on mathematical algorithms and data. The most well know is perhaps the Zestimate on Zillow.
Let’s take a look at these AVM tools and see how accurate they are. I’ll use a home I own in SW Austin as the subject property, as I am preparing to sell it and in the process of determining the best list price.
It’s the start of 2016 and already I’ve received a few inquiries from my investor clients wondering whether they should hold on to their rental property, or sell this year. It’s a conversation I have multiple times with multiple clients each year, and it’s a question Sylvia and I sometimes ask ourselves about our own rental property. Especially given the appreciation gains of the past 5 years in Austin. So this article will walk through some of the questions you might ask yourself when contemplating whether to sell your real estate asset, based on how I look at the question with my own rental properties.
The first questions to ask yourself are:
1) Do you need the money? and
2) What will you do with the money?
I normally don’t make it past those two questions, because the answers for me are are “no” and “I don’t know”.
For most, the equity would simply go into almost zero-interest savings or CD accounts, or into the stock market. Having just watched The Big Short, watched my Mutual Fund IRAs tread water last year, and then take a dive the first week of 2016, I’m pretty OK with leaving my real estate alone.
But if you have a defined purpose for the money, such as purchasing your retirement home, or funding a child’s college costs, those reasons can make sense. Using it to fund lifestyle adventures, like buying a boat or an RV, would be a bad idea though, in my opinion. Unless it’s part of an overall “next chapter” of retirement, and it’s time to spend that money. Read more …
One of the more vexing and frustrating aspects of managing a Texas real estate transaction is what we agents call “clearing the Option Period”. The Option/Inspection Period is the agreed upon number of days during which a Buyer can unilaterally terminate the purchase contract. It’s usually 5-10 days.
The buyer doesn’t need a reason. It’s a straight up right to terminate, for which the seller is paid a nominal fee, usually less than $500.
The problem is that, per the current contract language, a 7 day Option Period ends at midnight on the 7th day. I don’t know about you, but whether you’re a buyer, seller or agent, none of us like being up at 11:45PM waiting for an Amendment and wondering if the deal is going to crater. It’s one of the stupidest things we do, and nobody likes it, but it happens repeatedly.
A proposed change to the One to Four Family Residential Contract (sales contract) will move that deadline to 5PM on the final day. This makes me very happy. Agents need to learn to take care of business during business hours. Real Estate is not a 9-5 profession, but neither is it supposed to be the graveyard shift at the end of every option period.
From a listing agent standpoint, it’s not our problem, or the seller’s, if the buyer agent and buyer can’t complete their “due diligence” within the first few days of the contract. We do with our buyers because we’ve already talked to the inspector and know his availability, and we have plumbers, electricians, HVAC people who can do followup evaluations same or next day. Every buyer agent worth his or her salt should be providing these resources and pre-established vendor connections to their buyers. Those who can’t or won’t should get out of the business. Read more …
What will the real estate market in Austin do for 2015?
Most likely, more of the same. More of what we saw in 2013 and 2014 Spring/Summer selling seasons, which was strong price increases caused by limited supply and increasing demand. Especially in the central core areas of Austin but not limited to just those areas. Even homes in Pflugerville get multiple offers now.
The increasing demand is coming from job growth in Austin, which is showing no signs of abating in 2015. Unemployment in Austin is a low 4%. Simply put, barring a major macroeconomic event that affects our local economy and job growth, our housing market will keep chugging along and prices will continue to rise. Nothing will stop it short term, but it will top out eventually and take a breather. Maybe in 2 or 3 years from now.
The recent drop in oil prices will affect Texas to some small degree, maybe Houston mostly, but represents nothing more than a pothole in the road for Austin currently. If anything, it could free up a bunch of construction labor that fled to the oil fields for higher pay, which would help the new home builders increase volume. New home construction is currently restricted by labor shortage and low availability of build-ready lots, which exasperates the effort to meet demand.
Current, Past and Future Values
The median value of a home in the Austin Metro area is now about $250,000. Average value will probably break $350K this summer. A decade ago median sales price was about $150,000 and the average was $225,000. That’s really only a 5% annual increase roughly, which is what we expect over a decade of time, but so much of it has happened the past few years that it feels like too much too fast.
Also, and of concern, much of the appreciation is concentrated in the central “core” areas of Austin proper, which is no longer affordable to service workers or median income families. I sold a home last summer in 78704 zipcode for $290K which sold for $58K 18 years earlier. That’s bumping a 10% annual appreciation rate over two decades. Same with a home we bought in Westlake in the low $300s in 2010 and sold for $500K in 2014. That’s a 10% annual increase over 4 years.
And wages haven’t kept up, so the median income buyer who wants to live in Austin proper, close in, will continue to be pushed out into the suburbs like Leander where a home at or near $200K is still doable, but where they will have to endure ever worsening and soul crushing commutes on our congested roads.
How Should Austintes feel about this?
The value appreciation of Austin home prices gives me mixed feelings. Read more …
Have you ever woken up on a Friday morning with no intention of moving and by 5PM that day have submitted an offer on a home? That’s what Sylvia and I recently did, and it’s not the first time.
We really thought our current place in Westlake would be our “forever” retirement home. We’ve slowly improved and updated it, but still had a major kitchen and master bath redo and expansion in our future. The location is, in my opinion, the best in Austin for both our current working/family and future empty-nester lifestyles. 8 minutes to Town Lake, Zilker or Downtown, easy access to Mopac or 360, walking distance Trianon Coffee, FroYoyo, a Thundercloud Subs and more. Even a Cap Metro bus stop 6 minutes walk from our front door goes through Zilker Park and into downtown.
Our daughter can walk to Westlake High, and we’re within even closer proximity to the elementary and middle schools, which is what draws so many families and gives the Woodhaven neighborhood such a good mix of great people. It’s really perfect. A geographically “central” location without the quirky annoyances and absurdities of the 78704 areas.
But …Prices in the ‘hood have gone through the roof. It’s not going to be affordable or practical as a retirement home. If we make the contemplated improvements, our “retirement” home – a basic 1970s rancher – would be transformed and more highly valued and thus produce an annual property tax bill bigger than I want to swallow for the next 30 years. Sure, we’d be building equity, but still, property taxes seem to have gone too high already.
Life as an Austin Realtor requires a varied set of skills. Add to those now the ability to operate under constant Red Alert conditions if you hope to be an effective Buyer’s Agent. Here is the latest example.
Sylvia had buyers in from out of town last Saturday. Both houses they liked already had multiple offers. They went in on one of the homes. It wasn’t until Monday morning we found out another offer was selected. Meanwhile 5 new properties came on the market. The buyers were leaving town Monday night. Sylvia wasn’t feeling well so I took her buyers out Monday. We found a home they liked, checked with the agent and was told at 2PM that the owner was already reviewing multiple offers from the weekend.
We convinced the agent to wait for our offer. Saw the house, liked it, drove to my home where we all sat around our embarrassingly unclean kitchen table while I wrote it up. We did “old school” signatures on paper instead of DocuSign. I scanned and emailed to the agent with a pre-approval letter, followed by a phone call to “sell it” to the agent that this was the right buyer to select. This is all done with a sense of urgency, but not panic. Nevertheless, no room for mistakes, delays or incompetence. For adrenaline junkies like me, it’s fun. But not for most people.
How did it turn out? Read more …