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.
Sylvia and I usually attend an annual Austin Real Estate Economic Update to find out what the coming year holds. This year, I exclaimed to her, “Why bother? It’s going to be full tilt boogie, just like 2013“. I mean, Austin is rumbling along with all cylinders firing. There is nothing I need to hear about 2014 that I don’t already know. We’re gonna be working our butts off and house prices are going to keep rising.
For many, this is good news. If you’re going to sell a home in Austin this Spring or Summer, you’ll be happy. If you’re buying a home in Austin, you better have an “A Game”, and you better be ready to bring it. And I mean bring it. You don’t buy a house in Austin anymore, you compete for one. Oddly, you’ll be happy too, when you finally win a multiple bid competition and pay too much for a house.
Many of our Realtor friends had record production years in 2013, as did Sylvia and I. Most are looking forward to another busy year in 2014. But I don’t like it. I don’t want to be this busy. And I think, to some degree, these manic real estate swings and rising values are ruining Austin, and the real estate profession. Everything has become hyper-instant. Everything is Urgent. Sylvia called on a new listing the morning of Jan 2nd which had already gone under contract with 7 offers New Years Day. This wasn’t even in a “hot” area. Why aren’t people sleeping in on New Year’s Day instead of out fighting over a house?
I know. It’s a weird thing to complain about, being busy, doing well, enjoying professional success. Shame on me. Read more …
One of my favorite pastimes while driving in Austin is listening to Bloomberg News on my XM Radio. More specifically, I enjoy hearing interviews and discussions with people who explain and justify the positions they take on a wide range of (mostly) business topics. This includes small business, the economy, politics, real estate, etc., but also more specific micro topics such as the current and future outlook for farm tractor sales. And, thankfully, Bloomberg Radio is free of the bluster, yelling and arguing heard on the other XM Radio news stations. These are, for the most part, reasoned subject matter experts giving their honest take on things.
Call me nerdy, wonky, or whatever, but I really dig listening to this sort of stuff. When not listening to it, I’m reading about it. I believe it helps me better understand my own life and business. And it helps fulfill one of my ongoing goals, which is to never stop learning.
Recently, a dating expert was being interviewed about the business of match making sites and the state of modern “mate seeking”. She also discussed the mistakes she sees made by most aspiring romantics. Turns out there are a lot of frustrated romantics unable to find what they want in a mate. This despite the fact that finding and “connecting” with good, quality candidate dates has never been easier. I was struck by how similar her points were to the typical “match seeking” efforts of real estate buyers looking for the “perfect” home.
The quote that stuck with me most was related to how many daters reject someone who actually possesses more than 85% of what the seeker says she “must have” in a mate. To that point, she said. “Do you know how hard it is to get to 85%? If you find someone who meets 85% of your most important criteria, you should be running, not walking, to the alter with that person”. That’s what she said. Run, don’t walk to the alter.
Daters, apparently, allow too many small, picky “deal breaker” distractions into the evaluation process. “I don’t want to date a guy with thin hair” or “I can’t see myself with a guy who would wear a checkered shirt”. But if the guy loves horses, wants kids, and appreciates and “gets” her sarcastic irreverent humor, he’s going to make the great husband she says she wants because he meets the most important set of criteria. Even if he’s only average looking and a little too short.
Dating is more complicated than house hunting because the three (and only three) most important criteria a mate seeker should be evaluating will differ from person to person. House hunters, on the other hand, have had the same three static criteria forever – Location, Price and Condition (which includes age/size). It’s really not complicated at all. But modern buyers have made it so, by allowing too much information and data into the equation.
So, why do so many Austin buyers reject homes that are priced right, in the desired location, and of acceptable condition/size? Are Austin real estate buyers too picky? Yes. And many are just as frustrated as the single 34-year-old gals that dating expert was talking about.
I’ve been buying and selling stuff lately other than real estate. Mainly with Craigslist ads. Washer/Dryer left over from a sale. A Fridge too. Bought a used car for my daughter, and we’re selling our minivan. It’s funny how the non-real estate inquiries differ so much from real estate inquiries.
First up, I’m selling our trusty 2007 Honda Odyssey. It has 107,000 miles now, and we no longer need it. Our oldest daughter is in college and youngest in high school. We just don’t haul around gaggles of kids to parties, playdates, etc. anymore. Plus, the van is a 16 mpg gas hog. As a replacement, we bought Sylvia a 2012 Hyundai Sonata Limited, which achieved 38 miles per gallon driving our daughter up to TCU in Ft Worth last week! It’s a neat little car. GPS just like the Honda, and built in blue tooth connectivity for the phone. So, when driving and the cell rings, Sylvia just taps a button on the steering wheel to answer and start talking hands free. It’s roomy inside and nice enough for taking clients around, but more economical and easier to drive and park than the minivan.
Anyway, if real estate buyers were like auto buyers from Craigslist, and you were selling a home, let’s say, for $285,000, you might receive a text message saying “wil u take 235 I buy today“, and similar gibberish. What sort of dummy thinks this method of engagement is an effective initial communication for a purchase discussion? After enough of these pings, all of which I ignored, I altered my ad to say “Calls only. DO NOT TEXT. Text messages will not receive a response“.
So now I just get calls, thankfully, from intelligent people . For the Odyssey, the buyers all ask the the same opening question: “Has the timing belt been replaced?” Huh? No it hasn’t. But after enough of those calls I took it down to Howdy Honda to get the timing belt replaced. It’s just an $800 preventative maintenance thing that’s recommended at 7 years or $100,000 miles. I just figured a new owner would get it done, but that’s not working. These Honda buyers are tough! Way tougher than house buyers.
Almost overnight, with little warning, the Austin real estate market has caught fire. We are encountering multiple offers and buyer frustration. Not everywhere, but in the popular neighborhoods. Let’s look at some Active/Pending stats for popular neighborhoods.
27 Active Listings. Average Days on Market = 35
31 Pendings. Average Days on Market = 32
Over half of all listings under contract. A normal ratio is about 1 of 5 listings under contract in a balanced market.
Southwest Austin 78749 Zipcode (includes Legend Oaks, Village at Western Oaks, Westcreek)
25 Active Listings. Average Days on Market = 88
49 Pendings. Average Days on Market = 38
Double the number of homes under contract than there are available. This is an ASTOUNDING ratio reflecting a lot of pent up demand.
South Austin 78704 Zipcode – MLS Area 7 – Zilker/Barton Hills
10 Active Listings. Average Days on Market = 126
16 Pendings. Average Days on Market = 50
Like SW Austin, the Active/Pending ratio is inverted, with more Pending listings than Active.
Northwest Austin 78759
60 Active Listings. Average Days on Market = 59
51 Pendings. Average Days on Market = 47
Nearly half of all listings under contract.
The ratio for the entire Austin MLS at present is 1 of 3 listings under contract, which is very strong overall, even in typically weaker areas like Manor and Hutto. What does this mean for the Austin real estate market?
The Austin real estate market did about what we expected in 2011, which wasn’t much. Basically treading water with some slight improvements, but nothing that represents a notable shift in market activity. Instead, it looks like momentum is building for a breakout year of increased activity and rising prices either in 2012 or 2013.
Let’s start with a look back at the past 12 years for some context.
From 1999 to 2001, you see the effects of the Tech Bubble, as Austin experienced strong job growth, which in turn drives housing demand. From 2002 through 2004 (and most of 2005, though not obvious from the graph), Austin housing prices were flat, as we suffered the hangover of lost jobs after the Tech Bubble bust. Then in 2005 jobs returned as well as a lot of real estate investors who felt that other areas such as Phoenix, Las Vegas, Boise, Florida, etc. (which we now know were in a severe bubble) were playing out. So we had a mini burst of strong buyer demand through about the middle of 2007. After dipping in 2008, prices have slowly climbed since then, though many homes still sell for 2007 prices. By 2010, overall values were back to 2007 prices and have now surpasses the 2007 high. That’s the Austin real estate market in a nutshell, for the past 12 years.
Let’s look at the gains in 2011 compared to 2010.