Average rents for houses in Austin turned downward again in July according to MLS data. The 2005 YTD rents are again below the 2004 levels. Investors continue to supply Austin with excess rental inventory, keeping the rental supply at just below 3 months inventory as we head into the slower Fall season.
Steve Crossland
What your real estate offer really buys you
Once your real estate offer in Austin TX has been accepted, have you just purchased a home? If you are a seller, and have just accepted a real estate offer, have you just sold your home? The answer to both questions is, not necessarily.
Let me explain. Buying real estate in Texas is a two step process. Let’s look at how this works.
Austin Home prices on the upswing
The article below, from this morning’s Austin American-Statesman, does a good job of articulating what I have been noticing as the Austin real estate market starts to awaken from the past 3 or 4 years slumber. The last two offers I wrote were multiple offer situations – 3 offers on one home and 4 on the other, both in South Austin Area 10, which is an area I really think will appreciate well in the coming years because of its proximity to downtown Austin, shopping, restaurants and the fact that many of it’s homes are still below the median sales price for Austin as a whole.
As the article says, accurately I believe, “With fewer houses for sale and building costs rising, buyers no longer have the advantage.”
Rental rates, occupancy to rise in local Austin rental market
Although the article below specifically references apartments, the single family and duplex rental markets generally run parallel to whatever is happening in the multi-family rental market in Austin. Rental prices in turn have an effect on home prices. In general, this is more good news for Austin real estate investors and sellers alike.
Source: Austin Business Journal 8/23/2005
Rental rates, occupancy to rise in local apartment marketApartment owners will be able to post modest increases in rents this year and slowly eliminate concessions, according to a new market report. The report was issued by Encino, Calif.-based Marcus & Millichap Real Estate Investment Brokerage Co.
“Austin’s apartment market will continue to record improvement this year, as several key market fundamentals have turned positive,” says Bradley Bailey, sales manager of the firm’s Austin office.
“Job growth and in-migration are lifting renter demand, leading to rising rents and solid returns,” Bailey says. “The expanding economy and high quality of life will continue to attract new residents. These trends have positive implications for the local rental housing market going forward.”
Another Real Estate Bubble Prediction
Robert J. Shiller is arguing that the housing craze is another bubble destined to end badly, just as every other real-estate boom on record has. Lately, most of the news I read, hear and see about the Austin economy and Austin real estate market is positive. I write about and quote this information here online whenever I get the chance. I did however just come across an article that warns of a 40% drop in real estate prices in the U.S., combined with a decade long recession. Wow! Of course, it’s just one man’s opinion, but I like reading warnings like this just as much as I enjoy hearing the good news. It helps provide perspective. Read the Story here
Responding to Lowball Real Estate Offers
Austin Real Estate Agents disagree on the best negotiating strategy for responding to lowball Real Estate offers. There are two general camps of thought. One philosophy says that the amount of an initial offer doesn’t matter, and that the seller should always respond to any offer with a counter-offer of the lowest ‘bottom dollar’ price she is willing to accept for the property. I not only disagree with this strategy, but believe it is fails to protect the seller’s best interests.
To put it harshly, it is incompetent and negligent, in my opinion, for an agent to advise a seller to disclose her bottom line price based upon nothing more than the existence of a lowball offer. Nevertheless, I’ve heard many veteran agents claim that this is the best response to any offer – that “any offer is a good offer and deserving of a counter-offer”.
Would this ham-handed technique be representative of the “expert negotiating skills” that we as Realtors hold forth as one of the primary reasons you should hire us? I hardly think so. Of course there are exceptions to every rule, but in general, in a healthy market with a properly priced home – and the seller being under no extraordinary duress – I think responding to a lowball offer with an immediate price decrease is a very poor negotiating strategy.
Another approach, the one I follow both as a listing agent and as a seller of my own properties, has always been to respond to lowball offers with a cordial “thanks, I appreciate the offer – really I do, but we’ll have to pass on it at this time”.
Austin-area home sales still robust
From today’s Austin Statesman, more good news for Austin sellers who have been waiting the past several years for the market to rebound.
By Kate Miller Morton
AMERICAN-STATESMAN STAFF
Thursday, August 18, 2005Central Texas homes are selling in record numbers so far this year, and the buying boom shows no sign of waning.
Sales of existing houses have surged 18 percent in the first seven months of this year compared with the same months in 2004, according to the Austin Board of Realtors. Half of the 14,022 single-family houses sold from January through July were priced at $161,220 or above, a 3 percent increase from the same period in 2004. Monthly sales jumped 17 percent in July, compared with a year earlier, with 2,560 houses sold.
Austin Texas Homes Appreciate Modestly
Austin real estate prices are still not exactly on fire. But they are rising and inventory is shrinking while the number sales increase. This is a recipe for better appreciation, but as the report below outlines, Austin is still seeing modest real estate price gains relative to other parts of Texas and the U.S.
No Signs of a Slowdown in Real Estate
Reported by Realtor.org NAR Chief Economist David Lereah expects U. S. home sales to hit another record high in 2005, with price gains slower, but still above historical norms. Mortgage rates will reach 6.1 percent by the end of the year and move to 6.5 percent by 2006, still an historical low. “Relative to inflation, home prices will continue to experience above-average returns in 2005,” he says. Read the entire story here.
Wall Street Journal delivers scathing attack on Real Estate commissions.
A recent Wall Street Journal Editorial (entire text below) takes Realtors to task for what the WSJ claims is “a price-fixing scheme” made possible by bad politics and a protectionist Realtor industry.
The article claims that commissions should be much lower than those that consumers currently pay in the US. Are consumers trapped in a locked pricing scheme as the WSJ suggests? Well, last time I checked, Discount Brokers are an ever-growing segment of the real estate services industry, and real estate consumers have more choices than ever with regard to the level of service and fee structures available when buying and selling real estate.
Always Have Your New Builder Home Inspected, Always!
This morning I met with the Buyer’s inspector and Builder’s rep at a new home being purchased by one of my out of state buyers. I strongly believe that it’s always a good idea to have your new builder home inspected before closing, and I would never let one of my buyers make the mistake of simply trusting the new home builder to deliver a properly built home.
South Austin Area 10 Prices Rising, Finally
Austin Area 10 (South Austin) is finally starting to see price increases after 3 flat years.
Today one of my investors closed on a home in South Austin. The sales price was exactly the same price the sellers paid when they purchased the home in 2002. This made me wonder if South Austin real estate prices were still flat across the board, as this sale would suggest, or if there were signs that the market may be starting to improve. I suspected this sale was not an anomaly, but wanted to look at some actual Austin MLS sales stats to confirm. Read further to find out what I learned.
Investor Says Austin in Top 5 of places to Invest in Rentals.
Reading this week’s Austin Business Journal (Aug 5-11, 2005, Vol 25, Num 20), there was an article “Colonial investing $87M in Austin”.
Often, when talking to investors as well as regular buyers and sellers in Austin, I am asked questions about the Austin economy and the Austin real estate market. My response will usually start with something like “well, based on everything I’ve been reading, hearing and seeing…” This ABJ story is an example of the “everything I’ve been reading” category.
Young Lovebird Real Estate Investors Have Mis-placed Priorities
I just read this month’s issue of Money Magazine. An article in it (‘Young, in Love and in Too Deep’ – August 2005 page 39) profiles a young couple, both 23, not married or engaged, who have bought a $299,000 home together in Florida. They can’t afford furniture, don’t relate to the neighbors (who are mostly families with kids) and they fight about small amounts of money (He thinks she should pay for the iron she will use to press his shirts). They own a pit bull, and are essentially camped out and unhappy in their cavernous, empty home. Their budget is stretched to the limit and they have no money remaining each month to enjoy being young and in love!
Steve’s Austin Rental Market Update – August 2005
By Steve Crossland
Average rents in Austin are rising each month in 2005 according to MLS Leasing stats. It’s too soon to know if this marks a turnaround for the Austin Rental Market, but the trend is encouraging for residential landlords and Property Managers. See the graphs and details below.
Austin Condo Tower To Spring Up
From the Austin Statesman
Friday, July 29, 2005
A dramatic change is coming to Austin’s skyline, with plans under way for a $60 million condominium high-rise that would tower 36 stories over downtown Austin’s southwestern edge.
Developers expect to start construction in about a year on the tower, at West Third and Bowie streets.
Simon Drops Retail Dreams for Bastrop and Buda
BASTROP, Texas (statesman.com)
Plans to develop 700,000 to one million square feet of retail, entertainment and restaurants in Bastrop and a one million-square-foot outdoor regional mall in Buda have changed. Simon Property Group has scraped its plans and let options to buy land in these areas expire because of timing issues.
Home Sales Smash National Records, Prices Lift Off
WASHINGTON, D.C. (Realtor.org) – “Just when you think sales activity is ready to settle into a more sustainable pace, the housing market continues to surprise,” says David Lereah chief economist for the National Association of Realtors (NAR). Existing-home sales surpassed market expectations and reached another record in June. Home sales were expected to slow from their recent fast pace.
Home Building in Austin Surges
Job gains, low interest rates and relocations help send starts to an all-time high
By Kate Miller Morton
AMERICAN-STATESMAN STAFF
Tuesday, July 19, 2005
Continued low interest rates, strong job growth and a healthy appetite for new houses from both local and out-of-town buyers spurred Austin-area builders to start work on a record number of houses in the past year.
Builders started 13,611 homes in the 12 months that ended in June, an all-time high, according to market research firm Metrostudy. Five years ago, with the tech industry still booming, the figure was 5 percent lower.
Keller Williams Real Estate Agents Demonstrate ‘Extreme’ Volunteerism
CLARKSVILLE, TENN. (Friday, July 22, 2005)
In keeping with Keller Williams Realty International’s mission to build lives worth living, a dedicated group of associates from the Clarksville, Tenn., market center put their busy schedules on hold to ensure an injured Iraq war veteran could live a better life – in the comfort of a brand-new home. More than 60 Clarksville associates and their families worked through five days and four nights to help construct a new house for Army Master Sgt. Luis Rodriguez and his family as part of the ABC television hit show, “Extreme Makeover: Home Edition.”