The story below is from tomorrow’s Sunday Austin Statesman. It’s a pretty good overview of the optimism many hold for East Austin’s continued boom. I’ve stayed out of East Austin not because it doesn’t hold promise, but because rehabbing and flipping properties is a specialized and riskier form of investing, and we tend to take a more conservative approach.
Also, once one establishes a set of investment rules that work well, it takes resolve to stick with your criteria, but I believe it’s important to do so. East Austin has terrible schools, street drugs, prostitution and higher crime. It also has many asthetically displeasing aspects (it’s ugly) including many large welfare housing projects scatter about that won’t be going away any time soon. It just ain’t my cup of tea at this stage of my investing life.
That said, if I was 23 and single, as I was when I arrived in Austin in 1985, I would definately be drawn to the vibe and energy of East Austin and could see myself living there. But I don’t see soccer moms jogging with baby strollers through the East side, and that’s one of the barameters I currently look for in choosing an area to invest in.
But I thought this was a good article worth sharing.
Buyers take a fresh look at new and remodeled homes just across I-35 from downtown
Sunday, January 13, 2008
The numbers will probably surprise anyone who hasn’t ventured east of Interstate 35 lately. The 78702 ZIP code in East Austin currently has more than 150 properties for sale, and they’re just as eclectic as the artists who live in that part of the city.
A slew of modernist homes and condominiums are going for $400,000 to $600,000 or more. Remodeled homes are listed for up to $675,000. And four lots at the corner of Martin Luther King Jr. Boulevard and Harvey Street are on the market for $1.8 million.
The details reveal the big trends in a real estate area that got little attention 20 years ago. And it’s not hard to figure out why.
Despite a median home price that has risen by more than 50 percent in the past five years to $199,000, East Austin is still within reach of many potential home buyers, especially when compared with nearby Austin neighborhoods such as Travis Heights, Hyde Park and Tarrytown.
The changes have caused concerns among community groups about rising property taxes and whether longtime residents will be able to afford to stay. But few people would deny that the East Austin real estate landscape is undergoing dramatic change.
Austin Urban Partners is one of the groups making a big impact. Ian Mitchell and Jerry Pritchard of Austin Urban Partners are building more than a dozen modernist homes and condominiums in the East Second Street area.
“We have torn down and removed eight homes, but they were all boarded up,” says Pritchard, “so (we) haven’t displaced any families.”
On three lots in the 1200 block of Second Street, the team has put up five residences: four condominiums and one single-family home.
Krisstina and Garry Wise, owners of the GoodLife Team, affiliated with Keller Williams Realty, have been hired to market the properties.
One of the homes, a three-bedroom, three-bathroom house at 1205 E. Second St., is on the market for $495,000 and has 2,180 square feet. It also has what you would expect young urbanites to want: bamboo and polished concrete floors, granite countertops, stainless steel appliances and a second-story balcony with city views.
“Ian (Mitchell) put the basic plan together for the homes,” Pritchard says. “Then we took them to a licensed architect in order to get a finished version for the builders,” Stinson Property Group of Round Rock.
The colors used in the homes mesh with those used on other dwellings in the neighborhood and were chosen by Jennifer Chenoweth, an artist who lives on East Second Street. “She’s done a great job of using colors to make the modern construction fit in with the feel of the neighborhood,” Pritchard says.
Pritchard points out that “everything we’re doing couldn’t be done now” because of recent changes in city ordinances restricting the size of homes on inner-city lots. “Most of the lots here are long and narrow and accommodated shotgun homes,” he says.
But Pritchard and his team got approval for the new construction before the ordinances were changed, so the projects are “grandfathered in,” he says. The first of the homes are finally being completed and are ready to sell. They will be part of a Feb. 7 tour of modern homes in East Austin hosted by the GoodLife Team.
A home at 80 Waller St., originally built in 1910, is a good example of traditional remodeling. Owner Spiros Karamalegos bought the property in April and took it down to the studs. It’s still a work in progress, but Karamalegos says he expects the two-story, 2,664-square-foot project to be complete in the next month or two.
When it’s done, it will have four bedrooms, 31/2 bathrooms and a detached garage with 600 square feet, relatively roomy for a neighborhood where some homes average 1,000 square feet or less. The asking price: $675,000. Jane Coffman of Keller Williams Realty has the listing.
Karamalegos echoes many who have invested in the area. “It’s just so close to downtown, and if you want to buy a condo downtown, it’s really expensive. Plus, this is a four-bedroom house.”
He says the floor plan of the original home “was completely changed. We moved the main staircase and tore out just about everything so that we could make use of all the space.”
The kitchen will have granite countertops and new cabinets, and will open into a living area with hardwood floors.
Before the house was remodeled, it was appraised at slightly more than $356,000 by the Travis Central Appraisal District.
Karamalegos, who lives in Smithville, is supervising the renovations. He owns an Austin nightclub and in the next couple of months plans to open the Music Cafe, a coffee and wine bar at South Lamar Boulevard and Oltorf Street.
The Waller Street house joins a long list of recent remodels in the neighborhood.
A three-bedroom house at 1201 Garden St., with a complete update, is on the market for $535,000. Before the work, the house was appraised at slightly more than $198,000.
A remodeled three-bedroom at 1702 E. 17th St. is listed for $517,000; it previously was appraised for about $151,000, according to tax records.
And an updated, three-bedroom bungalow at 2602 Hidalgo St. is listed for $398,000, with a prior appraisal of about $81,000.
The $1.8 million listing for the four lots at the intersection of Harvey Street and Martin Luther King Jr. Boulevard is being handled by Iletra Lawrence of Coldwell Banker United.
Some might raise eyebrows at that asking price. But the market will determine what people are willing to pay for the land, which is near the University of Texas and the redevelopment of the old Mueller airport, Lawrence says.
“The lots have a total of 325,000 square feet of space,” she says, “and the zoning allows the land to be used for whatever purpose: single- family housing, multifamily or commercial.”
One of the lots at the current site is home to Lewis’s Bar-B-Q, a popular East Austin eatery. Lawrence says the various owners of the lots are related and that they’re putting the land on the market as a package.
Tax records indicate that the owners are Juanita Lewis of Manor, Alberta Black of Manor and Arthur Burton of Kyle. Two of the lots are appraised at $50,000 and the other at $60,000. The lot with the restaurant is appraised at $82,610, according to appraisal district records.
But the four combined, along with the burgeoning development in the area, account for the higher asking price.
Krisstina Wise says she thinks East Austin will continue to blossom and sees it as the next South Congress Avenue.
“We have our offices here (on East Cesar Chavez Street). We’re committed to East Austin,” she says, partly because of the diversity, eclecticism and relative affordability.
“Times have changed, and young people like the central location. Plus it still has that old Austin vibe.”