Buyers often want to know which areas of Austin are more likely to hold value and/or appreciate over time. Not just investors, but home owners who want build home equity. My standard answer to this question is usually “stay as close in to Austin’s core (downtown) as you can afford, in neighborhoods that are established and mature (not brand new), and which attend the better rated schools”.
If a buyer in Austin follows those rules alone, her home will appreciate or hold value as well or better than the greater Austin real estate market, over time, in most cases. Of course a buyer can pick the wrong home in the right neighborhood, or find a great deal in a lesser neighborhood, but assuming she stays in the median to average price/size range with a home that is standard for the neighborhood (not too big or too different), it will work out in the long run.
So how do you, as a reader, know that this rule of thumb holds up? Can I prove it? Yes, I can.
Today I’m going to revisit two neighborhoods that I compared three years ago, Circle C Ranch and Avery Ranch. Circle C Ranch is a Southwest Austin neighborhood that perfectly matches my buyer’s rule of thumb. Avery Ranch is a quality neighborhood as well, but not one I normally recommend to buyers because 1) it’s too far outside Austin’s core, 2) it’s too new, and 3) it was oversold to investors from the outset through 2007 when investors in Austin dried up.
So let’s take a look at the stats for these two neighborhoods and see how they stack up against each other as well the Austin real estate market at large.
| Austin Subdivision Sales Comparison | ||||||
| Circle C Ranch (SW Austin) vs. Avery Ranch (NW Austin) | ||||||
| Houses Only – Jan through Aug 2008/09 Sales – Data from Austin MLS | ||||||
| Circle C Ranch | Avery Ranch | |||||
| 2009 | 2008 | % Diff | 2009 | 2008 | % Diff | |
| # Sold | 153 | 167 | -8.38% | 120 | 164 | -36.67% |
| Avg List | $334,263 | $346,722 | -3.59% | $276,468 | $301,514 | -9.06% |
| Med List | $329,000 | $332,000 | -0.90% | $251,250 | $271,344 | -8.00% |
| Avg Sold | $324,288 | $336,674 | -3.68% | $266,926 | $288,741 | -8.17% |
| Med Sold | $322,500 | $330,000 | -2.27% | $247,500 | $263,330 | -6.40% |
| High Sold | $453,000 | $730,000 | -37.95% | 561000 | 696222 | -24.10% |
| Low Sold | $207,822 | $217,000 | -4.23% | 161000 | 165000 | -2.48% |
| Sold/List % | 97.02% | 97.10% | -0.09% | 96.55% | 95.76% | 0.81% |
| Avg SQFT | 2888 | 2825 | 2.23% | 2607 | 2642 | -1.34% |
| Med SQFT | 2870 | 2839 | 1.09% | 2329 | 2380 | -2.19% |
| Avg $ SQFT | $112.29 | $119.18 | -5.78% | $102.39 | $109.29 | -6.74% |
| Avg DOM | 73 | 62 | 17.74% | 80 | 73 | 8.75% |
| Median DOM | 46 | 41 | 12.20% | 55 | 52 | 5.45% |
| # Expired | 21 | 30 | -30.00% | 31 | 44 | -41.94% |
| # Withdrawn | 49 | 42 | 16.67% | 56 | 56 | 0.00% |
| Not Sold | 70 | 72 | -2.78% | 87 | 100 | -14.94% |
| Not Sold % | 31% | 30% | 4.20% | 42% | 38% | 9.87% |
| Prop Tax Rate | 2.18% | 2.51% | ||||
| Annual HOA | $472 | $408 | ||||
The above chart compares the Jan-Aug sales activity for 2009 compared to 2008 for both neighborhoods. What we see is the following:
Number of Sales: Number of sales for the entire Austin MLS is down 17% YTD for 2009. Sales volume in Circle C is down 8.38%, much less than the area average. Avery Ranch number of sales are down 37% for 2009 compared to 2008, more than double the area average. Avery Ranch is suffering disproportionately to the rest of the market during this slowdown, while Circle C remains stable and is holding up in sales volume better than the Austin market as a whole.
Average Sold Values: Values in the Austin market overall for Jan-Aug 2009 are down 3.25%. Circle C is down 3.68%, slightly worse than the Austin MLS average, but not bad considering the average sales price is is in the $300Ks, which has been a slower selling price range. Avery Ranch, even though it enjoys a lower average sales price of $267K, is down 8.17% so far this year, doing much worse than the market overall or Circle C.
Median Sold Values: Median values are similar to the average sold prices. Avery is doing far worse than Circle C with a 6.4% decline in median values compared to a 2.27% decline for Circle C. The overall median decline for all of Austin is -0.72% for Jan-Aug 2009.
Sold/List Price Ratio: Homes in Circle C are selling for 97.02% of final list price. Homes in Avery Ranch are selling for 96.55% of list value. Almost close enough to call a tie, but Circle C still wins. Austin overall is selling for 95.67% of list price, so both Avery Ranch and Circle C are doing better than the overall market in this category.
Average Price per sqft: At $112.20 average sold price per square foot, Circle C has declined 5.78% on this measure compared to the same time period in 2008. At $102.39 psf, Avery Ranch has declined 6.74% on this measure. The Austin market overall is down 5.28%, so both neighborhoods did slightly worse than the overall market on this measure. This may be because in both neighborhoods the average home size is much larger than Austin as a whole, and the larger homes have taken the biggest price hits in the past two years.
Days on Market: Circle C homes sell in 73 days on average, 46 days median, slightly better than the citywide average. Avery Ranch homes sell in 80 days average, 55 days median, worse then the citywide average of 76 avg and 48 median. Circle C takes this category as well.
Not Solds: For 2009 in Austin overall, 43% of the listings departing the MLS are doing so as failed sales efforts (expired or withdrawn). For Circle C, the rate of failure for sales listings is 31%, well below the city average. For Avery Ranch, the “not solds” are 42%, slightly better than the citywide average but much worse than Circle C.
Property Tax Rate: Circle C has a property tax rate of 2.18%, meaning a home valued at $300K will have an annual tax bill of $6,540. Avery Ranch has a tax rate of 2.51%, meaning a $300K home will have a property tax bill of $7,530 per year, or $627.50/mo if you’re paying into an escrow account with your mortgage each month. The home owner in Avery Ranch will pay $990/yr more ($82.50/mo) in property taxes than the owner of a $300K home in Circle C. To be fair, the $300K home in Avery Ranch will be slight bigger due to the average price per square foot in Avery being about $10 cheaper.
HOA Fees: Circle C has slightly higher HOA fees at $472 compared to $408 for Avery, though the exact amount seems to vary somewhat from home to home in the MLS listings. Avery gets the edge for cheaper HOA fees, but it’s more than washed out by higher property tax rates. Most would also say that Circle C provides more amenities, pretty drive in, landscaping, hike/bike trails, etc., though this is subjective.
Conclusion: Circle C Ranch in SW Austin wins the contest based on better stats and market resliliance.
Does this mean Circle C Ranch a “better” neighborhood than Avery Ranch? It depends. If you’re an investor looking to spend $235K to $275K on a good quality home that will attract good quality renters and appreciate well over the next 10 to 20 years, I recommend Circle C over Avery Ranch without hesitation, because of the aforementioned reasons.
But if you’re a young couple with small kids and you work up in the NW Austin Tech Corridor and all your friends and family also live in North Austin, Avery Ranch offers good schools (Round Rock or Leander) and would be a better choice due to factors other than those considered by a pure investor. You just have to be more careful with the exact home you pick, and I’d want you to have at least a 5 year time horizon before reselling.
This my first official “Austin Subdivision Smackdown’. Next up … well, I’m still thinking about it. Suggestions are welcome.
As you pointed out, I picked Avery Ranch over Circle C because of the tech companies (better jobs) up north and the better traffic connections. We’ve got easy access to Texas 45, 183/183A, the Mopac extension, I35, and Texas 130. The new toll roads (esp. Texas 45) have greatly improved the traffic situation.
In Circle C, there is only Mopac which is simply awful during rush hour. South Austin may be prettier, but there is simply not enough highway capacity for the number of people that live there. The area is environmentally sensitive so there is no way to increase road capacity and people in South Austin will be spending an increasing amount of time sitting in traffic.
Suggestion for future updates: How about a neighborhood smackdown that is slightly downmarket from Circle C? More like the $180k to $220k range. Milwood/Jollyville? Wells Branch? For south of the river, maybe Cherry Creek?
Hi Leon, we have multiple arterial routes from SW/South Austin to get into downtown, so I don’t think traffic is as much an issue as you. Meet a friend for breakfast some morning downtown and you guys both leave home at the same time. He’ll get there first and probably will forever.
Bob, thanks for the suggestion. Cherry Creek would be a good one but I’d need to find a neighborhood of similar age/style/size homes in north or northwest Austin to compare. Milwood might be a good one. I’ll look into ti further.
It’s eaiser to pit PUD developments against each other because the often have very similar homes built by the same builders in fact.
Steve
Steve,
I’d argue that the schools are much better for Avery Ranch (Round Rock ISD or Leander) than AISD (although Bowie is somewhat ok) than Circle C. Also, Circle C has been around for a very long time, at least the late 80’s. If you compare the stats from when Circle C opened to now, what does the appreciation look like? Most of the appreciation gains for new subdivisions are collected by the first/earliest buyers.
As a buyer, I’d bet there is likely to be a better “value” in Avery Ranch than Circle C, and furthermore, the appreciation will likely be higher in the future, especially if you pick a home in RRISD (over Leander ISD).
I whole heartedly agree. As an agent, my advice to buyers is exactly the same: stay close-in and stay away from brand new neighborhoods where builders can always beat the resale property with incentives. Though Leander and Avery Ranch offer far more than they once did, Circle C is still my pick!
Hi Anon: Most home owners stay in a home for about 5 years, so going back to the beginning of Circle C wouldn’t really be prudent. Wer’e just looking at what most people look, which is year over year. Though I think a 5 year lookback would be interesting. Perhaps Steiner Ranch vs. Circle C would be a better match for that.
With regard to schools, SW Austin has a superb cluster of 4 exemplary rated elementary schools. The brand new SW Middle will undoubtedly achieve exemplary staus. Bowie is good enough, but I’ll admit it the weak link.
Hi Camille, thanks for you input. Hope things are going well for you at AB.
Steve
Thanks, Steve! Great blog site!
Given the age difference in the subdivisions I wouldn’t expect anything different than your conclusion. When did they stop building in Circle C? They haven’t completely stopped building in Avery yet. Once the builders are gone I’d expect to see more stability in Avery.
Circle C is not yet built out. The last few Streetman Homes are finished. KB Homes is building out the final two sections.
But the difference in age and location was the entire point of the comparison. Established neighborhoods closer in generally hold value better than newer neighborhoods further out.
Steve
So what’s gonna happen after Circle C?
There are plenty open land in and around FM1826, I can only imagine the new “Circle D” will be up after that…
Hi arz,
Well, Meridian could be considered an extension of Circle C, but once buyers get out past 1826 and Hwy 45 distance becomes an objection. I’ve had buyers object to the additional distance required to make the U-turn at 1826/45 to come back to Meridian. We’re talking 5 minutes more compared to turning into Circle C West off of 45, but still, buyers have their threshholds.
Rim Rock is not selling well at present and it’s just another 10 minutes out past Circle C, so I’m not sure we’re going to see Austin buyers will to keep stretching out into Hays County along 1826 if it’s just going to be a PUD style home. But time will tell. Eventually, yes, perhaps, but not yet.
Steve
We are a military family getting ready to move to the Austin area. We will be renting as my husband will be going to UT Austin for his master’s degree. I’ve done quite a bit of research on the different areas and have come down to Avery Ranch (Leander ISD) and Circle C area. The main reasons for this are recommendations and schools. I have kids in HS, MS and Elementary, each with different needs and its been very difficult making this decision. I hear good/bad about Bowie, Gorzycki (new MS). Can you tell me what is better choice? My MS child has disabilities, but he’s still in general education. My HS child needs AP courses! Thanks so much! Excited to move to Austin, but oh so sad to leave Colorado Springs!! We have better skiing:)
This is a great comparison between two highly desirable communities
Please consider updating this, as well as some discussion regarding the
Timeframe since you last did the analysis.
Great analysis, Steve. Very helpful. I’d be interested to see an update in 2012 now too.
We relocated here from Seattle mostly because we were looking for 1) lower cost of living 2) great public schools 3) sunshine and from everything I read before moving here, we ended up renting in SW Austin near circle C. Now, 6 months later, we are looking to buy – probably in Avery Ranch. You can’t get into a house in Circle C for under $250K and our range is more $220K. Almost the second you step away from Circle C, the schools are not good (at least according to Great Schools – ratings go way way down). Also, for us, we have just one car. My husband used to commute daily in Seattle on his bike, but here it is much more spread out. He commutes 2 days a week now by bike to his office in East Austin. The selling point for us, besides the price range and exemplary schools in Avery Ranch, is that it’s on the commuter train line. This is HUGE. Austin is booming and with the influx projected over the next 5 years, traffic is going to be more than a problem. We are happy to live near the train where my husband will be able to do a hybrid bike/train commute rather than sit in traffic for that same amount of time. I do see that from solely an investment standpoint, Circle C may have the slight advantage. But for families like ours, Avery Ranch is an excellent choice 🙂