Units for Sale:
Dec. 21 - 27, 2008
(compared to the same week in 2007)
New listings down this week 34.14%
Pendings up 20.0%
Solds down 57.97%
As for Average Prices:
Dec. 21 - 27, 2008
Sold average sales prices decreased 29.16% to $200,635. In 2007 it was $283,230 for the same week.
Condominiums are traditionally the most volatile of real estate investments. Ask anyone who bought condos in the 1970s or 1980s and they’ll show you the financial scars on their backs.
Condos have made a strong comeback in recent years because of the popularity of purchasing second homes, particularly in resort areas. Whether this trend will continue is uncertain, but keep in mind that condos are generally a tougher sell in most areas than single-family homes. And because condominiums involve a homeowner’s association, you’ll have to deal with management issues, rules, and costs that may be out of your control.
When buying condos consider your prospective tenant or buyer when you resell. Is this priced so high that your pool of buyers is limited? It may be in the median price or below, but how many people live in one-bedroom condos? Is the development so old that the HOA (homeowner’s association) dues are high and will continue to rise as the development ages and needs repairs?
For the most part, condos tend to fit into two categories – rentable and livable. Cheap condos that rent well often don’t appreciate much in value. You can get away with buying a $50,000 condo and renting it for $500/month forever. In 20 years, it may barely have appreciated above inflation. A different condo near downtown or the beach may rent for negative cash flow and appreciate 10 – 15% per year. On short, the normal formulas that apply to single-family homes aren’t as consistent with condos, which is why investors need to approach condos with extreme caution.
Look for Limitations when Buying Condos
Be aware that some homeowners association rules restrict the rental of units, so make sure you check the limitations before you purchase a condo that you plan to rent. Also, many lenders have limitations on financing condos, such as a requirement that a certain percentage of the units be occupied by owners.
WASHINGTON (AP) -- Rates on 30-year-fixed mortgages dropped this week to their lowest levels in at least 37 years, as the Federal Reserve pledged to pour money into the mortgage market in an effort to spur the moribund U.S. housing market.
Freddie Mac, the mortgage company, reported Thursday that average rates on 30-year fixed-rate mortgages dropped to 5.19 percent, down from the year's previous low of 5.47 percent, set last week.
The rate is the lowest since Freddie Mac's weekly mortgage rate survey began in April 1971.
Mortgage rates started falling after the Federal Reserve launched a sweeping new effort in late November to aid the U.S. housing market by purchasing up to $600 billion of mortgage-related securities and other debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
A daily survey found that the national average rate fell even lower Wednesday. Rates on 30-year, fixed mortgages was 5.06 percent, according to financial publisher HSH Associates, the lowest since the 1960s and down from 5.3 percent Tuesday.
It was the best news in months for anyone looking to lock in a 30-year, fixed-rate mortgage. But it was not expected to be a cure-all, and borrowers already in danger of foreclosure probably won't be able to take advantage because only borrowers with stellar credit can qualify.
"It's a call to action for homeowners looking to get out of adjustable-rate mortgages," said Greg McBride, senior financial analyst at Bankrate.com. "Unfortunately, it's not an equal-opportunity party."
Faced with a dramatic surge in defaults, both Freddie and its sibling company, Fannie Mae, are stepping up efforts to prevent foreclosures.
The federal agency that regulates the two companies anticipates they will modify about 75,000 troubled loans next year, up from about 60,000 this year. The program applies only to borrowers who have missed three months of payments and have not filed for bankruptcy and still live in their homes.
Most of the increase is expected to result from a mass loan modification program for loans owned by Fannie or Freddie that was launched this week. Loan servicing companies, which collect mortgage payments for Fannie and Freddie, are expected to send out thousands of letters to eligible borrowers in the coming weeks.
But for borrowers who are current on their mortgages, they can take advantage lower interest rates, refinance and save money.
The average rate on a 15-year fixed-rate mortgage dropped to 4.92 percent from 5.2 percent last week, Freddie Mac said.
Rates on five-year, adjustable-rate mortgages fell to 5.6 percent, compared with 5.82 percent last week. Rates on one-year, adjustable-rate mortgages dropped to 4.94 percent, from 5.09 percent last week.
The rates do not include add-on fees known as points. The nationwide fee for 30-year and 15-year mortgages averaged 0.7 point last week. The fee on five-year, adjustable-rate mortgages averaged 0.6 point, while the fee on one-year adjustable-rate mortgages averaged 0.5 point.
Mortgage application volume jumped last week, fueled by borrowers seizing on lower rates to refinance home loans, the Mortgage Bankers Association said Wednesday.
The trade group's seasonally adjusted application index rose 2.9 percent for the week ended Dec 12.
The Federal Reserve, aiming to free up lending and jolt the economy back to life, on Tuesday cut the federal funds rate from 1 percent to a target range of zero to 0.25 percent and pledged to keep funneling money into the market for mortgage investments.
Mortgage brokers are already reporting a surge of calls from borrowers trying to take advantage of the Federal Reserve's extraordinary actions.
On Wednesday, some mortgage brokers were quoting interest rates of close to 4.5 percent for people with strong credit and hefty down payments.
Falling interest rates mean Americans could suddenly find billions of extra dollars in their pockets at a time when consumers have sharply cut back on spending in the face of rising unemployment and declining household wealth. But many experts believe that the interest rate cuts alone won't be enough to jump-start the economy.
Construction could begin by late next year on the $117 million redevelopment of the former Seaholm Power Plant in downtown Austin.
The public-private venture is expected to transform the decommissioned power plant on West Cesar Chavez Street into a mix of shops, offices, condominiums, a boutique hotel and special-events space.
The Austin City Council last week approved a new taxing district to cover some costs of the project, including the renovation of the power plant and the construction of streets and a public plaza.
The taxing zone will capture new property and sales tax revenue generated within the 7.8-acre project over 30 years. The new revenue will be used for future payments on debt issued to finance $8.1 million worth of work.
The taxing zone "is a way for the city to participate in the Seaholm project without having to come up with out-of-pocket funds," said John Rosato, principal with Southwest Strategies Group, the lead developer in Seaholm Power LLC, which the city chose to redevelop the site after a competitive selection process.
The city is forecasting that sales and property taxes will be enough to cover the bond payments. However, if the project doesn't generate as much in taxes as expected, the city will be responsible for making the payments, said Jeff Knodel, Austin's deputy chief financial officer.
After the bonds are repaid, taxes generated by the project will go into the city's general fund.
The city expects to spend an additional $10.5 million on utility and water work and a parking garage west of the site. The city plans to pay for that work from parking revenues and capital improvement funds.
The developers will pay most of the cost for the total project.
"The developers would have the vast majority of the risk," said City Council Member Brewster McCracken, who has been a champion of the project.
City leaders long have wanted to create a lively corridor of development along West Cesar Chavez, Second and Third streets. Today, the city will officially decommission the Green Water Treatment Plant east of Seaholm as part of that initiative.
In the summer, the City Council selected a developer group led by Trammell Crow for that six-acre project.
The developers will buy the land from the city.
The focal point of Seaholm will be the preservation of the landmark power plant, a 136,000-square-foot building with more than 110,000 square feet of usable floor space. Once renovated, the building will house an events center, offices, shops and restaurants.
Jeff Trigger and his La Corsha Hospitality Group will oversee the construction, management and operations of a 180-room hotel planned for the project. Trigger is the former managing director of the Driskill Hotel in downtown Austin.
Trigger said there's interest from "Austin-centric retailers" who want to be part of Seaholm.
"We're not going to be generating a whole lot of electrical power, but we sure want to generate a lot of energy," Trigger said. "As you can tell, I'm jazzed about this."
The groundbreaking is expected late next year, starting with excavation at the site. Next would come construction of an underground garage and foundation work for some of the buildings, along with work on the power plant.
Central Texas employers have modest plans to add jobs in the first three months of 2009, according to a Manpower Inc. survey set to be released today.
The employment services firm, which surveyed a sample of employers in the country's 200 largest metropolitan regions, found that 15 percent of firms in the five-county area planned to add jobs in the first quarter of the new year.
That figure is significantly lower than the anticipated hiring in the Houston and Dallas areas, but it is on par with the study's national findings: 16 percent of surveyed U.S. employers said they expect to add jobs during the same period — the smallest share of employers with hiring plans in the past five quarters of tracked data.
"A significant percentage ... of employers plan to hold staff levels steady," Jeffrey Joerres, chairman and CEO of Manpower, said in a statement. "This may suggest that a majority of employers are carefully monitoring the uncertain economic environment prior to making any additional employment decisions."
So far, Central Texas has continued to add jobs and have relatively low unemployment, escaping the full impact of the national economic turmoil. However, the Manpower study suggests that the region will continue to feel the effects of the downturn in the new year.
The Manpower study says 70 percent of area employers expect to maintain their current staffing levels, 10 percent expect to cut jobs and the remaining 5 percent are unsure. The strongest sectors locally include construction, financial activities, leisure and hospitality (which includes hotels) and government.
The local survey "looked better than I anticipated," said Shirley Sanders, branch manager for Manpower Inc.'s South Austin office. "I thought we would have a higher percentage expecting to reduce. So we have modest gains, which is encouraging."
Overall, 67 percent of 31,800 surveyed employers expect to "sit on the sidelines," Jonas Prising, president of Manpower North America, said in a statement. Thirteen percent expect to cut jobs, and 5 percent are unsure.
The Houston region, a 10-county area that includes Sugar Land and Baytown, is among the top places for hiring, the survey found. Manpower reported that 26 percent of sampled employers there said they plan to add jobs, 62 percent plan to maintain staffing levels and 6 percent plan to cut jobs.
Twenty percent of employers in the 12-county Dallas region and 17 percent of San Antonio employers said they plan to add jobs.
In a broader measure of the overall health of the job markets, several Texas cities made the list of strongest areas. The Texas cities included oil towns such as Beaumont, Houston and Amarillo and border cities including Laredo, McAllen, Brownsville and El Paso.
Among major tech cities, San Jose, Calif., ranked among the country's weakest job markets. Only 9 percent of the area's employers plan to add jobs in the first three months of 2009 while 17 percent said they planned job cuts.
The job outlook was more like Austin's in other tech cities. Seventeen percent of surveyed employers in Seattle said they planned to hire, and 13 percent of surveyed employers in Raleigh, N.C., said they would add jobs in the first quarter.
cgrisales@statesman.com; 912-5933
Rates on 30-year fixed rate U.S. mortgage loans fell last week to their lowest point since March of 2004, a more than four and a half year low, according to data from mortgage company Freddie Mac Thursday.
“Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed-rate mortgage rates room to ease back a little further,” said Frank Nothaft, Freddie Mac vice president and chief economist.
The 30-year fixed rate mortgage carried an average rate of 5.47 percent, excluding points, during the week ended December 11, a drop from 5.53 percent the previous week. At the same time last year, the average rate was 6.11 percent.
Rates on 15-year fixed rate loans also fell, declining to 5.20 percent from 5.33 percent the previous week. One year ago, the average rate on these loans was 5.78 percent. The last time the 15-year mortgage rate was that low was at the beginning of the year, during the week of February 7, 2008, when the average was 5.15 percent.
One-year Treasury-indexed adjustable rate mortgages had an average interest rate of 5.09 percent, an increase from 5.02 percent one week earlier. During the same week of 2007, the average one-year ARM rate was much higher at 5.50 percent.
Things in the mortgage arena remain unstable, leaving the future of interest rates equally volatile, according to Freddie Mac.
“The housing market still hangs in the balance, however,” commented Nothaft. “On a year-over-year basis, after rising in both August and September, pending existing home sales fell 1.0 percent in October, based on figures from the National Association of Realtors®. Meanwhile, conventional mortgage applications for home purchases over the week ending December 5th were up 2.0 percent from four weeks prior, but were still 51 percent below the same period last year, according to the Mortgage Bankers Association.”
During tough financial times, news is king. A simple announcement from the media can instantly send the financial and mortgage markets racing in either direction. As the financial markets continue to adjust to the credit crisis, current and potential homeowners will have to adjust and react immediately as well.
Headline #1: Mortgage Rates Plummet Thanks to the Fed
In late November, an announcement that the Federal Reserve and US Treasury would purchase up to $600 billion in asset-backed securities over the next year or so sent mortgage rates on many programs plunging below 6%. This is a bold step by our federal regulators towards a more stable economy. Not only will this increase the availability of credit, but it should help support the housing and financial markets as well. For new buyers and for homeowners looking to refinance, this is great news – especially borrowers with adjustable-rate mortgages.
Current Homeowners – those who have been on the fence about refinancing should investigate their options quickly. Remember, interest rates are incredibly volatile and extremely susceptible to news events that directly affect the economy, especially in today's marketplace. Whether you're looking to lower your interest rate or hoping to switch into another more stable program, applying now and locking in a lower rate will save you a lot of money. Make sure your mortgage professional has the knowledge and ability to access and follow the performance of mortgage-backed securities in order to get the best mortgage pricing available.
New and First-time Buyers – interest rates near historic lows, home prices at 2003-2004 levels in many markets, and a tax credit up to $7,500 for first-time buyers (anyone who hasn't owned a home in the last three years) all make for a great opportunity to purchase the home of your dreams at a major discount.
Cash-strapped Borrowers – low and no down-payment programs still exist through the government, including Federal Housing Administration (FHA), the Veterans Benefits Administration (VA), and the US Department of Agriculture (USDA).
For FHA loans, the down-payment requirement has increased this year, but it's still only 3.5% which isn't bad for a government-secured mortgage. With a VA loan, 100% financing is available to eligible veterans and, for non-vets, 100% financing is available in many communities through a loan guaranteed by the USDA. It's important to note that VA and USDA loans also do not require monthly mortgage insurance like FHA loans, creating even more savings for these special mortgages. If you're looking to take advantage of today's buyers' market, be sure to ask your mortgage professional about these special programs.
Headline #2: Rescue Program Offers Hope for Homeowners
In Washington, federal rescue and stimulus packages have made headlines for most of 2008. The intent of these programs has been both to stabilize the credit markets and to encourage lending to companies and consumers alike.
For the majority of struggling homeowners, however, these programs offer little relief from declining home prices, increased living expenses, and decreasing incomes.
Legislation passed earlier this year did contain a well-intentioned lending program called Hope for Homeowners (H4H) designed to help homeowners behind on their payments or who owe more on their mortgage than their home is currently worth. The $300 billion program aimed to replace the consumer's old loan with a new one set at 90% of the current value of the home. Lenders would absorb the difference or loss. In return, the consumer would pay higher than normal FHA insurance premiums, agree to share the remaining 10% equity with the government, and to split future appreciation on the home. There are, of course, other restrictions on how the loan should be structured and who qualifies, so talk to your mortgage professional to see if this option is right for your individual goals and needs.
Also, be prepared for some hitches and delays when it comes to H4H. Unfortunately, the program as it stands today is deeply flawed, and may offer very little hope for many distressed homeowners as it is currently applied. The main problem with H4H is that the program was introduced to the marketplace without requiring full participation from lenders. In other words, it is completely voluntary, resulting in a program that just doesn't meet the needs and demands of the homeowners who need it the most.
The Department of Housing and Urban Development (HUD), however, recently made some changes to the program that go into effect in mid-December. These changes are designed to engage (though still not require) more lenders to participate. It's hard to say how these changes will enhance H4H, so be sure to investigate any and all options and alternatives available with your mortgage professional.
Headline #3: Loan Modification Offers Alternatives to Foreclosure
Loan Modification is another "voluntary" program designed to help homeowners facing foreclosure. A favorite of the media, this program seeks to change the terms of a mortgage, including a reduction in the interest rate (permanently and temporarily), an extension in the term of the loan, a reduction in the principal balance, or some combination of the three.
There are two ways a consumer can approach getting his or her mortgage modified. The first is to reach out to the lender directly, detailing the situation and waiting for the lender to offer a plan. The second is to employ a professional to handle the negotiations on his or her behalf. (September 2008).
The primary benefit to employing a professional to assist you with a modification is knowledge and experience. They know what they're doing. A loan modification company or consumer credit company is accustomed to working with lenders to obtain a successful modification. The key for you then is to work with someone skilled in obtaining the best modification for your needs. Be sure to get a referral from your real estate or mortgage professional, or at least someone you know who has successfully gone through the process themselves. Whatever you do, do not be afraid to ask for and check all references because, unfortunately, there are scammers out there looking to take advantage of desperate homeowners during this extremely vulnerable time in their lives.
This doesn't mean you won't pay for the services of a professional. The typical costs for employing a loan modification company could be in the range of $3,000 to $5,000 depending on your situation and if you employ a company to negotiate for you as well. Items that can impact the fee can be the number of loans you need modified and the company you select.
Choosing a consumer credit counseling company may not cost you anything, but the expertise of the people you work with and the outcome itself may not be equal to employing a company that is dedicated solely to mortgage modifications.
One key point to remember is that the lender, while often willing to work with you, always puts its own interests first. This means that, while the lender may be willing to work with you personally to avoid a more substantial loss on its part, the solution offered may not be the best possible scenario available to you. Keep in mind, with a loan modification, you are asking the lender to take a loss, and you can bet that the lender will always try its best to minimize these losses.
Whichever path you choose, timing is of the essence. If you're struggling to make your payments or you've already fallen behind a few months, this is not the time to bury your head in the sand. Communication is the key to your success. This means answering the phone calls and opening up the letters from lenders. It means getting on the phone and calling your lender's loss mitigation department and following any advice they offer.
Unfortunately, accurate statistics are not currently available on the success rate of homeowner-negotiated transactions versus those who utilized the services of paid professionals. The best advice we can offer is to find out the right course of action for your individual needs. You've already taken the first step. You've read this article and you've learned the basic steps you need to take to save your home. Don't wait until it's too late.
According to Bizjournals, they will be:
Las Vegas, NV
Raleigh, NC
Cape Coral-Fort Meyers, FL
Austin, TX
Phoenix, AZ
McAllen-Edinberg, TX
Houston, TX
Salt Lake City, UT
Wichita, KS
Charlotte, NC
Texas has three cities on the list and Austin is at #4. What Bizjournals looked at was four key indicators — population, private sector employment, per capita income and gross metropolitan product. Read the story here.
September Austin real estate stats are below. Average and median prices are doing what they’ve been doing most of the year, which is treading water, trending down somewhat, but most notable is that the expired and withdrawns continue to rise, and for September moved past the 50% mark, meaning over half of the homes that departed the MLS in September did not sell.
Here is a quick summary of the September 2008 sales stats:
• Number of homes sold is down 14% (24% last month) from 1,763 Sep 2007 to 1,512 Sep 2008. (This represents a decrease in the slowing of sales)
• Average list prices in Austin were down 3.62% over the same month last year to $257,761.
• Average sold prices in Austin were down 3.65% over the same month last year to $248,026.
• Median sold price was flat at 0%, remaining at $185,000.
• Average List to Sold price about even with last year at 96.25%, down from 96.25% last year.
• Avg sold price per square foot is down 4.33% to $116 compared to $122 a year ago in Sept.
• Avg days on market is up 11 days (20%) from 56 last year to 67 this September.
• Median days on market is up 11 days (30%) from 37 days last year to 48 this year.
• Number of “Not Sold” (exp or withdrawn) is up 28% over the same month last year, to 53% of all removed listings.
So, while the numbers are trending downward, they continue to hold somewhat steady as a large amount of inventory simply goes away each month, leaving the homes that actually sell to paint a somewhat better picture of the market than the average seller experiences.
| Austin Real Estate Sales Market Update for Sept 2008 | ||||
| Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data | ||||
| Aug 2008 | Sep 2008 | Sep 2007 | Yr % Change | |
| # Sold | 1837 | 1512 | 1763 | -14.24% |
| Avg List | $269,807 | $257,761 | $267,445 | -3.62% |
| Med List | $204,409 | $189,900 | $189,900 | 0.00% |
| Avg Sold | $259,500 | $248,026 | $257,414 | -3.65% |
| Med Sold | $199,000 | $185,000 | $185,000 | 0.00% |
| Sold/List % | 96.18% | 96.22% | 96.25% | -0.03% |
| Avg SQFT | 2187 | 2131 | 2116 | 0.71% |
| Med SQFT | 1986 | 1924 | 1942 | -0.93% |
| Avg $ SQFT | $118.66 | $116.39 | $121.65 | -4.33% |
| Avg DOM | 63 | 67 | 56 | 19.64% |
| Median DOM | 43 | 48 | 37 | 29.73% |
| # Expired | 721 | 797 | 581 | 37.18% |
| # Withdrawn | 857 | 891 | 660 | 35.00% |
| Not Sold | 1578 | 1688 | 1241 | 36.02% |
| Not Sold % | 46.21% | 52.75% | 41.31% | 27.69% |
Last year Austin ranked number 20 on the list. The list ranks cities according to metrics such as job creation and salary and technology growth.
Is there are correlation between the economic strength of a metro area and its real estate market? Of course there is. Absent the type of speculation that happened in cities like Merced California, a metro area must have solid job growth and positive net migration figures in order to generate the kind of market buyer demand that sustains or propels a real estate market.
Remember, Texas had a soft economy and no real estate price run up during the early/mid 2000’s, and Texas had a relatively low percentage of sub-prime loans, compared to the areas in the U.S. that saw crazy real estate appreciation during those same years. Those 4 years of zero appreciation in Austin from 2001 through most of 2005 are looking pretty good in retrospect. Bleeding out 30,000+ jobs in 2002/2003 was tough medicine back then, but makes for a healthier economy today.
Let’s take a look at some of the cities on the list compared to the real estate markets they are experiencing.
According to the list of top 25 appreciating real estate markets in the U.S. as presented at the Housing Predictor website, Austin ranks number 6 for projected appreciation for 2008, with 4% being the predicted appreciation.
As of July 31, 2008, our median value in Austin was up 4.32% for single family homes, but the average sales price is up only 0.44%. Nevertheless, Austin is hanging in tough relative to most of the country.
Forbes list of the 10 worst real estate markets in 2008 includes Stockton CA, Las Vegas NV, Bakersfield CA, Santa Ana-Anaheim CA, Los Angeles-Long Beach CA, Miami-Miami Beach FL, Sarasota-Bradenton FL, Oakland CA, Fresno CA and Fort Lauderdale FL. How many of the aforementioned 10 cities with the worst real estate market are listed in the 2008 Best Performing Cities list? None. Zero. How many are listed in the top 50? One - Fresno at number 47.
I guess this isn’t a news flash. People know this, right? As job growth and population growth go, so goes the real estate market? Well, actually most buyers don’t know this. If they did, they would act as if they knew it. Instead, there are a lot of worried buyers on the sidelines in Austin at present, passing up interest rates in the 5’s and a reasonably good buyer’s market, in favor of the belief that the Austin real estate market is a bubble waiting to burst. It’s not. Austin is in a slowdown in some areas and price ranges, but overall, Austin is enjoying a real estate market and an economy that most of the country would gladly trade for at present. Buyers that know this are out there making good purchase decisions.
The city of Austin has sent out letters to people who either own or rent property in a floodplain or are within 150 feet of a floodplain. If you think you may be in a floodplain, but are not sure, click www.cityofaustin.org/watershed/flood.htm and click the interactive map. You can also contact your insurance agent to find out.
The letter goes on to state that FEMA began updating floodplain maps for Austin and Travis County in 2003. The updated maps show changes in the floodplain. There are more properties at risk of flooding than was previously thought.
The new floodplain goes live September 26th. If you think you are in the new floodplain, contact your insurance agent ASAP. You should get flood insurance prior to the release of the new maps as you may get a lower rate than after the change takes place.
1) Austin real estate home prices are still very robust. While overall Austin home prices are down 1% when comparing August 2008 to August 2007, prices are up 27% since the market peak in the year 2000 from $90 per square foot to over $122 per square foot in 2008.
2) Home sellers in Austin who price their home aggressively are getting deals done. The median list price for homes pending sale in Austin are 1% lower than the median sold price in Austin. This is opposed to the fact that the median list price for all homes available for sale in Austin are priced 16% higher than Austin’s median sold price. Homes listed aggressively are getting contracts.
3) With the benefit of time and patience, the aggressive buyer can often find a good deal on a purchase. Sold homes in Austin through August of 2008 are sitting on the market 28% longer than the same time period during 2008. Home prices have dipped by 1% in August 2008 compared to August 2007. These statistics combined with the credit crunch, which is making it harder for people to refinance their loan and/or harder to secure a new loan to purchase a home, results in increased home sales competition and therefore better deals. Drastically reduced gas prices could have the opposite effect so consider taking advantage of this current market trend.
Selling competitively and buying aggressively is my current recommendation to home buyers and sellers in Austin. Don’t be afraid of taking less on your home sale. Statistics show that getting a home sold fast will most likely result in getting more for your home than pricing it high and reducing the price incrementally. Prices are still robust and will still result in a significant gain for many sellers. Furthermore, there is opportunity to get a deal on your purchase so long as you have time on your side.
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The Federal Reserve held the line on Tuesday–leaving the Fed Funds Rate at 2.00% for the third straight meeting. The decision, however, was anything but cut-and-dry.
Earlier in the week, the Personal Consumption Expenditure data indicated that inflation climbed 0.8% overall in June, which is the highest inflation jump in 27 years. In addition, the report indicated that inflation now sits at 2.3%–above the Fed's desired range of 1-2%.
Although the Fed ultimately left interest rates unchanged, inflation obviously remains a concern and the recent rise may lead to an interest rate hike by the Fed in the near future.
What Does This Mean to You?
Many experts believe the housing market is nearing the bottom and may even be set to bounce back up. For now, home prices remain low, personal incomes are high, and interest rates are still very attractive.
If you've been weighing your options and waiting to see how things shake out, this is the ideal time to act–especially when you consider the new Housing and Economic Recovery Act benefits for home buyers:
Tax credits. First-time home buyers who purchase their primary residence between April 9, 2008 and July 1, 2009 are eligible for up to $7,500 in tax credit, as long as they haven't owned a home in the last three years. The credit is actually a generous interest-free loan, so we'll have to talk about some income parameters and payback terms. But if you're a new home buyer – or know someone who is renting or in the market to buy – this is a huge benefit that we should discuss.
Lower rates for larger loans. In the past, mortgages of $417,000 or more have been considered "jumbo" loans that were more expensive to finance. Thanks to recent provisions, however, those jumbo loans were able to qualify for better financing rates in some parts of the country. Although those provisions were set to expire, they are being extended–with a minor change to the maximum amount eligible. This is great news that may save you a ton of cash, so call me to find out how this impacts our area, and if it could help you.
Down Payment Assistance...going, going, not gone yet. Another provision of the legislation eliminates some down payment assistance programs later this year...but they are still available right now, and depending on your circumstances, we may be able to take advantage of them to double your benefit as a home buyer.
Bottom line...now may be the ideal time to put together a purchase strategy based on your unique situation.
The average sales price for houses in Austin increased 5.14% in May from $259,958 in May 2007 to $275,711 May 2008. Sales prices had been flat or falling since Feb 2008, but May has us heading the other way again. We continue to have a large number of “failed sales” listings though, and days on market continues to creep upward. In short, there are a lot of mixed signals in the sales data. Here is a brief summary followed by charts below.
• Number of homes sold is down 24% from 2,630 May 2007 to 2,006 May 2008.
• Average sold prices in Austin were up 5.14% over the same month last year to $275,711.
• Median sold price was up 7.01% over the same month last year to $199,925.
• Avg sold price per square foot is up 4.02% over May 2007 to $124 per sqft.
• Avg days on market is up 11 days (22%) from 50 last year to 61 this May.
• Median days on market is unavailable because our $1M/yr MLS software, MLXChange, won’t produce it this month. I’ll leave it at that before I go off on another “MLXChange Sucks” rant.
• Number of “Not Sold” (exp or withdrawn) is up a whopping 56% over the same month last year.
| Austin Real Estate Market Update for May 2008 | ||||
| All Austin / Central TX MLS Areas – Houses Only | ||||
| Apr 2008 | May 2008 | May 2007 | Yr % Change | |
| # Sold | 1826 | 2006 | 2630 | -23.73% |
| Avg List | $254,318 | $275,711 | $259,958 | 6.06% |
| Med List | $194,935 | $203,037 | $189,900 | 6.92% |
| Avg Sold | $245,483 | $267,231 | $254,169 | 5.14% |
| Med Sold | $189,000 | $199,925 | $186,832 | 7.01% |
| List/Sold % | 96.52% | 96.92% | 97.77% | -0.87% |
| Avg SQFT | 2117 | 2155 | 2132 | 1.08% |
| Med SQFT | 1924 | 1941 | 1928 | 0.67% |
| Avg $ SQFT | $116 | $124 | $119 | 4.02% |
| Avg DOM | 63 | 61 | 50 | 22.00% |
| Median DOM | 39 | * | * | not avail MLS |
| # Expired | 519 | 509 | 306 | 66.34% |
| # Withdrawn | 586 | 599 | 473 | 26.64% |
| Not Sold | 1105 | 1108 | 779 | 42.23% |
| Not Sold % | 38% | 36% | 23% | 55.71% |
| On the Market (houses) as of June 23, 2008: | ||||
| 12,466 = Active Res Listings in Austin MLS (12,066 last month) | ||||
| 10,335 = Total Single Family Homes listed (9942 last month) | ||||
| 1870 = Condo/Townhome/Loft/Garden Homes listed (2026 last mo.) | ||||
| 97 = Mobile/Manufactured Homes (97 last month) | ||||
The average sales price for houses in Austin increased 5.14% in May from $259,958 in May 2007 to $275,711 May 2008. Sales prices had been flat or falling since Feb 2008, but May has us heading the other way again. We continue to have a large number of “failed sales” listings though, and days on market continues to creep upward. In short, there are a lot of mixed signals in the sales data. Here is a brief summary followed by charts below.
• Number of homes sold is down 24% from 2,630 May 2007 to 2,006 May 2008.
• Average sold prices in Austin were up 5.14% over the same month last year to $275,711.
• Median sold price was up 7.01% over the same month last year to $199,925.
• Avg sold price per square foot is up 4.02% over May 2007 to $124 per sqft.
• Avg days on market is up 11 days (22%) from 50 last year to 61 this May.
• Median days on market is unavailable because our $1M/yr MLS software, MLXChange, won’t produce it this month. I’ll leave it at that before I go off on another “MLXChange Sucks” rant.
• Number of “Not Sold” (exp or withdrawn) is up a whopping 56% over the same month last year.
| Austin Real Estate Market Update for May 2008 | ||||
| All Austin / Central TX MLS Areas – Houses Only | ||||
| Apr 2008 | May 2008 | May 2007 | Yr % Change | |
| # Sold | 1826 | 2006 | 2630 | -23.73% |
| Avg List | $254,318 | $275,711 | $259,958 | 6.06% |
| Med List | $194,935 | $203,037 | $189,900 | 6.92% |
| Avg Sold | $245,483 | $267,231 | $254,169 | 5.14% |
| Med Sold | $189,000 | $199,925 | $186,832 | 7.01% |
| List/Sold % | 96.52% | 96.92% | 97.77% | -0.87% |
| Avg SQFT | 2117 | 2155 | 2132 | 1.08% |
| Med SQFT | 1924 | 1941 | 1928 | 0.67% |
| Avg $ SQFT | $116 | $124 | $119 | 4.02% |
| Avg DOM | 63 | 61 | 50 | 22.00% |
| Median DOM | 39 | * | * | not avail MLS |
| # Expired | 519 | 509 | 306 | 66.34% |
| # Withdrawn | 586 | 599 | 473 | 26.64% |
| Not Sold | 1105 | 1108 | 779 | 42.23% |
| Not Sold % | 38% | 36% | 23% | 55.71% |
| On the Market (houses) as of June 23, 2008: | ||||
| 12,466 = Active Res Listings in Austin MLS (12,066 last month) | ||||
| 10,335 = Total Single Family Homes listed (9942 last month) | ||||
| 1870 = Condo/Townhome/Loft/Garden Homes listed (2026 last mo.) | ||||
| 97 = Mobile/Manufactured Homes (97 last month) | ||||
According to Forbes magazine, Austin is ranked #3 in recession proof cities; right behind San Antonio (#2) and Oklahoma City (#1). The reason for the high ranking is because of low unemployment and affordable housing costs. Unemployment in Austin, Texas is 3.6% percent down from 3.8% at this time last year and the median price of a home is still under $200,000 in most areas of Austin.
Austin was ranked by Entrepreneur magazine as one of the top places to buy a home. Reporter Danielle Babb based her decision on the fact that Austin and Round Rock have seen incredible job growth and stable home prices even though most of the country is in a downturn. She also cited that jobs are continuing to grow here, which is a strong factor for keeping prices stable and inventory low.
Other cities that were on the list were Mission Viejo, California, Palm Beach, Florida and Las Vegas, Nevada. Palm Beach and Las Vegas were citied because of their number of foreclosure homes in 2007 making their market on the low cost end moving back up.
Austin is a great city to live in with everything that is has to offer: live music venues, top notch festivals, hike and bike trails galore, rock-climbing, lake living, great shopping and great food. Within the city limits itself, you have several parks and lakes such as; Lady Bird Lake (also known as Town Lake), Lake Austin, Barton Springs Pool, Barton Creek Greenbelt, and Zilker Park.
Many celebrities and world-class athletes have made Austin their home because of the laid-back and welcoming atmosphere of the residents and because of the plethora of outdoors and athletic activities that this community supports with fervor.
In many regions of the
1) Congress passed the Stimulus Act of 2008. During the recent housing boom, home values surpassed FHA loan limits in many regions of the
2) The FHA changed its appraisal and fee negotiating guidelines. In the past, many sellers steered clear of FHA loans because the appraisals were too strict and certain fees were non-negotiable. The FHA has greatly loosened these guidelines to make it easier for both buyers and sellers.
3) FHA loans are much cheaper now. Because FHA loans are federally insured, they tend to trade at a higher premium in the secondary market. This means lenders can often charge a lower rate.
Other FHA Benefits:
What interest rates really mean
The Fed did this! The Fed did that! Rates are up! Rates are down! Aaaagggh! Okay, now exhale. In turbulent economic times the media can’t wait to report what interest rates are doing. Pundits prognosticate, forecasters forecast and soothsayers sooth. When should you buy a home based upon interest rates and when is it the right time?
The fact is that interest rates, while important, have little impact when it comes to buying a home. Alright, alright, I’ll admit: it’s important…but it’s not a deal-killer.
There is a fixation on what rates are doing. A fixation on what rates will be in the future and what rates were in the past. I’ve heard potential home buyers tell me, “I’m not sure I want to buy now because rates are ¼ percent higher now and I think I’ll wait.” I say, “Wait for what?” I say let’s not look at the rate but instead concentrate on what that rate actually represents … your monthly payment.
Let’s look at what an interest rate move of ¼ percent really does to a $200,000 mortgage. Say a 30-year interest rate at 6.00 percent “jumps” to 6 ¼ percent. Shall we sit on the sidelines, thinking such a move is suddenly unaffordable? No. The payment on a $200,000 loan “jumps” by about $32 a month!
Now let’s get a bit more draconian and look at a ½ percent increase and the monthly payment increases by $64. Putting that into daily financial terms, $64 is about a tank of gas. While not insignificant, it’s hardly a reason to stay on the sidelines of home ownership. Right now, buyers should have more urgency than ever. Home prices have declined enough to make buying more affordable than it’s been in recent memory and interest rates (whether at 6 percent or 6 1/4 percent) are historically low. It’s time to act.
Are rates important? Sure they are. But are they the end-all? Heck no. Interest rates over the past few years have been in a very tight range, with few major swings. Just remember what interest rates represent, your monthly payment, and pay less attention to the headlines.
| Written by David Reed, author of Mortgage 101 and Mortgage Confidential. |
