Austin Real Estate Gaining Momentum

According to the March 2009 Multiple Listing Service report by the Austin Board of REALTORS®, the volume of single-family home sales in March 2009 was 1,421, down 22 percent from March 2008, and the median price was $180,160, down 4 percent over the same time period. Jay Gohil, Chairman of the Austin Board of REALTORS®, provided some insight, “Sales volumes in March are still down compared to a year ago, but we’re beginning to see the gap in volume close.”

For example, in January 2009, sales volume was down 36 percent compared to January 2008. In February 2009, sales volume was down 28 percent compared to February 2008. In March 2009, the 22 percent decrease in volume compared to March 2008 shows the Austin real estate market is gaining momentum. Chairman Gohil continued, “Looking at the first quarter of 2009, we’re seeing sales volumes improve and home values remain steady – that’s good news for Austin homeowners. Those factors, combined with Austin’s strong economic fundamentals, bode well for our market heading toward the summer buying season.” One of the most important economic fundamentals driving the real estate market is job growth, for which Austin was fortunate in 2008. Looking ahead, a recent study based on data from the U.S. Bureau of Labor Statistics cited Austin among the top 10 metropolitan areas in the country with the highest potential for job growth in 2009.

March 2009 Statistics
• $328,098,953 was the total dollar volume of single-family properties sold
• $180,160 was the median price, a four percent decrease from one year ago
• 1,421 was the number of homes sold, a 22 percent decrease compared to March 2008

The Week in Review

Units for Sale:
May 3 - May 9, 2009
(compared to the same week in 2008)
New listings down this week 23.30%
Pendings are up 9.69%
Solds down 22.38%

As for Average Prices:
May 3 - May 9, 2009
The "New Listings" average list price is up 3.49% to 340,555.
Sold average sales prices decreased 31.61% to $231,097. In 2008 it was $337,917 for the same week.

Check it out at
http://www.alamotitle-austin.com/mls_statistics.php

How Adjustable Rate Mortgages Work

During the last decade, Adjustable Rate Mortgages (ARMs) have increased in popularity among consumers. These days, few homeowners (especially first-time buyers) remain in their homes for more than seven years. In this case, it often makes sense to get an adjustable rate mortgage with a lower rate, especially one with a 5-year or 7-year fixed portion, since they won't have the loan long enough to be concerned about rate fluctuation.

Adjustable Rate Mortgages have three main features: Margin, Index, and Caps. The Margin is the fixed portion of the adjustable rate. It remains the same for the duration of the loan. The Index is the variable portion. This is what makes an ARM adjustable. Margin + Index = Interest Rate.

It's important to understand that there are many different indices: The 11th District Cost of Funds (COFI), the Monthly Treasury Average (MTA), The One Year Treasury Bill, the Six Month Libor, etc. Each index has its own strengths and weaknesses; some are slow moving, others are more aggressive.

The third and final component of Adjustable Rate Mortgages is Caps. Caps limit how much the rate can fluctuate over time. Annual Caps limit changes to the annual rate, whereas Life Caps provide a worst case scenario over the life of the loan.