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Austin Real Estate: Strong in 2007, Holding Steady in 2008
2008 has begun with a mix of decidedly lousy economic news and some pessimistic projections, so at first glance it might be very tempting for those hoping to either buy or sell homes in Austin to stay on the sidelines and avoid the Austin real estate market completely.
That would be a mistake. Don’t be discouraged, because things are not exactly as they appear. You need to look past the negative-leaning news headlines in order to find the proverbial silver lining in a cloudy real estate picture.
Of course the mortgage industry is still reeling in the wake of the sub-prime mortgage crisis, with some experts anticipating yet another large wave of borrowers defaulting on their loans. National statistics show existing home sales in 2007 down at least 20 percent over the previous year. There’s talk of the housing bubble bursting in various regions of the country, news of the highest unemployment rates in two years, and now even some presidential candidates openly using the dreaded “R” word, recession.
But that’s the national scene. When it comes to Austin real estate, the news was far from bad in 2007. In fact, to insert the word “bad” into any discussion of either last year’s local housing market or any analysis of the year to come would frankly border on irresponsible. The truth is the Austin real estate market bucked national trends and appears poised to remain solid this year, despite mixed economic predictions.
Yes, sales of homes in Austin were also down in 2007, but only by 12 percent, better than the national average. And there is further reason to avoid applying what you hear in the national news to the Austin real estate market: according to the National Association of Realtors, in several regions around the country average sales prices have actually increased, and that includes Austin homes, which went up in value by nine percent.
More encouraging news is that Austin homes in 2007 didn’t take too long to sell, and didn’t linger: on average, they stayed on the market 47 days, compared to 49 days in 2006 — hardly a cause for panic.
According to some economists, the Austin real estate market will cool in 2008. A new report from Austin-based Angelou Economics says stricter lending restrictions in the wake of last year’s mortgage crisis may price some first-time or low-end homebuyers out of the market — and it thinks this may have already started happening: apartment vacancy rates, typically seen as a leading indicator for decreased home sales, are at a five-year low, meaning those folks won’t be seeking homes in Austin, but will keep renting.
But at the same time, Angelou acknowledges that continuing population and job growth will cushion the Austin real estate market from the worst effects of the sub-prime mortgage troubles. After all, Austin is still perceived as a great place to live, work and play. The simple fact is people are still moving here, and shopping centers, hospitals, schools and entertainment venues are popping up all over the landscape.
Angelou also says increases in the prices of Austin homes will slow from “rapid” to “average”. That’s not exactly a grim development for sellers.
Angelou expresses concern about new home construction, which saw a significant slowdown in 2007 — a nearly 40 percent drop in new home permits over 2006. And according to a study cited by The Austin Business Journal, new home construction dipped 20 percent. By year end continuing angst over the mortgage crisis caused home builders to run for cover and scale back their previously aggressive plans in central Texas. The most recent and striking example of this came just in December, when Centex Homes announced it was backing out of plans to purchase nearly 500 acres of land in northern Travis County — an acquisition that would have eventually led to 1400 brand new homes.
Yet even this doesn’t necessarily translate into bad news for potential buyers and sellers of Austin homes. Buyers could be the recipients of favorable deals, as those home builders now focus on getting rid of their existing unsold inventory. As always, they’ll compete with the existing resale homes in Austin by offering incentives to buyers, who could find themselves in a brand new home at a bargain price.
But that new home inventory won’t last forever — and with less of those brand-new subdivisions being built and aggressively advertised, that’s less competition for homeowners who might be inclined to put their homes on the market. And of course it’s in their interest to price their resale homes competitively, in order to compete with the builders and sell within a reasonable amount of time. All that competition only works to the advantage of people in the market for an Austin home.
So don’t let a little gloomy news get you down. The Austin real estate market finished 2007 strong, and will remain that way in 2008.
About the Author
This article was written on behalf of Regent Property Group (www.RegentPG.com), home and office real estate specialists in the Austin real estate market. Regent offers turn-key commercial and residential real estate services to buyers and sellers of homes in Austin, and to professionals in need of commercial space in Austin Texas.
Refinance: Help to make a decision?
First mortgage was a 5 year ARM at 5.75% readjusted March of 2010 down to 3.25% on a 1 year Libor rate as reported on Wall Street Journal as of Dec 18th.
Margin is 2.25% (included in the 3.25%). Second mortgage HELOC at 5%. At the height of interest rate 2nd mortgage interest rate went upto 9%. Assuming interest rate goes up by year end 2010, should I refinance to a 30 year mortgage? Regardless of the real estate market declining or improving, we plan on moving out of this place at least by second half of 2013.
Hello Ouseph,
You made a few good decisions and a few bad ones. Looking at your situation; the answer is not in black and white, but then again its not too complicated. It sounds a little childish of me, but I want to label out what you have done out in an orderly fashion, so you know where you are and I know the type of financial dilemma.
I will name all the benefits you were probably told of an Adjustable-Rate Mortgage.
* Your home’s value was probably really high at the time of the purchase, which might explain why you chose this path. It gave you versatility on “purchasing” a bigger home.
* Versatility is the road you look like you are driving on. I can see that you have the desire to move from this property.
* Not to mention, if your paying lower interest on your mortgage your “saving” some money * on payment towards “your” property.
Note: You are very lucky because from what I know about Libor rates are very slow to change.
If we are on the ball of positivity, then I will show you the “benefits” of HELOC.
* The benefit I see in your HELOC is that your are leaving the market fast, so you will not have to play with numbers and three years will go by fast.
* Tax cuts may be something you would have been thinking of when you had gotten this HELOC.
* Another benefit I see in a getting a HELOC is the Windfall payments you are able to make anytime, often without a penalty. A HELOC can be cleared anytime altogether, so there is no tension in the interest you will be monthly accumulating.
Now I want to ask you a question myself. Why do you want to re-finance? refinancing is just another way the bank is making more and more money from you and who knows. Interest rates could rise soon, as the economy comes out of this trough. You may not even get the same amount of money you have put into your home when you leave your property in 3 years. God forbid that happens, you may still be paying your HELOC and ARM without even having the property that it is for. Several people have had experienced foreclosures, so digging yourself deeper in debt doesn’t seem like the solution for you because you have two high risk mortgages.
If I still have your attention, I have something you need to see. My dad qualified for a service that has me on track to be totally debt free in 15 years. You need to see if you qualify as well, as it can be life changing from the 30 year mortgage you have (My dad was in this situation as well). The best part about this system is that it can eliminate $1000’s of dollars in debt. My dad is personally scheduled to save over 100 grand in interest. We currently live the same lifestyle and nothing has changed in terms of financial situation. Instead of explaining all of this on an Yahoo Answers, if you have any interest please contact me on my Yahoo Account and I will get back to you as soon as possible.
- If a broken window was costing you 30 dollars a day in utilities, how long would you take to fix it.
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