I recently read an article by CNN's Shawn Tully, "Real Estate: It's Time to Buy Again", published on March 28, 2011.
The article references comments by the founder of Metrostudy, Mike Castleman, who lives right here in our neck of the woods, in Dripping Springs, Texas. The company analyzes housing/construction markets in 19 different markets, including Texas. Their client list features large corporations such as Bank of America, Wells Fargo, Pulte and KB Home.
One of Metrostudy's prime functions is to determine whether a market has a housing shortage or a housing surplus for new homes.
What the study finds is that in the 41 cities studied (including Austin), there is currently less than 1/4 of the vacant, for sale or under construction new homes that were available during the peak in 2006. If buying levels begin to increase, Castleman believes that we will have an incredible shortage.
So what does this mean for you, the consumer? The way I read it, housing prices are about to begin increasing again. If you are waiting for a market bottom, you have probably missed it. Will we see the incredible appreciation of past years? Gosh, I hope not! What we saw several years ago was not sustainable nor was it a healthy increase-it was a bubble. Slow and steady is the way to go and I certainly hope that's where we are headed.
Over time, real estate has historically been a good investment, with positive appreciation over time. But, just like any investment, it is often about hold time and market timing.
Austin, and Texas overall, have done better than most markets. We did not see prices degrade as much or as many foreclosures. Right now the bulk of our foreclosures seem to be in certain areas and in particular price points. I'm still seeing a lot of short sales and foreclosures in the under $200K category in areas such as Pflugerville, Hutto, Buda and Kyle.
Luxury or high-end buyers may find some great deals too - high dollar properties were overbuilt during the boom, so there is still some inventory at very attractive prices. Jumbo loans are more readily available now, too.
Most other areas in Austin and price points are actually faring quite well. Some homes are coming on the market right now and getting multiple offers and selling for full price. I think the turn has definitely started.
In Austin, particularly, vacancy rates for residential rentals are decreasing and that will generally begin to push rental rates upward. Unfortunately in the past year, our usual building patterns changed and new rental inventory is not coming on line at the same rate as in previous years, so that will also stress the market further with fewer new rental units being built. It will be harder to find a decent rental property and the rates will likely be higher going forward, some of the factors of a short supply.
I recently put a house on the market for lease in Austin. Within 2 days, I had 30 phone calls, 5 applications and more coming...all this for a well kept, updated small 2 bedroom/1 bath home in a convenient location, priced at $1250/month. That has to tell you something......
If you are currently renting, it may be time to look at buying....
Many people that I speak with are paying between $1200-$1800/month to rent a property. If you are paying that much in rent, it may make more sense to buy right now. What do you need to buy?
(1) Good Credit - this is probably the single most important factor in the process. Pay your bills on time, don't carry too much on credit and you'll generally be fine.
(2) Money for a down payment and closing costs. FHA loans require only 3.5% down. USDA has loans in some areas and will provide 100% financing. Conventional loans are available for 5% down. Closing costs can often be wrapped into the loan or the seller may provide some closing cost assistance. Another option, if you qualify: The Bond 77 Program provides the down payment for you (up to 4% total) and is paid back upon sale of the property.
So buying a home, even for first time home buyers, is very do-able. I have worked with three buyers recently in different areas, all with different scenarios, and all 3 qualified for homes ranging in price from $130K-$200K.
We are in a rather fortunate position in the Austin area, we have job creation, we have people moving to our area and we are a sought after place to live. Interest rates are low (but starting to rise) which means that buying power is high.
Now is probably a great time to buy a residence or an investment property to lease out, particularly in the greater Austin area.
Sue Ellett, Broker-Associate
Coldwell Banker United Realtors
Paragon Property Group Team
www.PPGTx.com
866-693-7741
Austin/Lake Travis & the Highland Lakes
Coldwell Banker United Realtors
Paragon Property Group Team
www.PPGTx.com
866-693-7741
Austin/Lake Travis & the Highland Lakes
