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*Income restricted, interest rates and grants vary by county and/or state funds.
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SALES SIZZLE IN CAPITOL CITY
AUSTIN (Austin Business Journal) –June 2007 Area home sales last month increased for the second month in a row. Marking a record for May, single-family home sales (2,679) were up 2 percent compared with May 2006, according to the latest Multiple Listing Service report from the Austin Board of Realtors.
Last month’s single-family home median price ($183,160) was up 5 percent from a year ago. Active listings (8,821) also rose, up 8 percent from last year. The average days on the market decreased 7 percent to just 55 days.
Home prices appreciated more than 10 percent, more than double the national appreciation rate in this year’s first quarter, according to figures from the Office of Federal Housing Enterprise Oversight. Across Texas, homes prices rose nearly 7 percent year-over-year
GOOD YEAR FOR CENTRAL TEXAS BUILDERS
January 2007
Austin American-Statesman - Builders started construction last year on a record number of homes in Central Texas. The supply of new, unsold homes also climbed to a record level, prompting builders to start 10% fewer homes in the last quarter of 2006 than the previous year.
About 2,900 new homes - just over a 2 month supply - were available in Central Texas in December, 2006. But experts, citing the local healthy economy, predict the supply of unsold homes, which rose slightly in 2006's fourth qtr, will diminish by spring, 2007.
Builders started 16,050 homes last year, a 10% increase from 2005, according to Residential Strategies Inc., a Dallas market research firm. There also were a record number of closings, which jumped almost 23% to more than 16,000.
The median sales price of a new home in Central Texas rose 8 percent to nearly $196,500.
Unlike other markets in the nation where prices and sales are cooling, Central Texas has experienced healthy job growth, a steady stream of newcomers and relatively affordable prices.
For the 12 months that ended in November, 24,800 jobs were created in the Austin area, according to the Texas Workforce Commission.
"Homebuilders are cautiously optimistic about the market," said Dr. Jim Gaines, research economist at the Real Estate Center. "A slowdown in sales and buildup in inventory should lead to fewer speculative units. Builders are looking forward to spring activity that will probably dictate the rest of the year's activity levels. Employment and population fundamentals are in place, so adjustments in the market should be relatively minor."
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HOME SALES BEST OCTOBER EVER FOR CENTRAL TEXAS
Austin American-Statesman, December, 2006 Central Texas’ housing market posted an October record for both single-family home sales and prices, as homes sold at the fastest pace ever for the month.
Although homes sold in October 2006 were on the market an average of 66 days compared with 58 days for homes sold in Sept, the Austin Board of Realtors’ latest Multiple Listing Service report said the number is still a record low for October.
Last month was the 10TH consecutive month of year-over-year sales gains, with nearly 2,075 single-family homes sold, up 8% from the approximately 1,920 sales last year. October’s median price set a monthly record at $175,000, an increase of 9 percent from approximately $160,500 posted a year ago.
The number of new listings jumped 12% during the period to almost 3,075. The nearly 7,950 active listings at the end of October, although down from September, were up 4 percent from a year ago. Pending sales were up 19% to more than 2,400. There are fewer homes selling for under $120,000 so far this year, down 6%or more compared with the same period a year earlier. Home sales in the $200,000 - $249,000 price range, however, are up 18%
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Austin housing market heats
Real estate expert predicts local market will remain strong.
Central Texas has all the right stuff to maintain a robust housing market, even as many parts of the country experience a slowdown in sales, a Texas real estate expert says.
Thanks to a shrinking supply of homes, rising home prices and the region's job growth, a key driver of housing demand, the Central Texas housing market is on track for a record year, said Mark Dotzour, chief economist and director of research at the Texas A&M Real Estate Center.
Dotzour predicts that job growth in Central Texas will be about double that of the national average in 2007.
The Austin area will add 20,800 jobs in the next 12 months, a 2.9 percent growth rate, compared with a 1.5 percent rate nationally. "The state of Texas will outperform the nation, and Austin will outperform the state of Texas" on the job front, he said.
"I think we're looking good," said Dotzour, who addressed more than 500 real estate professionals Tuesday at the Real Estate Council of Austin's annual forecast event. "Price appreciation in Austin is accelerating at an increasing pace as the East and West coasts let air out."
After several years of flat home values during the tech bust in the early part of the decade, Central Texas' median home sale price rose to $172,480 during the first half of this year — up 8 percent compared with the same period last year, according to the Austin Board of Realtors.
Prices are rising as the supply of homes continues to dwindle.
The number of listings was down 7 percent for the first six months of the year compared with the first half of 2005. With the market tightening, Central Texas had about a four-month supply of homes on the market, Dotzour said.
A 6.5-month supply is "the magic number," signaling a market where supply and demand are in balance. When the inventory of homes for sale dips below that, prices typically appreciate, Dotzour said. Though mortgage rates generally are rising, Dotzour said he doesn't expect them to have an appreciable effect on the local housing market.
"I'd be surprised if they go up more than half a percent in the next 12 months," he said. Austin also is benefiting from cooling housing markets elsewhere.
As Dotzour predicted last year, investor activity has picked up in the housing market in Austin, as well as in other Texas cities, as many East and West coast markets falter.
"Homes in Austin still look relatively cheap compared to houses in California in particular," Dotzour said. Because they ranked near the bottom in price appreciation in recent years, many Texas cities saw little investor speculation before now. "It's hard to get investors salivating on (Texas') 3 to 5 percent appreciation when prices in Phoenix were increasing 35 percent in the last 18 months," he said.
But as investors and buyers looking to relocate from California and other states enter this market, prices will probably continue to increase, Dotzour said. Because of "an endless supply" of new homes, however, prices shouldn't rise to an alarming degree, he added.
But an oversupply of new homes in the region could dampen the local housing market, he cautioned. And Central Texas is susceptible as national home builders saturate the market in other cities and seek new building grounds in markets with relatively low inventory and healthy job growth and home-price appreciation, he noted.
"And Austin is one of the few markets in the country that meet those criteria," he said.
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Housing boom over in 28 states
Arizona, Florida and California see the sharpest drops.
The nation's once-booming housing market slumped even further in the spring. Sales declined in 28 states, led by big drops in the formerly red-hot areas of Arizona, Florida and California.
Sales of existing homes fell nationwide to a seasonally adjusted annual rate of 6.69 million units in the April-June quarter, a 7 percent decrease from the record rate of 7.19 million units in the spring of 2005, the National Association of Realtors reported Tuesday.
And in further evidence that the housing boom is over, the National Association of Home Builders said its monthly survey of builder sentiment fell to its lowest level in more than 15 years.
The decline, which pushed the index down seven points to 32, was blamed on growing unease among builders about record levels of unsold new and existing homes and increased cancellations of contracts for new homes. It was the seventh consecutive drop.
"An increasing number of potential buyers are adopting a wait-and-see attitude because of uncertainty about where the housing market is headed," said David Seiders, chief economist for the home builders.
The slowdown is occurring after a lengthy boom in which sales of both new and existing homes set records for five straight years as buyers were lured by the lowest mortgage rates in more than four decades.
But mortgage rates have been climbing for most of this year, reflecting a two-year campaign by the Federal Reserve to push interest rates higher as a way of slowing the economy and keeping inflation under control.
The Fed last week chose not to raise rates for an 18th time, spurring hopes that the increases will end before they do more damage to interest-rate sensitive sectors of the economy such as housing.
The Realtors survey showed that sales fell in 28 states and the District of Columbia in the spring, compared with the same period a year earlier.
The biggest sales declines occurred in states that had the hottest markets last year. Sales fell 26.9 percent in Arizona, 26.7 percent in Florida, 25.3 percent in California, 23.9 percent in Virginia and 23.5 percent in Nevada.
However, some other areas of the country where previous gains had been more modest continued to have increases. Twenty states reported sales gains, led by Alaska — which had a 48.6 percent increase fueled by the boom in the oil industry — followed by Arkansas, Texas and North Carolina.
"States with moderately priced areas that have experienced healthy job creation are seeing sales gains," said David Lereah, chief economist for the Realtors. Lereah predicted that the slide in existing home sales would soon come to an end as reluctant home sellers start cutting their asking prices, which he said should spur a sales rebound.
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Costing more to build
Ken Swisher, president of David Weekley's Austin's division, said the hard costs of building a home, such as materials, have increased by 8 % to 12 % during the past year, which means that an average $200,000 home costs the builder $8,000 to $12,000 more to build today than it did a year ago.
The home builder is paying 24 % more for concrete than it did one year ago, while the prices of shingles and drywall have each increased 10% in the same period.
Competition among builders continues to make it difficult but he hopes to raise prices more in the next year. Swisher said David Weekley has raised prices "a little bit" in the past few years.
"Depending on what everybody does, I think it could be anywhere from zero to 10 %," Swisher said. "It just depends on where you are."
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New Homes in Austin
California sees gold in Austin homes
Real estate investors drawn to Austin Texas by
builder incentives, promise of better returns
Excerpts from article in business section of the Austin-American Statesman
Charles McMillan, a real estate investor from Palos Verdes, Calif., spotted an ad in the classified section of the L. A. Times a year ago.
The advertisement touted very large builder incentives -- discounts of 8 to 15 %, free upgrades and low interest rate financing -- on new homes in the Austin Texas area.
Therefore the real estate investor came to Austin, and he liked what he saw. In 2004, he bought 4 new homes as rental properties in subdivisions in Round Rock,Manor, Hutto & Leander -- and plans to buy more in 2005. Several of his friends and relatives are also purchasing new homes in the Austin metro area as investments.
"Everyone is starting to catch on,"he said. "In Texas, you're buying a house for $62 a square foot. You know you're going to have some value there."
Investors looking to diversify their portfolios are flocking to Texas by the busload from California and other states for what some say is one of the hottest investment opportunities around.
"If builders would give us 20 homes a month, investors would take them all," said. one Realtor.
Lured by huge builder incentives, lower interest rates and a large inventory of spec homes and convinced that the Austin area economy is turning around, investors are snatching up new homes priced from $90,000 to the high $100,000s in subdivisions in Austin's suburbs, some putting the 20 percent minimum down and others paying cash. One builder estimated that investors are buying at least 100 homes a month in the Austin area.
New home investors include doctors, lawyers and experienced real estate investors. Many have sold properties in California and the West Coast and are looking for a better place to invest that money. Most of the see it as a relatively long-term investment,
"They're putting their tea leaves here," said a representative of the area's largest home builder. "They see opportunity."
It is an opportunity created by Austin's building boom, and one that may not be around for long.
Large inventories of new homes has pushed down house price appreciation for the Austin area,last year.
Austin experienced 2.1% appreciation in home prices between Sept. 30, 2003, and Sept. 30, 2004. Nationally, the average appreciation rate was 13 %.
"Investors recognize there is something wrong, and there's an opportunity to make money," said Jack Harris, a research economist for Real Estate Center at Texas A&M University.
"They're getting in at the bottom."
Many real estate agents are advertising in California newspapers and holding seminars to recruit buyers to the Austin area.
Business is booming because of these investors. The word is out
"I've never seen such interest," one agent said. "But I've been selling homes in Austin for the past 21 years, and I've never seen builders taking this much money off the prices."
"Investors see a lot of appreciation potential in the Austin market," Ciani said. "It's a great place to invest."
Like most builders, Centex limits the number of homes investors and speculators can buy in any one subdivision, fearing it will lead to too many rental properties in a development.
"Having a few people buy an investment property in a community is one thing," Ciani said. "Having a bunch in a neighborhood may have an adverse effect. What you don't want is a neighborhood of rent properties."
One builder likes to keep the number of investment-owned homes in any community to less than 10 percent. Investor owner properties can't be side by side,.
Investors represent a small percentage of the homes we're selling."
For investors, new homes offer a number of benefits.
With builder warranties, the investors and homeowners owners don't have to worry about high maintenance costs.
And with economists bullish on Austin's prospects, the investors are betting their houses will appreciate in value, something they might not be able to get in California.
"They're looking at where they can get the highest cash flow, best appreciation potential etc.," he said. "The net result is that there seem to be dollars shifting from the West Coast to Austin."
Hutton sees the high level of investor interest in Austin as a positive economic indicator.
"They see we're at the bottom of a four-year decline," he said. "They see our office space leasing up, our warehouses filling up and the strength of our retail market. They see there's a recovery in the making."
An economic recovery is likely to put an end to this new "home rush."
"We think it will come to a close fairly quick as the economy picks up, one Realtor said.
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New homes in Austin - Information about purchasing a new home in Austin Texas -
Investment and appreciation potential and market trends
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New homes in Austin - Information about purchasing a new home in Austin Texas -
Investment and appreciation potential and market trends
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