Buying a house, looking to find a place for appreciation. (Austin: appointed, real estate market)

[grakk]

Hello,

My fiancée and I have been in Austin a while and we have decided we want to go ahead and buy a house - currently we work more in North austin. She works near Mopac and parmer. I work near 183 & Mopac, later on sometime next year I will be working closer to Techridge.

We are in a good financial situation but we would prefer not to stretch ourselves - we could handle a note for 400k+ but I'd hate to have the mortgage payment of 2700+ a month (20% down) in case something would happen (one of us loses a job etc).

So ideally we would not want to go above 325, and in a perfect world we would like to be in the mid 200s.

Commute is not a huge deal for us, because both of us can work a schedule that lets us drive during off peak hours.

What we are looking for is an area that is almost a sure bet to appreciate. The houses out in Cedar Park, Leander, etc look good for the price but I'm worried they won't appreciate because of competition with newer housing, flat, far from DT austin, etc.

Central Austin is really attractive but I guess I'm a bit scared to put up have a note on a 350k+ house and having the possibility of land value dropping with the combination of the high mortgage.

Any suggestions?

[mark311]

Originally Posted by grakk

What we are looking for is an area that is almost a sure bet to appreciate. The houses out in Cedar Park, Leander, etc look good for the price but I'm worried they won't appreciate because of competition with newer housing, flat, far from DT austin, etc.

It sounds like you are on the right track steering away from the far out suburbs. While I really like where I live (Cedar Park/NW Round Rock area) for raising a family, I would not purchase in this area looking for appreciation. If you have a family and you're looking for great schools along with ultra safe neighborhoods at a great value, then places like Cedar Park are a good choice.

I personally would look at an area like Allandale if I were you. It's still located North for your commute and it's still in your price range. The demand for that area still seems strong due to pretty good schools, some walkability, and a fairly central location. If you really want appreciation, staying as central as possible is the way to go in my opinion.

[donnaaries]

I think any realtor on the board will tell you that it's hard to predict which areas will appreciate. But certain factors will help an area's long term desirability:
1) accessibility to jobs/employers (major ones in Austin being State offices, UT, tech corridor in north Austin)
2) accessibility to recreation (major parks, restaurant, retail)
3) good schools (though it's also hard to predict how a specific school will perform in the long term)
4) specific land features like great views of the hill country or the river will always help your land value
5) in Austin there's also that "it" factor of being central, but I think it's mostly summed up by (1) and (2) and Austin's desire to shop local, and most non chain retailers and restaurants are in central Austin.

All that being said, I think you can't go wrong with a house in central Austin (between I-35 and Mopac, 183 and downtown) with your criteria, if you're willing to live in a smaller space. For your budget, I'd check out Crestview/Brentwood and also Allandale. Allandale will be at the top of your budget but I really love the park-like setting of that neighborhood for its central location. Crestview is great because of its close-knit neighborhood feel, access to transit (lots of bus routes and the new red line).

If you want more square footage for your $, I'd say the Great Hills neighborhood (northwest of the Arboretum) is a good choice. You'd be surprised at the choices in the 200-300K range that doesn't exist southeast of 360. The opening of the Domain along with all the shopping in the Gateway area has clearly established that this is an accessible part of Austin and its proximity to tech employers will make its appeal last. The haul to downtown isn't too bad from here either.

We looked at both of these areas and ultimately decided on Crestview. Austin is generally a progressive city, and I think the new urbanism development model will take off here faster than any where else in Texas. In the long run, I think it will be more beneficial for land values to be located in an area with mixed development rather than pure residential.

[grakk]

Forgot to mention - we don't have any kids and are not planning on having any.

[ROY DUBOSE]

just a few, quick observations trusting steve-austin to come up with the hard facts --

1) you make your money on the buy not on the sell
2) location is a key determination of appreciation and the closer to downtown one is the higher the probablity of long term demand (if we can take the downtown condo market off the table)
3) don't be afraid of creating equity -- if you can buy @ $200 a square foot and add square footage for $100/sqft resulting in a product that would sell at a current going rate of $200sq/ft then you've created market value for the whole property

these, again, are very general observations -- take your time

[llkltk]

Originally Posted by grakk

Forgot to mention - we don't have any kids and are not planning on having any.

Hmm, people say that all the time and end up having them. I wouldn't say never.

[orbius]

Things to look for:

Location, location, location. Aka close to a park, close to downtown, good schools.
Unique neighborhoods with above par construction and touches.
A property with the above things that needs renovation and updating.

But frankly in this market if you're looking for anything but a place to live you will probably be disappointed for up to a decade. I can tell you that there are many unforeseen factors at play in the Austin real estate market. If you're one of the people sitting back saying 'oh its Austin its just a matter of a year or so until prices start rising again', then you're ripe for a fall.

[rickc007]

It's nice to see someone concious of their budget, and making smart decisions.
I just move from Southern California, and watching people plunk down a million bucks
for very mediocre houses was frightening. Even more frightening was the look on their
face when the market turned.

With that said, I can't see Avery Ranch area going down, really nice area.
Even $250k will get you something really nice.
Good schools, parks... all the things people look for in the burbs

I live here myself (was not plunking down a million for house either :-)

[llkltk]

Originally Posted by orbius

Things to look for:

Location, location, location. Aka close to a park, close to downtown, good schools.
Unique neighborhoods with above par construction and touches.
A property with the above things that needs renovation and updating.

But frankly in this market if you're looking for anything but a place to live you will probably be disappointed for up to a decade. I can tell you that there are many unforeseen factors at play in the Austin real estate market. If you're one of the people sitting back saying 'oh its Austin its just a matter of a year or so until prices start rising again', then you're ripe for a fall.

In what market? Disappointed up to a decade, not likely. Austin is anticipating a 2012 housing shortage. Prices will not fall. It isn't a buyers or sellers market right now, and next year it will most likely be a seller's market.

[orbius]

Originally Posted by llkltk

In what market? Disappointed up to a decade, not likely. Austin is anticipating a 2012 housing shortage. Prices will not fall. It isn't a buyers or sellers market right now, and next year it will most likely be a seller's market.

These are the same people who said Austin real estate wouldnt depreciate because it never appreciated, was that correct? No of course not there have been quite sizeable drops in real estate prices in Austin. Believe these self-interested liars at your own peril they have been proven wrong.
The budget cuts are going to kill thousands of high paying jobs in Austin either tell me where the jobs to replace these are going to come from or reevaluate your thesis.