Is this a good time to buy property in Austin? (Howe: sale, rentals)

[austin-steve]

Someone was showing me the appreciation in the past two years in Tarrytown etc, citing a 100% appreciation. If that ain't a bubble waiting to let out some air, I'm not sure what is.

Whoever made that claim doesn't know how to interpret the data. Tarrytown is in MLS area 1B. MLS area 1B has had the following appreciation.

2008 (Jan-Jun) 0.02% avg sold price, -6.77 median sales price
2007 12.1% avg sold, 12.44 median sold
2006 14.16% avg sold, 18.88% median sold.

Note that, for example, the average price per square foot in 2006 increased by 7.28%, so a average price increase of 14% doesn't mean that every particular home increased by that amount in value. What pulls the values up in an area like Tarrytown is teardowns and rebuilds, which move the overall price point up.

Steve

[Exiled Texan]

Steve- In all fairness, the stat he was quoting was with respect to a specific property he was putting a bid in on.

[austinbound?]

Originally Posted by austin-steve

That said, you have to be smart about where and what you buy, even in Austin. Bad decisions are easy to make. If you plan to hold for 10 years, buy what you want, where you want. But if you might need to sell in 3-5 years, you are best to stick at or below average/median values for the area in which you purchase and stay with closer-in areas that attend better schools, and/or master planned communities that are substantially built out and are rising in value.

Steve

Steve,
I have a 3-5 year horizon looking to spend 350-400k. How do I find the average/median values for neighborhoods? I'm targeting Travis Country West (for proximity to downtown) and Lake Pointe (for schools and amenties). There seem to be better deals in TCW despite lower inventory, but LP seems like a very attractive community despite distance from downtown.

Thanks!

[austin-steve]

How do I find the average/median values for neighborhoods?

Casual observation is one way, pulling the listings from austinhomesearch.com and seeing the range of list prices for the subdivision. The other way is to have your agent just run off a CMA of all the solds over the past 6 months, and you'll see the range there.

Steve

[handy dan]

Originally Posted by austin-steve

I disagree with all of this. Prices are not going to fall 50% in Austin. Any buyers sitting around waiting for $150K homes to return to Circle C will be in for a disappointment. It ain't gonna happen, no matter what.

It's a good time to buy. I'm personally buying more property right now, so I'm not just a Realtor blowing happy wind. I'll probably buy 1 to 3 more homes before the end of this year. I'm not selling anything I own.

The best time to buy is almost always when the neysayers are out in full force and inventory levels are high. The buyers who would otherwise represent competition are on the sidelines. Real buyers have more negotiating power and more to choose from. What more could a buyer want?

Interest rates are still low, prices are still rising overall in Austin, and the government bailout just got signed into law, which should change the mood in the financial industry now that we know Freddie/Fannie won't be going belly up.

That said, you have to be smart about where and what you buy, even in Austin. Bad decisions are easy to make. If you plan to hold for 10 years, buy what you want, where you want. But if you might need to sell in 3-5 years, you are best to stick at or below average/median values for the area in which you purchase and stay with closer-in areas that attend better schools, and/or master planned communities that are substantially built out and are rising in value.

Steve

Amazing that the major stock indices have declined by 50% or more since austin steve predicted that Austin RE would not see a significant fall in prices.

[TexasHorseLady]

Interestingly, the Austin real estate market has had some weird stuff going on lately.

A drastic decline in sales, combined with a slight increase in prices on those that have sold.

[woodinvilleguy]

Originally Posted by TexasHorseLady

Interestingly, the Austin real estate market has had some weird stuff going on lately.

A drastic decline in sales, combined with a slight increase in prices on those that have sold.

Actually that makes sense. People that want to upgrade to a bigger house when they can get a better deal so they buy a bigger house. But they are very picky about what they want.

[goacom]

Good to see that my post is generating such a strong discussion !
Regarding the comments below, what needs to be answered is the cost per sq.ft on a locality by locality basis. I suspect that mean total prices have increased because the lower end of the market is the first to feel the brunt of the recession. At least this is what happened in California. Eventually however, the entire market will get impacted assuming the recession continues to get worse.

Originally Posted by TexasHorseLady

Interestingly, the Austin real estate market has had some weird stuff going on lately.

A drastic decline in sales, combined with a slight increase in prices on those that have sold.

[jtrichel]

We are considering an eventual move to Austin for work, but can afford to wait awhile if we want to. I am wondering convential wisdom on buying land only right now... i.e. a residential lot for future build...one that can be purchased outright vs. a builder controlled lot. We are looking in the far west Austin area/Bee Cave. Spanish Oaks, Belvedere are two of our top choices. Any perspective on what land pricing is doing compared with actual housing inventory? The lots that we are looking at are approximately 1-2 acres for approximately $200kish...

[TexanInNYC]

Originally Posted by TexasHorseLady

Interestingly, the Austin real estate market has had some weird stuff going on lately.

A drastic decline in sales, combined with a slight increase in prices on those that have sold.

From here in NYC, I have zero visibility into the fundamentals of Austin, but as a general macro call, we're not looking to buy real estate anytime soon. I do not think Austin (or Texas generally) will be immune to the economic implosion going on in the rest of the country, and I do think Austin real estate will get much cheaper before it gets more expensive.

We saw the same pattern in NYC--a reduction in volume before a fall in price. The market may even freeze entirely, as NYC did in the 4Q 2008. But eventually, sales will need to be made because people death, divorce, and transfer, and motivated sellers will help to establish new, lower comps.

Austin probably isn't suffering from the evaporation of the bid side, as has happened here in NYC, but I dont think it would take too much for skittish buyers to disappear.