Is this a good time to buy property in Austin? (Round Rock: for sale, real estate market)

[goacom]

The story is this: My family is being relocated to Austin by our employers. Yes, we are yet another Bay Area family that is moving to Austin!
The question that we are faced with is whether we should buy a home here, or rent for a while? It seems that the market is getting soft here and we have already seen many homes that are being offered at 5-7% below their intial list prices. Also, we are seeing many homes that have been on the market for 3+ months. The homes that we are looking at are in the 400-500K range.

What is your general feeling of the property market? Is Austin at the early stages of a crash that is currently being played out in California (20-40% down), or will the correction, if any, be much smaller? Alternativley does any one have any info on how much the Austin property market appreciated in the last few bubble years? Was it as crazy as California?

Next, assuming we will buy, we are torn between two general areas: Avery Park vs. Greathills/Spicewood/Jester. We are currently leaning towards the latter, inspite of it being a little more expensive. Our thinking is that these regions are closer and more conveniently located to the core of the city. We also feel that while these homes may not be as modern as some of the new homes in Avery, there is a timelessness to these areas, versus the new, but boom town/cookie cutter feel to the homes in Avery.

Any ideas would be appreciated.

Thanks.

[HappyTexan]

I'm not a realtor right off the bat.

My feeling is that our market is slowing down. I don't think prices have hit bottom yet..nothing I read these days indicates we've hit bottom.

One thing you can do is rent in the neighborhood you want to live in and watch the real estate there to see how it's trending..up, down, stagnant. You could rent for 6 months at a time..if a nice property comes up for sale and you feel it's a good price then you don't have a long lease holding you back. If nothing comes up then you can renew. If you have kids then you would want to rent in the area you want to live in.

And I agree with you in that Great Hills/Spicewood/Jester has a nicer feel to it then Avery.

[Raskolnikov]

I think its fine and dandy. There are pockets with slow sales, but honestly I don't think Austin has the right mix of elements for a major housing downturn. There are still people moving here in droves and companies locating here, the economy of Austin is still growing. Honestly I don't think you can go wrong if you invest in the right area.

[hal512]

Certain areas of Austin (Lake Travis) have a 14 month supply of homes on the market. Many homes in 500k and over are starting to come down in $$ from what I am seeing. Vineyard Bay and Water's Edge are showing $$ up to 250k below appraised value. My husband and I are in market as we have to take our current builder to court (fun for us). We choose to lease a home we may be interested in buying. Many of the higher end homes that have been sitting on the market are willing to lease them, lease to purchase or lease with an option to buy. What I've heard is the market will continue to fall thru 2009 but not as sharply as the rest of the nation. It has become more of a buyers market. Yeah for us as we sold last year for $500 under our asking price in only 4 weeks, but of course we are in litigation with our builder and homeless....

[Austin97]

Originally Posted by goacom

The story is this: My family is being relocated to Austin by our employers. Yes, we are yet another Bay Area family that is moving to Austin!
The question that we are faced with is whether we should buy a home here, or rent for a while? It seems that the market is getting soft here and we have already seen many homes that are being offered at 5-7% below their intial list prices. Also, we are seeing many homes that have been on the market for 3+ months. The homes that we are looking at are in the 400-500K range.

What is your general feeling of the property market? Is Austin at the early stages of a crash that is currently being played out in California (20-40% down), or will the correction, if any, be much smaller? Alternativley does any one have any info on how much the Austin property market appreciated in the last few bubble years? Was it as crazy as California?

Next, assuming we will buy, we are torn between two general areas: Avery Park vs. Greathills/Spicewood/Jester. We are currently leaning towards the latter, inspite of it being a little more expensive. Our thinking is that these regions are closer and more conveniently located to the core of the city. We also feel that while these homes may not be as modern as some of the new homes in Avery, there is a timelessness to these areas, versus the new, but boom town/cookie cutter feel to the homes in Avery.

Any ideas would be appreciated.

Thanks.

We live in great hills and love it. Portions of great hills are in the RR school district and feed into laurel mountain, canyon vista and westwood.

We had a property in jester and we like that area too. However I feel that great hills has slightly better access because of the closeness of 183 and mopac with jester you are relegated to 2222.

[goacom]

Thank you all for your responses. Another question, if I may - can any of you recommend a good day care/pre school for a 2 and 4 year old?
Thanks.

[hal512]

The Children's Courtyard at Spicewood Springs Rd and 360. I had my two kids there (5 & 3 when started 6 & 4 now) until this week. My oldest just finished kinder in June and my youngest will go to a school closer to our home. I was driving an hour to take them to C.C. because we loved the teacher and the staff and the activities but the gas is just too much. They have a very low turn over rate with teachers and are education based. In fact both of my sons teachers came to their birthday parties!

[austin-steve]

Yes, we are yet another Bay Area family that is moving to Austin!

Welcome!

It seems that the market is getting soft here

The further out you go, the softer the market, in general, especially with gas prices rising. The higher in price you go, the softer the market, as there is much more available inventory at the $400K and up range.

The Austin real estate market is very neighborhood and "house" specific though.

Your ultimate question is, will you save money by waiting to buy? Even if I wasn't a Realtor, my answer would be "probably not". Especially in Great Hills. In Avery, possibly, but the thing most people fail to factor in when making this decision is the "silent" costs and risks of waiting.

Those costs include moving twice instead of once, and all the fees and expenses related to moving twice. The impact on you personally, or your kids, of moving twice (moving is rated right up there with divorce and death in the family on the stress chart). The possibility that even if prices fall somewhat, interest rates rise, completely wiping out any savings on your actual monthly payment. The strong possibility that prices will in fact NOT fall for the area and type of home you seek, and you thus end paying more anyway.

You essentially are trying to "time the market" when renting and waiting. It's not as easy or simple of a decision as armchair advisers would have you believe, and prices would have to fall more than most people assume, and the interest rates would have to hold steady or fall. All those things have to happen for it to be a wise decision.

With regard to the overall market in Austin, no we didn't have the runups of other places. We had essentially ZERO appreciation from 2002 through 2005. In 2006, the market overall appreciated about 10%. In 2007 the appreciation was 6.6% for homes. So far in 2008, the market is flat, falling in some areas and still moving up in others.

For Great Hills, here are some stats.
2008 = Avg Sold $445K, Med Sold $408K (year to date through July 5)
2007 = Avg Sold $456K, Med Sold $455K (year to date through July 5)
2006 = Avg Sold $433K, Med Sold $409K (year to date through July 5)
2005 = Avg Sold $370K, Med Sold $362K (year to date through July 5)

This is for all sales and appears to show that homes have fallen in price in Great Hills 2008 YTD. But if we make one simple change to the search, and limit to homes in the Round Rock ISD, we'll get a different story.

2008 = Avg Sold $525K, Med Sold $537K (year to date through July 5)
2007 = Avg Sold $492K, Med Sold $510K (year to date through July 5)
2006 = Avg Sold $451K, Med Sold $445K (year to date through July 5)
2005 = Avg Sold $426K, Med Sold $400K (year to date through July 5)

So are home prices falling in Great Hills or not? It depends. We could slice and dice by square footage and price ranges also and get even different results.

This is why it's a mistake to use macro numbers to make micro decisions. It cut's the other direction also, when the market overall was hot. Investors thought they could just buy ANYTHING in the Austin area and it would go up in value. Not true. You have to look at the specific area and type of home to make a decision.

Steve

[Superma'm]

Hey Steve,

that's a great statistic. My hubby and I were looking into the Great Hills area as well. But prices vary in that area so much from house to house that it's hard to see what's reasonable and what's not and how the market is moving. We are trying to stay under a 430K budget on a medium size house, +/-2500sqft. What is a reasonable price/sqft in that area? And with that, should we expect to do lots of updates on an average house? Can we expect a premium lot by any chance, like greenbelt?

Thanks for the always great insights

[greenfrog]

I suggest that you look at the price per square foot that the home/area sold for 3-4 years ago as the basis. The housing squeeze is in Austin and will continue to be felt for awhile. There is virtually no area of the country that has not been hit severely by the housing bust. Also, you can look at the foreclosures in the area you are interested in to gage the temperature. If you can rent for a little while, you are fortunate and you may avail yourself of some great buying opportunities while you watch and wait.