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Austin Real Estate Market Inventory

May 22, 2013 by admin Leave a Comment

A friend recently saw so many coming soon signs in his neighborhood that he was concerned that the Austin sellers’ market was over and that a flood of inventory was going to bring the market back into balance in no short order. Indeed there are more $500k+ Austin homes for sale than last week. To allay his fears I said that this was the traditional peak selling time, and that this was to be expected – more listings, more buyers, frantic activity.

Here are a few different views of the market. The first is months of Austin home inventory over the last five years. I restricted it to homes from $500,000 – $1m and for homes in the City of Austin.

Months of Inventory – A measure of market balance

As you can see, since the 2012 summer season, inventory has been below five months. Three months is a balanced market in the lower price points, and in this price point, five or six months is balanced. So we’re in a sellers’ market per the inventory chart. The spikes in inventory are in the winter months typically – homes that are left over from the peak summer demand can languish over the holidays when there are far fewer buyers, and sometimes are withdrawn from the market and sometimes sell much later.

The next chart shows the typical annual cycle of MLS listings over the years – purely the supply side of the equation. This is for the same price point and location as above.

Austin housing market supply

I can see two things here.

The typical summer cycle – the rationale is that people often want to move when there are more homes to choose from, and people like to get settled by the start of the school year. Listing in May or June means the potential of an August close, assuming a minimal time on market and a 45 day period from contract to closing, though some of the jumbo loans take a little longer to close depending on your lender.
Just looking at the last line on the right of the chart, it looks like we may be seeing the start of increasing supply. It’s perhaps too early to say right now, but the slope of the line may point to a higher supply than the previous years.

Traditionally, extreme market conditions tend to exist for a short period of time, so I expect that by the end of the summer we will see the swing back towards a balanced market. I’m deliberately not talking about price right now – that’s another matter.

If you would like more information on a smart way to buy in a swinging market, or need information about selling your home with the least hassle, please get in touch – 512 215 4785

Filed Under: Austin, For Sellers, Housing Market Tagged With: austin housing inventory, market, market conditions, selling a home

Should This Austin Area Agent Be Banned?

April 12, 2013 by admin 4 Comments

The prevailing wisdom is not to write an email while you’re still angry, but I’m not sure if that applies to writing on your real estate blog, so here goes. I’m hopping mad right now due to something another Austin real estate agent has done that I think is completely irresponsible.

Angry Realtor

I turned on the radio after dropping off a really great guy on his way back to the airport. He’s interviewing here and wanted to see some neighborhoods near to UT to help in his relocation decision. A radio commercial came on to 102.7 – the comedy station I prefer, trying to grab a few laughs on the way back to Mueller. The advertisement was for an Austin area Realtor, and it thoroughly sickened me.

Some of the statements made were factual – talking about changes in upcoming loan regulations. Sure, when you’re trying to attract new clients, it helps to give them some “buy now and get the good rates” kind of message – I get that, and it’s not too offensive – a great way to start a conversation with a first time home buyer. As one of my first time home buyer friends posted today:

“With a conventional loan, once you pay off 22% of the house, the mortgage insurance amount will fall off of your loan. This is also true (AS OF RIGHT NOW) for FHA. As of June 3, 2013, if you get an FHA Loan and pay less then 20% down, you will be required to pay mortgage insurance for the life of the loan. Moral: AVOID AN FHA LOAN IF POSSIBLE AFTER JUNE 3, 2013.”

That’s probably a little extreme, but it shows that there are some reasons to buy now rather than later. So what really got my goat about the radio commercial? It was the bare faced lie:

“…take advantage of the buyers’ market in Austin right now…”

Hello? Where have you been for the last year, Austin area Realtor? This is so completely wrong, that I think it casts all real estate agents in a bad light. It doesn’t take long to be informed. I took all of 17 seconds to log in to the Austin Board of Realtors site and pull a graphic and two lines of text that shows that this is 100% nonsense.

Here goes:

: Hmm. Let’s see – more homes sold than last year for the same month, and there are less homes available. And an increase in prices. Does that sound like a buyers’ market to you?

Okay, so the diagram doesn’t show the entire story, here’s the one line that you would need to read to figure it out:

2.6 – Months of inventory* of single-family homes, 1.6 months less than February 2012.

Okay, so say that even this doesn’t mean anything to you, then if you look at the asterisk footnote, this surely must give it away:

* The inventory of homes for a market is measured in months, which is defined as the number of active listings divided by the average sales per month of the prior 12 months. The Real Estate Center at Texas A&M University cites that 6.5 months of inventory represents a market in which supply and demand for homes is balanced.

So, not only is Austin housing inventory down, it’s very much less than a balanced market. And no, Austin area Realtor, it’s not a buyers’ market. It’s an extreme sellers’ market.

So what have I done? Just ranted about it on my blog? No, I’ve called up to ask about it several times – straight to voicemail. That’s what one is supposed to do right? Get in touch. The next step is to look at the Code of Ethics, again discussed on the Austin Board of Realtors site and elsewhere:

First established in 1913, the REALTOR® Code of Ethics establishes time-honored and baseline principles that come from the collective experiences of REALTORS®. Those principles can be loosely defined as:

…Truthfulness in statements and advertising…

I’m so annoyed about this that I plan on getting the advertisement taken off the air as soon as possible. It’s just plain wrong. If you want more information on the real picture of the Austin market, please give us a call at 512 215 4785 or get in touch with a real estate agent who despises false advertising.

Filed Under: Austin, First Time Homebuyers Tagged With: angry birds, Austin area real estate agent, lies, radio

Five Things Austin Home Sellers Get Wrong

December 9, 2012 by admin Leave a Comment

It happens time and time again – a home seller skim reads the Realtor’s listing agreement and purchase contract and doesn’t pay attention to the pages of small print. Here are the five blunders I see home sellers in Austin making that they could easily avoid:

1. The window coverings stay with the house. This might sound kind of obvious, but in some foreign markets I’ve seen people taking the wall to wall carpeting with them as it wasn’t included in the contract. I’ve been to a few closings were the buyers have done a pre-closing walk-through and discovered that the sellers have taken down curtain rods and even blinds, and taken them to their next home. This leads to panic, delays and hasty reparations – not what you want to happen on the day of closing.

This section in the Texas Real Estate Commission’s promulgated “One to Four Family Residential Contract (Resale)” covers what conveys with the house:

The following described related accessories, if any: window air conditioning units, stove, fireplace screens, curtains and rods, blinds, window shades, draperies and rods, door keys, … entry gates, and (iv) other improvements and accessories.

2. The washer, dryer and fridge do not generally convey with the home unless they are included in a separate non-realty items addendum to the purchase contract. Again, there’s a section in the purchase contract which describes “permanently installed” items. In layman’s terms this means, “if it’s not screwed on, it isn’t included in the sale”:

..permanently installed and built-in items, if any: all equipment and appliances, valances, screens, shutters, awnings, wall-to-wall carpeting, mirrors, ceiling fans, attic fans, … mounts and brackets for televisions and speakers, heating and air-conditioning units, security and fire detection equipment, wiring, plumbing and lighting fixtures, chandeliers, water softener system, kitchen equipment

So unless your washer, dryer and fridge are built in, they convey, if not, they are a negotiable item and have to included in a specific form to stay at the seller’s home after closing.

3. All light fittings / ceiling fans convey with the home. This is another case of the permanently attached staying with a home. So if you have a favorite family heirloom set of curtains, and a hand-made light fitting made by your dead Uncle Bert, if you want to hang on to them, take them down before showing the house, or include them as specific exclusions in the purchase contract.

4. TV mounts attached to the wall do convey with the home. This one isn’t always obvious, but a flat panel TV on a wall mount does not convey (though it is attached to the wall mount) but the wall mount does (as it’s attached to the house).

5. The seller has a contractual deadline for providing a survey affidavit. In the purchase contract, there are subtleties regarding who pays for a survey if the current one isn’t acceptable to the buyer’s lender or title company. However, if the seller fails to get a copy of the survey and an affidavit (known as a T-47) saying that the survey is still accurate to the title company within the time specified, then the seller is liable for the cost of a new survey. The affidavit does require signature by a notary – this could be one at the title company or one at your business / local bank for example. So dig out your survey before you put your home on the market, and get a T-47 from your listing agent, and get it notarized.

These are just some of the seller pitfalls that are easily avoided when you work with an experienced Austin real estate agent who can guide you through the process. Call 512 215 4785 to talk about selling your home smoothly.

Filed Under: For Sellers Tagged With: contract, pitfalls, selling a home, small print

Austin Landlords: When to Get An Energy Audit

April 9, 2012 by admin Leave a Comment

A friend of mine bought a resale home at Mueller and kept his old Austin home as a rental property. His tenants are complaining that the home is leaky, and he’s wanting to sell the home in the next few years. Should he have Home Depot come take a look and bid for some energy efficiency upgrades?

Yes, and no. Mostly no. There’s a strong chance that his rental home will require an ECAD Audit before he sells it – it’s a part of the energy efficiency disclosures mandated in the City of Austin for Austin Energy supplied homes. If he doesn’t qualify for an ECAD exemption, he’ll need to have an independent 3rd party provide an energy audit of the home and provide this information to any buyer. This differs from the free audit that Home Depot might do – a sales effort which allows them to bid for work.

So when should he do his ECAD audit? Given that they are valid for 10 years, and he’s planning on disposing of his income property in that time, I would advocate doing it now. That way if there are egregious energy leaks, he has the option to take care of them on behalf of his tenants, and get the benefits of any work performed when marketing the home for sale. For example, auditors often find leaks around the return air handler which can be significant and inexpensively fixed.

Does he definitely need an ECAD Audit? If he hasn’t had rebates from energy efficient upgrade work from Austin Energy, he probably does. Call 512-482-5346 to check, and have a copy of the account number to hand.

Who should he use for his energy audit? I like Positive Energy at 512 462 1000 – Kristof’s team are extremely over-qualified, and are true scientists when it comes to measuring building performance. They are the auditors’ auditor.

Filed Under: For Sellers Tagged With: ECAD, landlord

How to Respond To A Hand-written Offer For The Sale of Your Home

March 14, 2012 by admin Leave a Comment

I recently listed a home for sale in the Mueller Garden Court, and the seller received an offer under the doormat of her home. The prospective buyer had decided not to use a real estate agent to put together the offer, and the seller dutifully scanned it and sent it to me.

Most agents will use one of the Texas Real Estate Commission’s promulgated forms to submit an offer. In fact, our real estate license dictates that if there is a form that we can use, we should use it, unless either the buyer or the seller has asked to use their own format. This might happen if you are selling your home to a wholesale buyer (one who intends to assign it before closing, and thus wants certain safeguards in their that protect themselves as a buyer).

So the most common form for a resale home is the option-based residential purchase contract. It allows a buyer to lay out all of the purchase terms and then buy an option to buy the home. So it might be that the buyer pays $150 for the right to buy the home, and that $150 is no-refundable. The buyer can also opt out of the contract for any reason during that option period, and not default on the contract. The offer we received was not an option contract, nor was it on a promulgated form. It was hand-written.

I am not a lawyer, and so I’m not permitted to practice law. That’s why the Texas Real Estate Commission gives me forms to fill in. The elements of a legally binding contract are (as I understand them) as follows:

Acceptance in strict compliance with the terms of the offer – in practice, both parties must sign the same offer with no changes between signatures
Legal Purpose/Objective – i.e. it can’t be binding if it agrees on the performance of an illegal act
Mutuality of Obligation – also known as the “meeting of the minds”
Consideration (amount of money typically)
Competent Parties – no-one can be crazy, drunk or a minor. (or all three)

My advice to the seller is to respond using a promulgated form – one in which all of the elements above are laid out. If we proceed with the offer as written, my advice would be to seek legal counsel.

Garreth Wilcock sells homes in Austin. 512 215 4785

Filed Under: Austin, For Buyers, For Realty Professionals, For Sellers, General Information

Why isn’t that home listed in the MLS?

January 18, 2012 by admin Leave a Comment

The Austin multiple listing system (MLS) is the system of record for many but not all home sales. In most estimations it accounts for around 60-70% of the overall sales. So some homes sell without the MLS, and buyers often ask the question: “Why isn’t that home in the MLS?”.

There are several categories of homes that aren’t listed for sale:

For Sale By Owner – regular resale homes where the owner/seller doesn’t want to employ a listing agent
New construction – sometimes one or two of a builder’s homes may be listed in the MLS, but if the builder has an on-site sales agent, sometimes they don’t list all of their homes – the as yet unbuilt, the under construction and the completed inventory.
Pocket listings – where an agent is marketing a home for sale by themselves privately. This might be to extend greater privacy to the seller, who may not want attention drawing to themselves (Sandra Bullock – call me when you’re ready to sell), or may not want to have their home in a presentation ready state all the time.

There are also inaccurate data sources which list homes for sale when they’re not. For example, Zillow or Trulia allow people to add their homes for sale directly to the site (the For Sale By Owner crowd), and sometimes the data they import from the MLS is just wrong – homes that sold three years ago are sometimes listed as active.

Then there’s the homes that have a “coming soon” sign out, but haven’t been added to the MLS yet. In some ways, this is the time when a home is worth the most (in a flat market):

As time on market increases, the “market stigma” increases – the “why hasn’t this house sold yet” question that buyers ask means their perception of a home’s value is less.
Buyers often feel that they should scoop up this “exclusive opportunity” before the rest of the crowd come along
However: there are less people looking at the home or made aware of it, so the number of buyers looking at the home is diminished. The people that are looking (for example the people stalking homes for sale in Mueller Austin)

No matter why a home isn’t in the MLS yet, it’s possible to get your trusty buyers agent to find out more details and represent you in any potential purchase. Get in touch if you would like to find out more about any home in Austin. 512 215 4785

Filed Under: Austin, For Buyers, General Information, Home buying

University Hills Austin Homes – Market Update

December 14, 2011 by admin Leave a Comment

In a housing market like Austin where one in three home listings (per the MLS) fails to sell despite local economic indicators looking good, is University Hills faring any better?
It’s certainly a different picture to the one six months ago where the number of foreclosed homes was bringing down list prices and perception of home values. The impact of the distressed homes made for a temporary dip in prices. While there are still a few foreclosed homes set to close soon, there are none currently on the market and we’re seeing mostly equity sales. Remodeled and renovated homes above $200,000 are starting to appear again with eight selling at the time of writing in 2011.
As predicted earlier this year, investors are flipping homes from the distressed market to the upper end of the resale market. This is what I wrote in my May 2011 University Hills newsletter:

“Home sales in the area have been dominated by foreclosures as the low average sales price indicates.

In the last year, almost one in three sales in University Hills has been a foreclosed home. The good news is that only 4 out of 21 currently active listings are foreclosed, and the discount inventory has been clearing up. Expect some home flipping activity in the next quarter.

Remodeled home sales are faring well with several under contract including one which failed to sell last year and went off the market. We’re getting to a state now where inventory is low and sales are consistent – demand is steady and showings are up over last year. This is a good indicator that the very local market is shifting back towards a sellers’ market. This is long awaited good news for sellers.

The market remains broad – sales prices in the last 12 months have spanned from $67,900 to $214,000, and only now are we seeing contracts on two of five homes at the upper end of the market (>$225,000)”

Will 2012 be a good year to sell your home in this sleepy East Austin neighborhood? It’s early to say, though I always recommend getting your home on the market before the Spring / Summer rush when there is less competition for the available buyers. Call 512 215 4785 to find out what your home is worth, or check out the competing University Hills homes for sale.

Filed Under: Home buying, Housing Market, University Hills Tagged With: Home prices, market

How an MCC Can Save You Money on Your First Austin Home

December 12, 2011 by admin Leave a Comment

Mortgage Credit Certificate

The Mortgage Credit Certificate (MCC) is an optional tax credit that income qualified first time home buyers may purchase as part of their home loan. What is it, who gets it and how do you save up to $2,000 per year over the life of the loan?

What is the MCC? The Mortgage Credit Certificate is provided by the Texas Department of Housing and Community Affairs to help make home ownership more affordable for low to moderate income groups. It targets certain housing areas, including within the City Austin.

Who can get an MCC? The scheme has the following requirements on home buyers:

First time homebuyers (have not owned a home in the last three years)
Low to moderate income. This is defined as earning a maximum of 115% or 130% of Austin Median Family Income. This qualification depends on household size, so the maximum allowable income for a family of four in Austin in 2008 is $79,465 per year.
Buying a home for primary personal residence
Must take a certified home-buyer education class before closing

How much can an MCC save? The scheme provides a tax credit of up to $2,000 per year as an offset to paid income tax. This is available for every year during the life of the loan if the home is still your primary residence. This tax credit is in addition to the regular tax deduction available to regular home owners.

How much does an MCC cost? The application fee is around $75, and the certificate costs 1% of the loan amount at closing.

Which lenders can I use to get an MCC? Only qualified lenders and loan officers can apply for the MCC on your behalf. This is a list of MCC approved lenders, or I could introduce you to some that I have worked with recently who provide excellent service.

The MCC is a great way for income qualified applicants to receive additional tax benefits for the life of their loan.

Contact an Austin Realtor if you have questions about the MCC and how it can save you money on your home purchase. 512 215 4785

Filed Under: First Time, Mortgage

What is the US National Foreclosure Rate?

December 12, 2011 by admin Leave a Comment

The US foreclosure rate at the end of 2011 is still somewhat high in my opinion 1 in every 563 housing units received a foreclosure filing notice in October 2011. How is Texas doing? The same measure was just 1 in 988 housing units in the same period, which is encouraging for those of us living in Austin. We’re not as safe as North Dakotans, but we’re almost 4 times safer on average than a homeowner living in California.

Check out the latest foreclosure data from RealtyTrac below.

Filed Under: Austin Tagged With: foreclosure

Austin Land Market

December 1, 2011 by admin Leave a Comment

Lots over $1m in Austin are in good supply right now, which is great news for land buyers. Here are a few statistics I pulled from the Austin MLS for lots that were listed for sale since the start of 2010:

Under contract: 2 lots

For sale: 38 lots

Sold lots: 14 (within 23 months of listing)

Failed to sell: 43 lots (ones that have been taken off the market)

If we look at lots on the market since 2005 we see that the average time on market is 6 months.

So what does this mean for a seller of a valuable lot? If you look at the lots that are currently selling, one is a foreclosed multi-family lot, and another is a huge lot just South of Downtown. There are a fair number of choices currently available for large estate home building, so it’s a tough market, with perhaps 5+ years of inventory.

If you look at sold listings, the bulk take 4+ months to sell. The sales prices have reflected seller optimism and perhaps some market fatigue.

This analysis doesn’t take into account all of the tear-down homes that an agent hasn’t listed as a lot in the MLS, though at this price point, one would hope that the listing agent would have the presence of mind to do that.

Check out all lots in Austin over $100k for sale, and all Austin lots over $1m to see what’s happening in the market right now.

Filed Under: Land Tagged With: lots for sale

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