Austin Real Estate Blog

SAN ANTONIO (San Antonio Express-News) – The San Antonio economy has outperformed all of the nation’s largest cities through first quarter 2009, according to a Brookings Institution report.

The city has become accustomed to being labeled a top economy. It recently ranked fifth on Forbes.com’s list of cities most likely to bounce back quickly from the recession.

San Antonio’s economy — driven by sectors such as health care and insurance — has benefited greatly from military expansions and relatively stable housing prices.

The Brookings Institution report measured changes in employment totals, unemployment rates, housing prices, the values of goods and services produced by cities, and other factors.

Other Texas cities listed as top-performing metro areas include:

• Austin (third),
• Houston (fourth),
• Dallas (fifth),
• McAllen (sixth) and
• El Paso (11th).

The above-mentioned report is from the Real Estate Center at Texas A&M.

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The 19 remaining condos at Brazos Place will be auctioned on May 17, the first auction of a downtown property that I have seen in Austin. It should be an interesting, educational and - I would guess - very well attended event.

Is this auction of properties located at Brazos St. and 8th St. a death knell for the downtown condo market? Or merely an innovative way to move properties in a slow market?

Success or failure depends on attracting bidders, according to research on auctions. The newspaper advertisement announcing the auction said prices would start at $80,000 - far below anything reported in the MLS system lately.

If enough good bidders show up, then higher prices may result than from the normal market mechanism. If the auction brings together many who are interested in newly remodeled downtown condos, and effectively pits buyer against buyer - then maybe this is really an effective marketing campaign.

Since my office at RE/MAX Downtown Austin is one block away you can bet I’ll attend!

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In response to failing housing markets and increased foreclosures over the year, the federal government has introduced new tax credits for first-time homeowners who purchased homes in 2008 and 2009.

The good news is that first-time homebuyers who purchase a home between April 9, 2009 and December 1, 2009 can receive a tax credit of 10% of the home’s purchase price with stipulations of course.

I recommend researching this further, but below I’ll try my best to summarize the main points.

For homes purchased in the 2009 specified dates above, the credit amount cannot exceed $8,000 and the buyer must live in the home for at least 3 years. Otherwise, you must pay the amount of the credit back in full.

For homes purchased in 2008, the credit cannot exceed $7,500 and it must be paid back. To learn more details about the 2008 tax credit visit the IRS website here.

FYI: If you haven’t filed your 2008 federal tax return yet, the form you must file with it is Form 5405.

Bottom line: If you’re looking to buy your first home soon and plan on living in it for awhile make sure you purchase it between April 9 and December 1 of this year.

I found this information on IRS.gov and this Austin American-Statesman article from last month- both good sources for more detailed information and information on other tax credits available.

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While the mortgage market continues to generate a lot of chatter in both the media and in Washington, interest rates are currently near or at all-time lows. Lately there has been talk about the 4.5% 30-year fixed rate mortgage. Will it become a reality though? Right now, no one really knows.

The bottom line is the Fed announced recently that they are going to buy up to $600 billion in mortgage-backed securities. This has already driven rates to historical lows. In January, the SEC is meeting and information may be released that could have a significant bearing on rates, potentially for the worse.

We are already seeing lender backlog due to low interest rates. With a first time home buyer tax credit of up to $7,500 and low or no money down programs available for many people today, now is a great time to buy a home.

The Austin American-Statesman says on its front page (11/26/2008) that the real estate slowdown has even hit condos in downtown Austin. While this event has been anticipated for more than a few months, the admission - or revelation – may seem shocking to many.

From a real estate buyer’s angle, nothing could be better. If you are considering a condo downtown or near downtown there is a holiday sale going on - deep discounts are available.

Baron Rothschild (1871) is credited with the saying “the time to buy property is when there is blood in the streets”. Panic and uncertainty create opportunity.

There may be blood in Austin’s downtown streets today.

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Check out the new page “Buying Central Austin Real Estate in the New Economy” in the Buyer’s section. It’s all about buying in the new economy and buying in central Austin. Now new maybe a misnomer, new means a change from the last 2-3 years. Before the era of easy money this was the norm for homebuying and qualifying for a loan.

If you’re thinking about buying a downtown condo…existing condos generally are offering better value than new or very recent ones. Long-range investors have some attractive opportunities, for several reasons:

• Existing condo projects are largely sold out, reducing the pressure on prices
• Existing condo prices are based on a historical sales, not hypothetical future ones
• Homeowners Association fees may be lower and/or more stable because they’re shared out among a larger number of owners
• Many new and very recent condo projects are in the luxury price range

In short, they have more measurable value than presales or recently offerings. Still, existing resales are discounted from 15-25%.

If you believe the stock market anticipates future economic activity, now may be the time to buy. Real-state investment trusts are down 50% from their highs, so real estate assets may be a bargain.

Residential downtown Austin is an exciting and newly developing area. The land area has not changed much from the original plat in 1838. It is bounded by the Capitol on the north,and the lake on the south. Much of the arts, entertainment and dining experiences in Austin are located in and around this grid. New high-rise condos are currently under construction BUT there is an existing condo called the 5 fifty five. This condo, while of recent construction (2004), has several close out units on the 29th/30th floors below $500 psf. This is for condos with great views of the lake, downtown and the Capitol. With the new construction like the Austonian, the W, etc being offering at an average of $700 psf for these larger condos located on higher floors and offering great views. For those in the market you should check them out.

Recently a customer who was looking to buy a student condo in Austin told me that due to the election results she didn’t want to go ahead with a purchase. Now we all know that buyers have many reasons for not wanting to purchase but I had to laugh at the notion of not buying because of an election.

Economic cycles …yes, job status….yes, moving to another city…yes, those are good reasons. However not purchasing property because of an election means you don’t understand the intrinsic value of real estate. Real estate outlasts political terms in this country. In fact it outlasts governments. Remember that Texas and Austin, in particular, was owned by Mexico, the Republic of Texas, the Confederacy and now the United States.

Throughout all those years Austin has grown and prospered albeit with some ups and downs. This is one of those down times. Make it work for you. Look to the long term and I know you will realize that today’s market represents a buying opportunity.

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