Central Texas Home And Land Blog

Here’s the latest on the proposed energy audit.

If you remember, there was a proposed law that would state that before any seller could sell thier home, they would need to make “necessary repairs” to make thier home energy efficient.   This proposal could have made it so some/many homesellers would not even be able to afford to sell their homes, as some cases could cost several thousands of dollars to do so.   This would be something that would not only affect sellers, but buyers alike.   If you think any market could slow down due to economy, just think what asking every seller to spend money on a home that they are no longer wanting to live in would do the real estate market.  

Upon hearing this proposal, Real Estate  proffessionals began to look at ways to curb this idea.

Well it looks like we have come up with some sort of agreement.

Just recently it was approved that instead of flat out requiring repairs to me made, that there will be the following:Beginning June 1st 2009, this will take affect

• All sellers in Austin, and within the Austin Utility District will have to conform

• Before your home can be sold, you will have to hire a certified energy audit proffessional to perform an energy audit

• These audits will cost no more than $300

• The audit will tell of everything in and about the home that is not up to today’s standards of energy efficiency (we are also trying to make it so that the report will read in easy terminology, explaining the money that could be saved if repairs were to be made, and how much those repairs would cost)

• Once a buyer is interested in the home, the report has to be made available and signed off that the buyer is aware

• The Energy Audit will be dealt with as an attachment, or possibly become part of the usual Seller’s Disclosure statement, that is required on all 1-4 Family Residential Transactions

Although most don’t feel this to be a perfect situation, it is defenitly more affordable and does allow for Sellers and Buyers to be aware of how we can help make our homes more efficient.
If you have any questions or comments, please feel free to contact me.

Austin, TX, the place to be!!!

Why?   Here in Central Texas we are sitting on a gold mine.   Well, it may not feel like it right now, but the housing market and economy in Austin are much better off than practically anywhere else in the country.  

There are many things that  are helping us through this time that many are finding difficult.  

DID YOU KNOW!?   During the decade of the ’90s, Austin gained more population than 38 states?!

DID YOU KNOW!?   In 2007 Governor Rick Perry said that out of all the jobs created in the United States, 50% were in Texas!!   That’s right 1/2 the new jobs in 2007 were in the great state of TEXAS!!

It’s stats like these that are helping us out.   The simple truth is, we are still seeing  similar stats even today.   This means lots of good things for us here in Texas, and especially Central Texas.   It is because of new jobs, and growing population that our housing market is still doing well.   You may not believe me, but we are not doing that bad.   Especially if you are a buyer.

Right now,if you are looking to buy in Texas(Central Texas), you are seeing reasonably low interest rates, lots of houses to choose from, and low, low prices.   All things that help when purchasing a home.  

On the other side, in many areas of Austin and Central Texas, we are seeing the average prices of home going up from this same time last year.   Just another indicator that we are in a great place during this time.

Check out what Donald Trump (the King of Real Estate) had to say on Larry King the other day.

http://video.google.com/videoplay?docid=2961136074832015378

Now…go out and buy something.

The Economy
Where Recession Will Hit Hardest
Joshua Zumbrun, 10.15.08, 1:45 PM ET Washington, D.C. – The economy faces a tough recession, but it won’t hit equally everywhere. While some places will get pummeled, others will be far less scathed.

 California, Florida and Nevada, already spiraling into economic crisis, will get hit hardest in the coming months, according to our analysis. The reason: housing, which created their recent economic booms, and the accompanying bust. With the highest foreclosure rates in the nation, cities in these areas are dragging on all other parts of the economy. Nine of our 10 riskiest cities are in these three states.

In Pictures: The Worst And Best Cities To Ride Out The RecessionMore than half the people in San Diego, Bakersfield and Riverside, three California cities which made our list, owe more on their homes than their homes are worth. In Riverside, the situation was especially dire–the median home buyer in the last five years is $33,000 in the hole, estimates Zillow, a real estate service that tracks ownership data. Zillow estimates that 40% of home sales in cities like Las Vegas, Fresno and Bakersfield are foreclosure sales. These distressed sales flood real estate markets, making it even more difficult for normal home sales.

That stresses the economy of the entire state. Data from the Bureau of Labor Statistics (BLS) shows soaring unemployment in these bubble cities. Unemployment and underwater homes are a toxic combination. Someone who can hold on to their job and make payments on an underwater home will eventually rebuild that equity. But without that job? Rising unemployment is not only risky for housing markets, it also cuts spending at businesses, decreases tax revenue and increases public spending, forming a dangerous downward economic spiral.

In the most recent BLS data, for example, unemployment in Cape Coral-Fort Myers, Fla., jumped to 9% in August from only 5.3% a year ago. In Miami, Fla., unemployment jumped to 6.4% from 4.2%. That’s only slightly above the national average for unemployment–6.1%–but for a city the size of Miami it translates to more than 64,000 newly unemployed. That’s a total of 184,000 people on the unemployment rolls in Miami alone.

There are cities better poised to weather the crisis. Unemployment is on the rise almost everywhere, but in northwest cities like Portland and Seattle, northeast cities like Boston and Baltimore or energy and agriculture cities like Oklahoma City, Tulsa and Austin, it remains low.

Homeowners in these areas are, not surprisingly, also not drowning in debt. In Boston, the median homeowner has $60,000 extra in his home. In Seattle, it’s about $80,000. In Honolulu, it’s $120,000. Foreclosures aren’t flooding markets, meaning homeowners can sell at current prices if they get in trouble. In Seattle, Oklahoma City and Baltimore, fewer than 6% of home sales are foreclosures, some of the lowest rates in the nation.

Still, there are risks for even the best-cushioned regions. Falling commodity prices could undo the prosperity that’s been enjoyed by natural-gas-rich Oklahoma in recent years. A recession will curtail vacations to Hawaii. And even in the worst-hit cities, there’s hope. Home prices have fallen 30% to 40% in some of the most troubled areas. They could be closest to finding the bottom.In Pictures: The Worst And Best Cities To Ride Out The Recession

What determines a home’s value?

Many buyers and sellers have a difficult time understanding why a home is worth what it is.   Or actually they have a difficult time understanding why a REALTOR says this is what this home is worth.

It is common for someone looking to make the largest purchase of thier life, or sell thier most prized asset to question the reasoning behind a proffessional’s report.

Let me try to shed some light on this.  

Real estate and the stock market are very much alike in most ways.   Their likeness is the way they are valued.   Buyers/Sellers typically take it that when a REALTOR gives them a value, that it is the REALTOR’s opinion.   In some ways this is true, and also false.

Let me explain.

An educated and proffessional REALTOR will do what is a called a CMA (Comparitive Market Analysis).   What?   A CMA is generally when a REALTOR takes information from the MLS (Multiple Listing Service) and breaks it down, consisting of comparable homes in the immediate area.  

The scary thing is, some REALTOR’s do not know how to do it effectively.   I mean no disrespect, but there are times when you see that incorrect comparables were used.  

An effective  CMA should consist of not only the homes that are actively listed for sale (the immediate competition), but also properties that are under contract(pendings), those that have sold, AND…homes that have expired(thier listing agreement time period was up with their agent), and been withdrawn.  

The reason these are all so important is this.   If you only look at what is actively out there, you have no basis of what people are actually willing to pay for these properties.   Anyone can put a property up for sale.   But what will someone pay for it, is the question.   So by looking at pendings, you can see immediately what prices are bringing buyer’s attention, and by looking at solds, you see what was the bottom line(what were they willing to pay).  

But you can’t stop there.   There are a numerous amount of properties that you would never even know existed if you didn’t look at what expired and withdrew.   In many cases expireds sat on the market for an exhausting amount of time, years in some cases.   This is a major key in determining what people WOULD NOT spend money on.   And the same goes for withdrawn, they usually are not getting action as well, so the sellers decided to pull it off the market.

What an educated REALTOR will do well, is have a formula to implement all of these factors and be able to  decipher within a tight range, what a particular property is worth.  

Now, understand that this is what it is worth RIGHT NOW!   It may change in a month.   Markets change all of the time, and if you don’t continously look at the factors going on, you will be priced out of the market.   This happens all of the time, a seller puts their home on the market, maybe priced at the top of thier range, and in a couple of months, the market has changed, and they are no longer even being considered.   When they finally realize that they must change their price, it’s too late, they are seen to many as a difficult property.   Many buyers will see it as either there is something wrong with the property, or the seller is difficult to work with.   In essence, what happens in many cases, the home eventually sells for much less than it should have, had it been priced correctly.

Remember when I said that real estate and stocks are alike?   What I meant by that is this.   REALTORS(like Stockbrokers) do not control the prices, it is the BUYERS AND SELLERS who determine the value.   REALTORS only report the findings.

Please let me know if you have any particular questions concerning this or any other topics, and I will be glad to help you find the answers.

Many people ask me to  discuss how to time the market.   As is our human nature, everyone wants to feel that they got the best deal they could possibly get.   The majority of buyers/sellers feel that the best way to do that is by timing the market.   This is most commonly felt in real estate, and stocks.  

The fact is, there are even careers that deal directly with this.   When you want to buy stocks, most people go through a broker, and use their expert advice to help them make decisions based on “timing” and specific stock performance.  

The funny thing is, most stock analyst will tell you that there is no “sure fire” way to predict any specific stock’s performance.   They can make educated guesses(based off of past performance and trends), but no way to make a for sure prediction.   If they could, you would see alot more people in the market getting rich.  

The fact is, stocks and real estate are alot alike.   It’s more of a long term investment that yields the benefit, not quick money.   If you are looking for quick money, in most cases, you are just as well off going to Vegas(yahtzee).

 When I hear of potential buyers/sellers holding out because they are trying to time the market, I find it very amusing.   Don’t get me wrong, there are sure fire ways of knowing if it is a not so good time to buy/sell, by knowing if we are in a buyer’s or seller’s market(which is determined by months of inventory, less than 5 months = seller’s market, more than 7 months = buyer’s market), and getting with a REALTOR who can advise you on what your home could sell for.   But when you really get down to the nitty gritty, and expect to know what the market will be doing in the next 6 months, you might as well get out a crystal ball, and start gazing.  

 The fact is, no one knows where the top or the bottom is.   Actually, I will correct myself, EVERYONE knows where the top and bottom is, only the downside is that they know after it has already turned.   Think of it this way; If I began drawing on a chalkboard from left to right, showing a downward line(representing the market going down), at what point would you know I was going to stop going down, and turn to start going up?   Unless you have some mental powers and could read my mind, you would have clue where the bottom is.   However the second I turn to go up, you when then see that we have just passed the bottom, and if you are aware of how curves work, the bottom is a faster transition than the way down or up.   What I mean is that when you make the turn on the bottom, it speeds up through the turn, so after you realized it has turned, you are already quite a way up on the other side.  

 It  is not always beneficial  to try to time the market, unless you are an investor with a good deal of money to spend, and can take chances.   Real Estate should not be purchased for quick money, it’s a long term investment.   If you are looking to buy/sell your home, for reasons that matter to you, consult with your REALTOR(to see what you may be able to purchase in your budget, or what your home could sell for), then determine if it’s the right time for you.

 If you have any particular questions you would like answered, please feel free to contact me, or comment here, and I will do my best to answer them for you.

Daily Real Estate News    |    October 15, 2008Cities Where Your Dollar Goes Furthest

Money goes further some places in the United States than it does in others.

Housing, in particular, has remained most affordable in the South and the Midwest. That™s because of less stringent building, an abundance of land and growing populations in the South, says Daniel McCue, a research analyst at Harvard™s Joint Center for Housing Studies.

To determine the cities that offer the best quality of life for the least amount of money, Forbes magazine calculated the ratios between a city™s median home price and its median household income. It also factored in projected job growth. And it compared median income to Moody™s Economy.com™s cost of living index.

Here are the 10 cities that it found to offer the best value, and the cities that it believes offers the worst value.

Cities Where Residents Get the Most for Their Money

1. Austin, Texas
2. San Antonio, Texas
3. Indianapolis, Ind.
4. Houston, Texas
5. Charlotte, N.C.
6. Columbus, Ohio
7. Dallas
8. Minneapolis/St. Paul
9. Denver
10. Portland, Ore.

Cities Where Residents Get the Least for Their Money

1. Los Angeles
2. Providence, R.I.
3. New Orleans
4. Philadelphia
5. Cleveland
6. New York
7. Milwaukee, Wisc.
8. St. Louis, Mo.
9. Washington, D.C.
10. Sacramento, Calif.

Source: Forbes, Abha Bhattarai (10/10/2008)

What is going on?   Is the world coming to an end?   Should I buy that house I want?   Should I sell my house?   How does all of what’s going on affect me?

Are these questions you have been wondering?

I am hearing these questions asked daily.   I keep my ear to the ground, and will do my best to help you understand briefly the answers.

Q. What is going on?

A. We are in a buyer”s market.   For quite a long time, here in Central Texas (and in most other areas) we were seeing a very long and strong seller”s market.   This occurs when there is less than 5 months of inventory in a given area.   Of course, when that happens, sellers have less competition, and therefore are able to sell at higher prices, and get them much quicker.   In many cases, homes would have multiple offers on them by the end of the first day they are on the market, and they usually would sell for more than asking price.  

Across the country, for the most part, this was the case.   Mostly due to the fact that more people were being able to get loans than usual.   This of course meant that there were more buyers than homes to buy.   So you have 10 people looking to buy, and only 5 homes to sell, duh, supply and demand.

Well, since a major amount of those buyers in recent years, really should not have been able to get loans (due to bad credit, and poor judment with finance, and bad track records, no money saved), a large majority of their mortgages went bad.   Therefore, now you see a large amount of foreclosures and short sales on the market.   There are also those large amount of  owners who are proactive and trying to sell before they see foreclosure in the near future.

So as a result, there are more than 5 months worth of inventory on the market.   In fact there is more than 7 months (which constitutes a buyers market).   Coupled with this is the tightening of lenders criteria to loan.  

So, there are lots of homes on the market, and not as many buyers.

Q.   What does this do to the market?

A.   This is great in alot of cases.   This strong buyer’s market means it is an oppurtune time for many people.   The large amount of homes for sale means there is a lot of competition.   This means that homeowners who really want and/or need to sell, are having to lower their prices.   For a buyer, THIS IS PERFECT!   Also, a buyer now has more homes to choose from.  

Q.   So you are saying this is good as a buyer?

A.   Definetely!   This is great for buyers.   If you are a buyer, who is able to get a loan(if you have good credit, a stable job), it’s like being a kid in a candy store.   Not only with the resale market, but with new homes as well.   Homebuilders overbuilt  during the last few years trying to keep up with the markets demand, resulting in most of them having way too much inventory.   Now they are willing to jump through hoops with incentives to get rid of this abundance, while also trying to compete with the resale market.

Q.   So as a homeowner, you are saying what to me?

A.   If you are comfortable where you are, do nothing.   Do not be in fear of your home going down in value either.   This is a normal fluctation.   It is a cycle that always returns.   The only unknown is how long it will be.   For as long as we can track, we have always moved back and forth between a buyer and sellers market, and will continue to do so.

Q.   What if I’m looking to sell and buy another property, is this bad news?

A.   Not necessarily.   If you have lived in your home for at least 2-3 years, chances are you have good equity.   If you are looking to sell, it’s true that you will more than likely be selling it at a price lower than you would a year ago, but look  at this scenario.  

EX.   If home prices dropped by 5%, here is what it could look like if you decided to sell and trade up(size, neighborhood, city).

Home Price $200,000                           ————–>     Home Price $400,000
Sell at $190,000 = $10,000 loss                                             Buy at $380,000 = $20,000 SAVINGS

Falling home prices are a great oppurtunity for a savvy homeowner looking to move up.   Even though your home sell price may be lower, the smaller loss at sale will be compensated by greater savings at purchase, resulting in a significant net gain.   It’s like stocks, you make your money by buying when the stocks are low.   It is always said, that in real estate, you make your money when you buy the property.

 Please feel free to contact me for further information regarding the market.  

Welcome to Rodney Monk’s Blog! This blog will provide you with valuable information, tips, and general insight into the real estate market in Austin and surrounding Central Texas areas.