Austin Real Estate Guy Blog

Austin Home Builders Slowing Down

Sam Chapman — Thu, 03 Jul 2008 15:21:00 GMT

I have posted about this several times, but an article in today's Statesman gave us numbers on home starts in 2008 and new home starts are way down. This is just more evidence to support what I have been saying about the supply of new homes in Austin shrinking. The article is negative at times and you have to read the whole thing to see the positive news, but it is there. Click here to read the article.

2008 Austin-Round Rock Real Estate Market Overview

Sam Chapman — Tue, 01 Jul 2008 19:58:00 GMT

The Real Estate Center at Texas A&M came out with its 2008 Market Overview for major metro areas in Texas. This is for the Austin MSA, which includes Bastrop, Caldwell, Hays, Travis and Williamson Counties. Cities included are Austin, Cedar Park, Georgetown, Leander, Lockhart, Pflugerville, Round Rock, San Marcos and Taylor. Some highlights:

2007 population estimate was 1,598,161, up 5.6% from 2006. Population growth from 1997 to 2007 is estimated to be 43.8%. The area's population is expected to exceed 2 million at some point between 2020 and 2025.

26.1% of the population of Travis County residents ages 25 and older have at least a Bachelors Degree. That compares to a statewide average of 15.6%.

The University of Texas at Austin had an enrollment in 2007 of 50,170. That's a huge student body!

The state of Texas employed almost 66,000 people in 2007. The largest private employer was Dell with approximately 17,000 employees.

Employment growth in 2007 was 5.6% while unemployment was just 3.6% That compares to 3.0% and 4.3% for the state of Texas. Overall the numbers are very strong both for the Austin MSA and the state.

Austin Bergstrom International Airport saw an increase in passengers in 2007 of over 625,000.

There is much, much more information to look through. To see the Austin-Round Rock Overview, click here. For other Texas markets, click here.

Can Anyone Help These People?

Sam Chapman — Tue, 01 Jul 2008 15:32:00 GMT

I received this in an email today. Please read it and help if you can.

Hello!

As many of you know, my friend Bridget and I have taken on the responsibility of four children as a voluntary placement through Child Protective Serives. If you don't know about voluntary placement, you get the kids, but no financial support!

Both Bridget and I are single moms living in two bedroom houses, her with an 8 year old girl, and me with my 5 year old son and now we have included in our families a 14 year old boy who is handicapped, a 5 and 8 year old girl, and an infant. Because of this, we are asking for your help. We would appreciate anything that you are willing and able to offer, especially prayers.

These are the main needs:

14 year old male needs:
Shirts - size 14 to adult small
Shorts/Pants - size 14
Pajamas - size 14, 16
Wipes
Swim diapers - size 12ish (we have been using size 6, as it is the biggest we can find in the stores!)

8 year old girl needs:
Shirts - size 6
Shorts/Skirts/Pants - size 6 (pants need to have an adjustable waist)
Pajamas - size 6
Underwear - size 6
She would love chapter books of her own!

5 year old girl needs:
Shirts - size 6
Shorts/Skirts/Pants - size 6
Pajamas - size 6
Underwear - size 6

8 month old girl needs:
Diapers - size 3 or 4
Formula - Similac Advance
Clothes - size 12-18 months
Pajamas - size 12-18 months
Wipes
Swim Diapers - size small

We are also in need of school supplies for the 5 and 8 year old and school clothes for August.
The 5 year old is going into kindergarten and the 8 year old is going into second grade at Serene Hills. The supply lists are attached.

As a group, we need food, or gift cards for food and gas (their doctors are either downtown and Round Rock), gift cards for clothes, as well as gift cards for fun things to do as a family. We would like to be able to do things like go bowling, go to the zoo, go putt-putting, girl time getting manicures or pedicures (for the three older girls), as well as go out to eat every once in a while as a group. Between Bridget and I, there are 6 kids and only two adults!

Not only this, but Bridget has a vehicle that does not hold all of the children. However, not only is it not big enough, it also keeps overheating, even just going to Randall's and back. If you know of someone that has a car that she can use for the time that she has the children, please get ahold of us asap! If you know of someone selling a larger vehicle for fairly cheap (must fit at least 4 people in the backseats) that is in great working order, again, please let us know!

If you have any questions, feel free to call me at 512.300.7524. We need your prayers most of all, that we can provide these children with what they need at this time, including a safe and healthy environment. Thanks for everything!

Contact Person: Karyn Ford or Bridget Noack at 512.300.7524.

From: karyncford@aol.com [mailto:karyncford@aol.com]

Karyn Ford and Bridget Noack

The Big G

Sam Chapman — Mon, 30 Jun 2008 14:49:00 GMT

I read a long article in the paper this morning about Google. The headline was: "Does Google know too much?" and it was about how much information Google gathers and stores about users. The internet has revolutionized the way people do just about everything relating to information. Google and other search engines track what we search, comments we leave, orders we place and all kids of other information. So does Google really know too much about us and should we be worried about it?

Many real estate agents keep profiles about clients. They find out names and ages of people in a family, birthdays, anniversaries, pet types and names, favorite restaurants, hobbies and on and on. Our insurance agents do the same thing. So do many other sales people or organizations that we use with some degree of frequency. We do this to have good ways to stay in touch and get referrals. Do people worry about this? Doesn't look like it. Websites that we visit install cookies on our computers. Cookies track where we do and what we look at so that websites can actually remember us for automatic logging in and other things. Are people worried about cookies? Doesn't appear that way.

So back to Google - do we have anything to fear? I guess that depends on the websites we visit and our degree of paranoia. Nobody forces people to use Google, Yahoo, Dogpile or any other search engine. When we go there, we know (or should know) that we are being tracked and recorded. Internet usage is voluntary. Don't want to be tracked and recorded? Don't use the internet.

Lake Travis Dropping Consistently

Sam Chapman — Thu, 26 Jun 2008 20:05:00 GMT

With the hot weather the lack of rain and normal water usage, Lake Travis is dropping rapidly. I just went to the LCRA website and saw that over the last week or so, Lake Travis is dropping by an average of around 3.5 inches per day. This isn't anything unusual. Click here to see an LCRA graph for 2006. What you will see is the level of Lake Travis dropping from over 665 feet above sea level in May to under 645 feet in early October. If we continue with hot and dry conditions, it is likely that Lake Travis will drop around 20 feet by the end of summer.

We've seen this before and we will see it again. The drought that ended in 2007 was pretty bad. Many local marinas and lakeside restaurants were really hurt economically. Many boaters stayed off the lake as the water was too low to launch a boat. Then in March and April and then again in June we picked up lots of rain. Click here for an LCRA graph showing Lake Travis levels in 2007.

Now let's look to the future. Lake Travis was designed for flood control, not recreation. The LCRA, which manages the lake, has water contracts down stream, meaning that they have to release water even in times of drought. The LCRA is a private business, not a government entity. If a municipality goes to the LCRA with a proposal to buy water and the numbers are right, LCRA will do it. Right now the cities of Cedar Park, Leander and Round Rock want to place two intake pipes in the lake for water for those cities. In addition, Austin, which currently gets most of its water from Lake Austin, wants to take water from Lake Travis. San Antonio has also asked for water.

If the LCRA does agree to supply water to all of these areas, they will practically drain Lake Travis during times of drought. 645 feet above sea level might look high some years in the future. That is really not a good thing. Travis County, Austin and surrounding cities need to get busy and encourage water conservation. They need to encourage the use of gray water and also harvesting rainfall among other things. The last thing that waterfront buyers of today want will be a dock on the ground and a staggering amount of bare shore line, islands and peninsulas.

If you are interested in learning more about what might happen if the LCRA sells lots more water, visit http://www.draininglaketravis.org/. Now this site is pretty dramatic and scary looking, but there is some good info there.

Austin Western Growth to Slow

Sam Chapman — Thu, 26 Jun 2008 16:58:00 GMT

I wrote a blog post on another blog back in December, 2006 talking about growth to the west of Austin. At that time, it looked like the LCRA would take water lines farther out Hamilton Pool Road and Highway 71. The LCRA was projecting that by the year 2035 there would be an additional 45,000 households in northern Hays and western Travis Counties. It doesn't look like that will happen unless something changes dramatically.

The LCRA took water out Hamilton Pool as far as the subdivision of Belvedere. On Hwy 71, they took water as far out as the Sweetwater subdivision. From what I have heard from Mark Sprague of Residential Strategies and Austin engineer Hank Smith, the LCRA will not take water farther unless someone else pays for it.

So for the LCRA to make water available, developers or land owners will have to pay for a water intake line, treatment plant and pipelines to get water wherever it was needed. That sounds pretty cost prohibitive to me unless a group of developers and land owners got together.

I am very curious about projects that had been announced out Hwy 71. The Sweetwater Lazy 9 is supposed to build around 1800 homes on over 2000 acres just west of Bee Cave. They started on the main road not long ago and will continue to develop the infrastructure over time. From what I understand, the developer has not secured any builders yet. The reason for that is probably because production builders have cut new home starts back to almost nothing because Austin's market has slowed and their profits are terrible all over the country. Local custom builders have too many specs on the ground and you can bet that none of them will go in to Sweetwater.

The Reserve at Lake Travis doesn't have LCRA water, but they are moving ahead anyway. They have an agreement with a neighboring subdivision that has a few wells that produce enough water for both developments. Vizcaya is another high-end development that was announced a year or more ago. This is what used to be the large Covert Ranch. I can't find anything about this development and have no idea what they will do for water. Lakeway Highlands is a 1500 acre development that is roughly bordered by Lakeway and Bee Creek Road. The developer of that property does have a water provider and that development should be just fine. This development will eventually have around 1400 homes, over 300 condos, lots of green space and a marina.

So what is the answer for land owners and developers? One possibility is for the owners of this land to accept the fact that the land isn't as valuable as they thought it was because of the lack of available water. Unless owners decide to sit and hold until water is available, if that ever happens, they may need to sell for less. Without water, developers will not be able to do high density projects. What they can do is create developments said fewer, but larger lots. Builders should then build homes with large rainfall harvesting systems. They should install systems to re-use gray water.

What looked like a slam dunk for developers a year ago has really changed. It will be very interesting to see what happens as time goes by.

Small-Mart Planned for Northcross Mall

Sam Chapman — Tue, 24 Jun 2008 15:06:00 GMT

Residents living close to Northcross are happy about a change in plans by Wal-Mart. Two years ago, the huge discount retailer announced plans to build an almost 200,000 square foot store at Northcross Mall. Area residents almost immediately formed a group called Responsible Growth for Northcross to fight the giant company. Wal-Martfinally announced plans to reduce the size of the Northcross store to under 100,000 square feet. It looks like area residents might just support this. Northcross Mall needs help. It has been dying for a while and has lost many tenants. Having Wal-Mart come in with a smaller location might be just what the mall needs to thrive again and provide welcome shops and services.

One thing that made me curious was that Wal-Mart said that it redesigned and scaled down the size of the Northcross location because of a changing business model across the country. The company has built huge stores in smaller towns with great success. So why the need for change? I see it as being a political thing. If Wal-Mart wants to go into more urban areas, they face huge opposition from residents. A changing business model or a response to angry people? You make the call.

Austin Home Prices Expected to Rise

Sam Chapman — Sat, 21 Jun 2008 17:16:00 GMT

There was an article in the Austin American Statesman today predicting that home prices will rise after this buying season. The article cited sources who talked about rising construction costs, rising transportation costs for material, less new inventory and fewer available lots over the next several years.

The other thing to think about is what builders are doing right now with speculative homes they started 6 months ago. Nobody saw the incredible slow-down coming and even those who did didn't expect it to be as slow as it is. Home sales in Austin are down around 20% over a year ago. Builders are practically dumping inventory in places just to get homes off the books.

I was showing in Steiner Ranch yesterday and found two homes with the exact same floor plan about 10 homes away from each other. One was a resale and was listed for over $300,000. The other was under construction with an expected completion date of August 15. The new house was originally listed at around $305,000 and then dropped to around $271,000. I think the builder is motivated to let it go for less than that.

So what builders are doing is almost frantically trying to get inventory off their hands. What they list next are likely to be to-be-built homes. Over time, that will shrink the inventory of new homes. With rising costs, the price of new construction will go up. With fewer new homes available, resale home prices are likely to go up.

Another thing for existing buyers to consider is that the cost to borrow money has already risen and will probably continue to go up. That combination tells me that buyers need to get motivated before the end of this year to make a purchase.

Want more information? Click here to read the Statesman story.

If you are interested in the Steiner Ranch home I was talking about or about other Austin homes, call me at 512-293-2422.

Austin is HOT

Sam Chapman — Thu, 19 Jun 2008 17:44:00 GMT

Austin is a hot place right now. I'm not talking about the real estate market, but the air temperature. As I sit here writing this at 12:45 PM it is already 96 degrees at the Lake Travis weather station. So far this year we have already had 14 days of 100 degeree or higher temperatures (for people in Canada and other countries, 100 degrees F is around 38 degrees C). Austin has already had three more days over 100 than an average year's total. I'm reminded of June around 10 years ago when the weather was similar. We baked in June and then had relatively comfortable temps in July and August.

The grass in my yard isn't just dry and yellow. It crunches like twigs when I walk across it. I'm not watering regularly because it just goes dormant and I don't want to waste water. To keep a yard green means watering just about every other day and I don't want to waste the water. With no significant rain in months, Lake Travis is dropping steadily. The last thing we need is the lake back to where it was 18 months ago - 40 feet below full with islands and peninsulas all over the place.

What is ironic is that June 21, the first official day of summer, isn't even here yet and we've already surpassed the average number of 100 degree days for a year!

Lending Market Update − June 2008

Sam Chapman — Thu, 19 Jun 2008 15:37:00 GMT

Guest post by Steven Bray of Texas Lone Star Lending:

Economic Summary

The Texas economy continued to soften in May, although economic growth in Texas still is stronger than in the rest of the country. The labor market remains relatively tight with reports of difficulty hiring for skill positions. Construction and real estate activity continue to weaken. New and existing home sales fell, but median prices remained flat. Inflation expectations have become the big economic concern, fueled by run-ups in gasoline and food prices. While the core rate of inflation remains relatively contained, the headline number is high, and that has dampened consumer confidence.

Housing

Housing activity continued to decline last month. New and existing home sales fell further, and some builders are abandoning planned developments. Inventories are creeping up, but they remain in the 6-month range, which is helping to hold median prices steady. Texas continued to enjoy a relatively low foreclosure rate. Commercial construction activity was robust, but reports are that few new projects are being started because of tight credit conditions. Demand for apartments was strong, but there is concern about oversupply in Houston and Austin. Demand for other commercial property types continued to weaken.

Lending

Mortgage insurance (MI) companies continue to call the shots in the credit market. They have further restricted coverage for loans they consider to have greater risk, especially in areas they define as distressed or declining. Fannie and Freddie rolled back their "declining market" policies, but the MI companies have not. (Fortunately, areas of Texas have not been listed as declining markets at this time.) Condos and investment properties, as well as interest-only and high-leverage loans (regardless of property type) are feeling the pressure.

Rates have been under pressure the last month, sparked by inflation concerns. 30-year fixed rates have risen by more than 0.5%, and the 10-year treasury is seeing its highest yield since the beginning of the year. The consensus is that the Federal Reserve is done easing rates. With elevated headline inflation, there will be pressure on the Fed to tighten rates this year, but the expected slow economic growth likely will allow them to stay on hold. Nonetheless, those looking for a jump start for housing from low interest rates may be disappointed.

Lenders restricting use of 2nd liens

Some lenders have begun to restrict the maximum combined loan-to-value (CLTV) for property purchases to 95%. One lender also is restricting the first lien loan-to-value (LTV) to 80% for combos (simultaneous 1st and 2nd liens). These changes are not universal at this point, so shop around if your customer wants a combo to avoid mortgage insurance.

Freddie Mac more restrictive

Freddie Mac has lowered LTVs on a range of loan programs. The maximum LTV for 2-unit properties under the Home Possible program is lowered 95% and on cash-out investment properties is lowered to 85%. As of Aug 8th, Freddie will not approve mortgages for persons who have financed more than 4 properties (down from 10). These changes do not affect Fannie Mae loan programs at this time.

Fannie Mae releases new underwriting engine

One positive development is the new underwriting engine (DU) from Fannie Mae, which redefines risk factors. Being self-employed is no longer considered an added risk, which is good news for self-employed applicants who can document income. The updated engine also has clamped down on authorized user credit accounts. (This occurred when someone allowed another individual, relative or not, to be an "authorized user" for the purpose of boosting the user's credit score.) These accounts no longer will be used to determine an applicant's credit potential. On the down side, condos are now considered a risk.

Reduced-doc getting tougher

Lenders that still offer reduced-doc loans are getting more restrictive. Expect lenders to require applicants to demonstrate 6 months of reserves to qualify. In addition, minimum FICO scores are up (680 now the minimum) and LTVs are down (75% the generally accepted maximum). Three and four-unit properties no longer are eligible, and 2-unit properties only qualify if the applicant is willing to verify assets.

The information in this report supplemented by reports from the Federal Reserve Bank of Dallas, Fannie Mae, and the Texas A&M Real Estate Center.

	Stacy Bray º Mortgage Broker º License #4705
	812 Sunfish º Lakeway, TX º 78734
	Main: (512) 261-1542 º Direct: (512) 468-0201
	Email: stacy@lonestarlending.com
	Web: www.LoneStarLending.com

Questions about Austin homes? Contact Sam Chapman at 512-293-2422.

Lake Travis Helicopter Tour

Sam Chapman — Sun, 15 Jun 2008 15:08:00 GMT

At the grand opening of the Reserve at Lake Travis yesterday, I got to take a short helicopter tour. After taking off, we went up to around 1000 feet and followed Lake Travis to the east. Banking over the uxclusive subdivision of Angel Bay, we turned back to the north and flew out over Lago Vista. Circling around, we landed back at the Reserve. Following this post is a short video of the trip. To see pictures from yesterday, visit my Lake Travis photo album. Here are a couple of samples:

View Video
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Duration: 0:47

Reserve at Lake Travis Grand Opening

Sam Chapman — Sun, 15 Jun 2008 14:48:00 GMT

The grand opening for the Reserve at Lake Travis lived up to it’s billing yesterday. I did not stay for the evening activities, but the day stuff was great. I went with fellow agent Claudine Thorne and we had a great time. Arriving at noon, we were the first guests at the Reserve. After looking around a little bit, we had lunch and it was delicious.

As we sat under the shaded pavilion, Claudine made the comment that it felt like she was on vacation somewhere. Lake Travis was beautiful. With clouds drifting by, the color of the Lake Travis water was a dark blue in the shadow of a cloud. In direct sunlight, it was blue-green.

We walked to the staging area for the helicopter tour, signed the necessary releases and were second on the list to go up. The helicopter ride was excellent. I sat in the front with the pilot so I could take advantage of the view for my camera. The videos and photos tell the story better than I can. The perspective from being 500-1000 feet up was amazing compared to being at lake level or even on a hill.

After exiting the helicopter, Claudine and I walked down a gentle slope to the lake and relaxed getting 15 minute massages. Like I said, the developer, Hal Jones, pulled out all the stops for this grand opening. After the massages it was time for a little more food and a beverage.

Claudine and I hung out talking with people who had put reservations on home sites and just stared through the oak trees at boats cruising Lake Travis. We walked down to the tent in which the developer had agents talking to people and showing the property on maps. We picked up some marketing material and called it quits.

Our visit to the grand opening of the Reserve at Lake Travis was really a lot nicer than what I had expected. It felt more like a vacation at a resort than a subdivision on a lake in Central Texas. I’m sure that is what Hal Jones had in mind.

Update on June 24, 2008: I had a conversation yesterday morning with Mark Sprague of Residential Strategies. This is a business that studies real estate markets very closely and provides updates and consulting services for builders, lenders, developers and others. Mark told me that he was surprised at how well the Reserve is doing so early into releasing lots. He said that he flies over the area every 90 or so days and is amazed to see some of the new homes being built. Mark said that he thinks Lake Travis is turning into an area similar to other establish second home markets for people with lots of money. The article in the Statesman a couple of weeks ago supports that in terms of prices. Actual main body frontage on Lake Travis is extremely expensive. If someone wants to build a nice, new home on the water, they need to expect to pay around $1.8 million and up - and this is for the inexpensive home sites. For the prime sites in the Reserve, buyers should expect to pay around $2 million or more just for the land.

See more Lake Travis photos from our trip to the Reserve.

The Reserve at Lake Travis

Sam Chapman — Thu, 12 Jun 2008 17:24:00 GMT

The Reserve at Lake Travis is a high-end equestrian community west of Austin around an hour. Situated on Lake Travis, the development will have a number of waterfront lots. Sitting on 300 acres, lot sizes will be generous at one to five acres. In addition to an equestrian center and trails, The Reserve at Lake Travis will have the Cypress Club for residents, a waterfront restaurant and a 192 slip marina. This is going to be a pretty pricey community with home sites ranging from around $300,000 to several million for the prime waterfront sites.

One thing for people looking at waterfront sites in this community need to know is that the most expensive sites will get a little expensive to build on. The reason is that many are below the Lake Travis floodplain. So anyone building will need to bring in a lot of fill material to raise the land well enough above the floodplain to build a home and install a septic septic system that will be operational even during significant flood events.

The developer is going all out in terms of attracting attention to The Reserve. The grand opening is going to be quite the bash, offering things like food and drinks, jeep and helicopter tours, water activities, massages, live music, island dancers and more. The grand opening is right around the corner, running from noon to 11:00 PM this Saturday, June 14th.

Questions about Lake Travis waterfront homes or other Austin area real estate? Call Sam Chapman at 512-293-2422.

Things are SLOW Out There

Sam Chapman — Tue, 10 Jun 2008 15:00:00 GMT

Here are the latest stats from Alamo Title Co.:

The number of active listings are up 22.80% over last year.

The number of new listings are down this week 5.49% (compared to the same week last year). Pendings and solds are also down.

How are we doing on sales prices? To get the full picture, check out the our web site for latest sold data.

June 1 - June 7, 2008

(compared to the same week in 2007)

New listings down this week 5.49%

Pendings down 76.37%

Solds down 13.18%

As for Average Prices: June 1 - June 8, 2008

(compared to the same week in 2007)

The "New Listings" average list price decreased 0.32% to $320,436. In 2007 the new listing average list price was $321,457.

Sold average sales prices increased 1.72% to $260,910. In 2007 it was $256,498 for the same week.

Check it out at

http://www.alamotitle-austin.com/mls_statistics.php

May 2008

Units for Sale: (compared to May 2007)

New listings were up 26.29%.

Pendings were down 67.48%.

Solds decreased by 27.78%.

As for Average Prices:

The "New Listings" average list price is down 6.91% to 314,069. In May 2007 the average list price was $337,378.

Sam's comments - buyers are sitting on the sidelines. Some are sitting because they have homes in other areas that have not yet sold. Others are sitting hoping that prices will go down. Others simply can't get loans. I don't like seeing the average price of new listings up when sales are down. Sellers seem to be stuck back in early 2007 when prices were still rising because home sales was still strong.

If you need to sell now, price the house just below market value. If you need to buy, go ahead and buy. I don't think we will see a substantial enough price decrease to justify waiting. Interest rates are low and we have no idea how long they will stay that way. So sellers, get realistic with your price and buyers - buy.

Questions? Call Sam at 512-293-2422 or contact Sam by email.

Real Estate Websites

Sam Chapman — Sat, 07 Jun 2008 19:02:00 GMT

When someone does a Google search for Austin real estate or any other city using a similar term, websites are returned. At the very top highlighted with a very dim color and on the right side are what are called pay-per-click or PPC. Owners of these sites bid to get ranked at the top. They set a daily or monthly budget and when that is exhausted, the site no longer appears on the first page of the websites that are returned. These sites may be great and they may be sites that don't give you what you want.

Following the PPC sites are real estate websites that rank high in a search for other reasons. They are usually content rich, which is a great thing for people actually looking for real estate and related information. The main thing people using the internet to look for real estate want is a good property search. The one I have seems to be well liked. Check out my Search Austin Homes page for yourself.

For people from outside the area, especially for those who are not even in Texas, having a lot of information about things families care about is important. This generally isn't what people are looking for on a real estate website, but if they find it and it is useful, they will come back to the site over and over. What I am referring to is information on area schools, recreation and information on specific communities and subdivisions.

Contact Sam at 512-293-2422 if you have any questions about Austin real estate.