Spyglass Realty 1st Quarter Newsletter

As we end the first quarter of the year, national speculation shows that sales are down in some areas of the country. This could be due to the onslaught of winter storms during the first quarter of the year, experts say. This has caused the fed to re-consider their tapering of QE3, also know as quantitative easement.

Sales are expected to grow through the summer as new developments come online. Outside of Austin, most of the new development neighborhoods are being erected in Leander, Cedar Park, Georgetown and many parts of Hays county.

At this time, the February numbers, which were just released, show median home prices up 10% over one year before, standing at $225,000 in January. The average home price was up as well, 11% to $288,650.

Area 7, which encompasses Barton Hills and Zilker, shows the median home price up a huge 16.8% year over year, landing at $550,000. The “average price” is down (presumably because the data is showing less properties and the homes that sold were down). Both the average and the median price per square foot show a decrease in price. The data also shows that in February 2013 of last year there were 8 properties. A very small sampling of data shows there were 20 in the same time span of 2014. So are values down in area 7? There is also the “pocket listing” problem. Many agents are electing to try to sell properties off market for various reasons. This is fine, but if it is not put into MLS, then your neighbors will not realize the gain, through appraisal, when they list the home.

For example, if the comparable properties only sold for $640,000 and you believe that someone will buy your home for $700,000, you can list your home for $700,000 and find a ready, willing and able buyer who will pay the asking price, but if this buyer is getting a loan, and the appraisal comes out at $640,000, the bank will only lend to that amount. Meaning that the only way to circumvent this is to get a cash buyer or to negotiate the financing contingency out of the contract. We’ve done this a few times on the latter, but only if there are several offers, and the winning buyer is able to bring in cash over and above the down payment. Ideally, Austin real estate agents should put pocket listings into MLS after they close in order for subsequent sales to appreciate properly.

As the summer season approaches, be prepared to see multiple offers throughout on reasonably priced properties. Also be prepared to see interest rates rise as we enter the fourth quarter of the year and the Feds QE3 tappers.

Coming Soon in 78704 – The Bridges at the Park – 210 Lee Barton Dr # 513, Austin, TX 78704

Very slick and modern design, located just south of the Lamar bridge and at top of 78704, near Butler Park and Auditorium Shores.  This complex truly offers the best of what 78704 and downtown have to offer.  Residents here can cross into downtown through the Lamar pedestrian bridge.  It’s also a short walk to many local restaurants on Lamar and Barton Springs Road.

This unit is a 2 bedroom, 2 bath facing West.  Its on the 5th floor and features high end, stainless steel appliances, hardwood floors and granite countertops.  Please send an email to sales@spyglassrealty.com to be notified of the first showing opportunity.   $515,786 for 1369 sq ft.

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Economic Outlook: Texas and Austin 2014

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The population boom in Texas and Austin is obviously the key driving factor for this economy. Projections are that by 2060 there will be 80% more Texans in our great state and by 2070 the state’s population will double.

In the short term, predictions forecast: Austin will have a population of 2,317,732 by 2020, 3,077,732 by 2030, will gain 30,000 new jobs in 2014, and the unemployment rate will drop somewhere between 4.5 and 4.8%

A huge impact on Austin’s future economy will be the new medical school. Millions of square feet are being built right now all for the biotech and medical industries.

About 4,500 new apartments are sprouting up in the urban core. Last year 5,000 new units were added. In the region (which includes outlying areas of San Marcos, Kyle, Buda, etc), there are 17,000 new units being built.

Are we overbuilding? In the short term, yes, but in the long term, no. As these downtown and urban core (78704 included) units are completed, there will be competition amongst them as they all come online at the same time. Since we expect 30,000 new jobs, however, that should only be a temporary problem.

The resale market is expected to sell more units in 2014 and that this number will be between 10,000 and 11,000 units (there were about 9,500 in 2013).

A lot of the growth that we will see, in terms of new homes, will be in the outlying areas. It’s estimated that Leander alone has between 12,000 and 17,000 lots that will begin to hit the market this year.

How did 78704 fare?

This zip code has had some of the biggest gains in appreciation of any in Austin.

 

Economic Outlook: The Nation 2014

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2013 ended with substantial growth compared to the year before. The unemployment rate has been slowly trickling down over the past couple of years and we ended 2013 with a rate of 7%, nationally. Over the last recession it is estimated that we lost 9 million jobs and we have recovered just over 7 million jobs since then so we still have a ways to go.

The Fed began quantitative easement, or QE3, which is the practice of buying mortgage backed securities in order to encourage banks to release that money into the economy. They were buying about 85 billion in mortgage backed securities and treasury notes each month. Their plan was to “taper” the buying of these once the unemployment rate hit 7%. The mere announcement of tapering caused the markets to rally and the interest rates to rise. However, an interesting thing happened once the actual tapering began — almost nothing. It is expected that the further tapering of QE3 will have a much less affect on mortgage rates than originally expected.

The economy found that household incomes did not increase that much but that families began paying down debt and it’s estimated that family wealth has increased to a level that has not been seen in 20 years, thus making household balance sheets look very good.

Consumer spending is up, and that makes up two thirds of the US economy. Corporate profits are up 30% more than just a few years ago and business spending is back to the level of pre-recession. Inflation is now at 1.5 to 2.2%.

Nationally, the housing prices have appreciated to around 12%. Remember, Texas did not see a significant drop in value, other markets did.

2013 Austin Real Estate Year in Review

Austin’s real estate market saw a record breaking year in 2013.  We saw the most units sold in recorded history in July with 3,135 units.  This was the highest number of units since June of 2006.  We also saw the lowest interest rates in 2013, with 30 year rates nearing 3.35% in May.  At the time of this article, interest rates are up to 4.5%.

It was an unseasonably busy 4th quarter this year.  Inventory remained low as buyers searched for homes, and with the government shutdown, the year ended with some ups and downs.  Some consumers temporarily slowed down the buying of new homes until the new deal was struck and then sales picked up once again.

Still, the lack of inventory and low numbers showed a smaller than normal (for 2013) appreciation.  The median list price in Barton Hills/Zilker was up 5.4% (to $411,000) from November 2012 to November 2013, and the average for that same period was up 7.9% (to $473,783).  Keep in mind that these numbers include all the areas west of Lamar.  In areas east of Lamar, which has a much larger reporting area, the median home price was up 20.3% (to $350,000) and the average was up 17.4% (to $398,861).

2014 promises to be a good year in real estate, mostly because of Austin’s continued economic growth and role as the “darling” city of the US.  The perfect storm that allowed the sales we saw in 2013, however, is gone so it would stand to reason that there would be some slow down in our real estate market compared to this last year.  The Federal Reserve has been saying that they would begin tapering the buying of mortgage backed securities once the unemployment rate hits 7% and that number was reached in December.  Just the announcement of this news made interest rates rise, and it’s expected that the interest rate will hit 5% sometime in the first quarter of 2014.