Spyglass Realty November 2014 Newsletter

I hope everyone had a great holiday yesterday and are continuing to take time out this weekend to be with loved ones. I know this is a little late in the month, but thought this could provide some reading material for the long holiday weekend.

So what’s the synopsis of the 2014 Austin real estate report? Its good. If you’ve been receiving my newsletter for a few months now, you’ve probably heard me say this a few times. Mid year, what we referred to as the “drunken sailer approach” to buying property, abruptly came to an end. Just to give an example of what happened before then was this: On any given street, property A came on the market and sold at a high price, sometimes $10,000 or more above list price. Multiple offers ensued and, given the right circumstances, buyers agreed to bring money to close over and above what the property appraised for (and bring additional money over and above their initial down payment). Property B (which is a close match to property A) sees the sales price and lists $10,000 above what property A sold for. And with buyers lining up to purchase property, this vicious cycle continued. Well, around June we started to see these buyers “sober” up.

Why did this happen? Not exactly sure, but I would say it’s a combination of things. The national real estate market started slipping and more rental units became available which gave buyers a viable alternative to buying. And there were probably some fears of what would happen after the November elections, in some cases. Whatever the cause, I don’t think it was a bad thing. Days on market for prime properties (desirable areas, in good condition and presented well to the marketplace) went from selling in days to selling in weeks. Inventory increased from two months, with some areas having 5 to 6 months worth of inventory, which is generally considered to be a “healthy market”.

So that brings us to the next question: what happens next? Well, the headlines below would indicate that things will continue and have continued since 2011. But the truth is (in my opinion) that we had a slight lull in 2014. And I believe that things will pick up in 2015, albeit at slightly slower pace. Property values in November are higher than ever but that is for the median home value. The struggles we’re seeing are in the over $500,000 category (And I say “struggle” using it comparatively to the months preceding June 2014).

What I mean by this (and again, this is just one real estate expert’s opinion), is that instead of 10-12% appreciation, we will probably see an appreciation level of closer to 7-10%.

So what can you do to take advantage of this market and when should you do it? If you are a buyer, think about getting into contract before March. That’s when the largest amount of pending listings have been seen in the past 6 years. And have a really thought out plan for submitting an offer on properties that are in multiple offer situations. If you are working with a Spyglass agent, we have a 7 point plan designed to combat the variables involved in the Texas purchase contract, all while still allowing you to conduct your due diligence. It’s super aggressive as far as terms go, and that allows us to work the sellers on price. We ask up front that we be told what we need to bring to make the deal work. This method is really productive and it’s not for every situation, but if you find that perfect home, then you are going to want to hear how we control most of the variables that sellers consider when in a multiple offer situation. If you are buying a property in Austin, you are going to want to have this tool in your home buying arsenal.

If you are a seller, try to get your property on the market either the second week of January or the third week of February through the end of March. The third week of February through the end of March are for obvious reasons mentioned above. Why we recommend the second week of January is a long story. Call or email for further explanation. Sellers, you are going to want to be tactful when selecting price this coming year. There is a real sweet spot for pricing your property that we have found produces multiple offers, combined with our home selling techniques. This is especially true in the $500,000 and up price range, which is where we have seen the greatest amount of inventory increases in the past 6 months.

From our lender partner Max Leaman at Prime Lending:

We expect mortgage interest rates to remain low yet with a slight upward (rising) bias. Reasons here are that the U.S domestic economy is picking up steam. Employment gains with upward movement on wages increasing is a key factor. Latest read on GDP is at 5.0% and showing signs of consumers spending once again. The fall in oil prices has saved American roughly 700 million a day, much of which is going back into the economy. Headwinds are China and Europe which are struggling and will help to keep key interest rates here at home low.

Here are the most recent attention grabbing headlines:

Austin Real Estate Market Statistics: November 2014.

Austin Median Home Price Sets a record for November. Please see below article for what I believe to be a better reporting of the current situation.

Everything’s Up in Austin: Home Prices, Sales and Listings. This paints a very accurate picture of what I’ve been saying for months, which is that we’re doing well and we’ve stabilized some from the previous 24 months.

Where Texas Home Values are Rising and Falling. Interactive map showing the areas of Austin that are falling and (more recently) rising in Texas.

Spyglass Realty November Newsletter

Spyglass Realty November Newsletter - Picture of people on bikes!

Welcome to the Spyglass Realty November Newsletter. The latest numbers from the Austin Board of Realtors are out for October. The median sold price in Austin is $237,500, up 10.6% from last year at this time. The average days on market were up from last year, increasing from 46 to 47 days on market. I was certainly expecting a larger number there based on the slowdown we’ve been seeing and the days on market that are higher in the areas where the price ranges are above $400,000 (mainly central Austin). So what this tells me is that even in this last quarter, the under $400,000 price is still very appealing.

In our office we’re seeing an uptick in online registration for people that are looking to buy in the next 120 days. I see this as a sign that the market will pick up in January. What’s the take-away? For buyers, its that the last 3 months are absolutely the best time to buy property and if you’re looking to sell a home, its time to start getting ready because we normally see a pop occur the second week in January.

Mortgage Rates

30 year rates dropped below 4% for the first time since last summer as worrisome economic news affected US markets. Currently, Freddie Mac reports the following figures: 30 year fixed rate 3.97%, 15 year rate 3.18%, 5/1 adjustable rate 2.92%

So what’s the new year going to look like? The economic indicators in Austin haven’t shown any signs of slowing down and the fact that the usual uptick in website activity is picking up for this time of year tells me that things are going to start ramping up again in January. I don’t think that we are going to see quite as much appreciation in 2015 as we did in 2013 and 2014 as buyers are starting to use caution when approaching overpriced listings.

I’d encourage you to read Jan’s reporting at Austin Economic Forecast from the Austin Business Journal below. It paints a really nice picture for Austin, especially compared to the rest of the country. I think this is why we saw what is normally a fourth quarter slowdown, occur in the middle of the third quarter. The rest of the country isn’t doing nearly as well as we are and its hard to realize that if you are caught up in what the local economy is doing.

December

A buyer’s delight! Oh the joy of the holidays….I know you are busy and so is everyone else. That’s precisely why, if you are looking for housing, this is the perfect time to do so. The demand is down and its a great time to catch sellers off-guard. Some of the best deals I have ever seen occur have been in the month of December.

The October Real Estate Stats are out: http://www.spyglassrealty.com/austin-real-estate-market-statistics-october-2014/

In The Headlines –

Austin’s Economic Outlook is still the brightest in the nation – Reports the Austin Business Journal – http://www.bizjournals.com/austin/news/2014/09/25/austin-still-ranks-among-fast-growing-u-s-cities.html

Formula One’s Economic Impact on Austin – http://www.myfoxaustin.com/story/27054527/formula-one-race-could-add-fuel-to-austin-economy

Image, courtesy of rmommaerts

Google Fiber in Austin

fiber optics

Last night I went to my quarterly neighborhood association meeting and heard a Google Fiber rep give us the status of Google Fiber in Austin. Southwest Austin and Southeast Austin have been chosen, for logistic purposes only, to become the first areas in Austin to receive Google Fiber.

The impact of Google Fiber in Austin is going to be profound. They will bring internet speeds up to 100 GB per second. This speed is faster than the transition from dial-up to broadband. Mark Strama was the representative for Google and he said that fiber optic cable is already all over the nation that allows those speeds to occur from city to city; however, when the cables go into neighborhoods, they split off into slower connections. He said it’s like traveling at high speeds in a car from city to city, but when you enter a neighborhood, the speed slows down. Once the network is complete, customers will experience that speed all the way to their homes.

When will this occur? He was hesitant to speak to this because they don’t want to let anyone down, and as they learned in Kansas City, delays are inevitable. He did say that their sign ups for Southwest Austin will occur in December and their goal (and he stresses the word goal) is to have service initiated in about 2 months from sign up. So that means that Barton Hills, Zilker and other Southwest neighborhoods could experience the amazement of Google Fiber by the end of February. Incredibly exciting.

I asked him to explain the potential impact on Austin’s economy, having Google Fiber here. He said that it’s not known how much impact it could truly have. In Kansas City, the first neighborhoods that have it have a few homes that are hosting entrepreneurial “hubs” where amazing things are happening with start ups in the actual homes. I’ve already heard that some companies are eyeing Austin just for the potential of Fiber Optic high speed and because of our stature as a tech city already, it can only be a further catalyst for positive economic impact.

End of Summer Newsletter

End of Summer Newsletter

Well, the July stats are out (see link below) from the Board of Realtors and its a mixed bag all across the board. Overall, through the entire MLS, the median home price is up, year over year. This is because the under $300,000 price range continues to flourish. Its the most sought after price range in the city.

 

If you look at the sales numbers throughout Austin, central Austin shows a substantial decrease in sales over last July. Some areas, including Westlake, the Southwest Parkway corridor and 78704 show an actual decrease in property values. Before you look too deep into these numbers, know that much of this is due to a small sampling of data. Area 6 is the part of 78704 east of Lamar. This is an interesting area because there is SO much of a difference in price ranges between the northern part and southern part, that if more properties sold in the southern part, the data can be skewed. So much so, that I think this should be divided into two new MLS sections that I would label 6N and 6S, with the dividing  border being Oltorf. The average sold price in this section decreased by .5% for properties that were in the same square footage range. I think if we narrowed this down, you would see that many more properties sold in the southern part of area 6 than the northern part and the northern part, which led to a data report that is hard to interpret.

 

Looking at area 7 (the part of 78704 west of Lamar) you see a substantial decrease in value. The median home price shows to be down 22.8% over July of 2013. Now in this section, not only is the data sampling small (only 11 homes sold in July of 2014) but the size range of the homes is dramatically different. In 2013 the average square footage was 1581. In 2014 its 1062, a staggering 32% reduction in the size of the homes sold. The average price per square foot is actually up 11% from $323 in 2013 to $359 a foot in 2014.

 

Still, its a mixed bag of information. As you will see in the below article link, July showed to be the first month of increase inventory in years. So people keep asking “whats going on here?” The amount of people moving to Austin does not seem to decrease and the headlines for companies moving to Austin and hiring haven’t slowed down. My theory is that people moving to Austin have heard about the crazy market we’ve had here in the 24 months preceding June and they are being very cautious as to how they enter this market, if at all. Many would-be buyers are electing to rent instead of buy.

 

You see in the past 24 months, many sellers would look at a comparative market analysis and decide to price their property some 3% to 5%, and in some cases even 10% above the highest comparable home that sold. And shockingly, it did sell. Buyers were willing to make up the difference between appraised price and contract price. With this recent slowdown, such tactics aren’t going to be successful. Can you sell your home in 2014? Of course, but you have to be reasonable.

 

If you are buying or were in the process of buying, this gives you a unique opportunity (compared to the previous 24 months) to enter into a market without the insane competition that we saw in 2013 or the early half of 2014. I believe that we have seen most (if not all) of the appreciation we are going to see in 2014 already.

 

I recently evaluated some properties in 78704. A property there sold for $449,000 in March in just 6 days. There are currently two actives on the same exact street and they are almost identical models. They have 51 and 73 days on the market, respectively. They are priced between $440,000 and $450,000 and sitting. But they were originally priced in the 470,000 range. I personally believe that had these sellers priced their homes in the range between $445,000 and $449,000, they would have sold within the first two weeks at, or close to, list price. But now they have a stale listing, and a savvy buyer will take advantage of this to get a price some $10,000 below what it should have been priced at.

 

 

The take-away: if you’re a buyer, this is good time to get a decent deal compared to the 24 months preceding June. If you are seller, you can still sell, you just have to be reasonable with your list price. Don’t let greed lure you into selling your home lower than you should ultimately be getting. The DYI pricing program is over. Now more than ever do you need a qualified and service oriented agent. And, if you are reading this, well guess what? You’re on the right track :)

 

We have some great articles below.

 

Texas inventory is up for the first time in years.  – http://austin.culturemap.com/news/real-estate/08-05-14-texas-austin-housing-market-inventory-up/

 

If you have lived in Austin for a while, you probably have heard people at some point saying that Austin is losing its identity with its growth. Well, thats song has been played for nearly 30 years now. Check out this article showing that people have been worrying about that since 1983. 30 years later and we still love it! http://www.texasmonthly.com/daily-post/1983-new-york-times-profile-austin-showcases-fact-austinites-have-always-complained-about

 

Alamo Drafthouse South Lamar and the Highball are finally reopening, and what a reopening it is! http://io9.com/this-is-the-greatest-karaoke-bar-in-the-world-the-end-1620794748

 

 

And, finally, here are the Austin real estate statics for July, 2014.

 

 

Real Estate Newsletter September 2014

Summer’s over and Fall is here. School is back in session and this red hot real estate market we have enjoyed the last couple of years has officially cooled into what most would call a “normal” market.

 

The Board of Realtors official numbers are out and, for the second straight month, sales are down while median home price is up.  Once again, this is normal for this time of year.  Here’s the link to the Market Stats page on our site.

 

So what do great agents tell their audience at this time of the year?

 

If you are a buyer, carpe diem. This is your time to take advantage of the slowdown.  If this market truly is normal, there will be a big pop in January.  But what’s better is that there are a group of sellers out there that still have their home on the market. Reality is hitting them smack dab in the face.  They listed too high because they weren’t informed from their agent that the slowdown occurred or they just outright ignored their agent’s advice and now they are suffering the consequences.  These properties are ALL over MLS, especially in the $500K and up price range.

 

If you are a seller, hurry up and put your home on the market soon or wait until January.  And please be reasonable with your property.  This is NOT a bad market, any way you look at it, but buyers have come to their senses and they aren’t going to put up with any shenanigans.  Inventory and days on market are up so price accordingly and present your property to the market in the best possible light.  That’s where we come in.  We offer complimentary staging services from our experienced and double certified in-house staging experts.

 

So what’s going on in ATX these days?

 

Companies are still moving here:

 

Sanyo moving headquarters to Austin

 

Rocket company eyes Austin for headquarters, test facility

 

As a result, our commercial space is in high demand: unprecedented demand in Austin commercial space 

 

And of course, ACL is right around the corner, bringing its own set of demands.

Spyglass Realty 2nd Quarter Austin Real Estate Newsletter

Well, the July market stats are out (see link below) from the board of realtors and its a mixed bag all across the board. Overall, through the entire MLS, the median home price is up, year over year. This is because the under $300,000 price range continues to flourish. Its the most sought after price range in the city.

If you look at the sales numbers throughout Austin, central Austin shows a substantial decrease in sales over last July. Some areas, including Westlake, the Southwest Parkway corridor and 78704 show an actual decrease in property values. Before you look too deep into these numbers, know that much of this is due to a small sampling of data. Area 6 is the part of 78704 east of Lamar. This is an interesting area because there is SO much of a difference in price ranges between the northern part and southern part, that if more properties sold in the southern part, the data can be skewed. So much so, that I think this should be divided into two new MLS sections that I would label 6N and 6S, with the dividing boarder being Oltorf. The average sold price in this section decreased by .5% for properties that were in the same square footage range. I think if we narrowed this down, you would see that many more properties sold in the southern part of area 6 than the northern part and the norther part, which led to a data report that is hard to interpret.

Looking at area 7 (the part of 78704 west of Lamar) you see a substantial decrease in value. The median home price shows to be down 22.8% over July of 2013. Now in this section, not only is the data sampling small (only 11 homes sold in July of 2014) but the size range of the homes is dramatically different. In 2013 the average square footage was 1581. In 2014 its 1062, a staggering 32% reduction in the size of the homes sold. The average price per square foot is actually up 11% from $323 in 2013 to $359 a foot in 2014.

Still, its a mixed bag of information. As you will see in the below article link, July showed to be the first month of increase inventory in years. So people keep asking “whats going on here?” The amount of people moving to Austin does not seem to decrease and the headlines for companies moving to Austin and hiring hasn’t slowed down. My theory is that people moving to Austin have heard about the crazy market we’ve had here in the 24 months preceding June and they are being very cautious as to how they enter this market, if at all. Many would-be buyers are electing to rent instead of buy.

You see in the past 24 months, many sellers would look at a comparative market analysis and decide to price their property some 3 to 5, and in some cases even 10 percent above the highest comparable home that sold. And shockingly, it did sell. Buyers were willing to make up the difference between appraised price and contract price. Well with this recent slowdown, such tactics aren’t going to be successful. Can you sell your home in 2014? Of course, but you have to be reasonable.

If you are buying or were in the process of buying, this gives you a unique opportunity (compared to the previous 24 months) to enter into a market without the insane competition that we saw in 2013 or the early half of 2014. I believe that we have seen most (if not all) of the appreciation we are going to see in 2014 already.

I recently evaluated some properties in 78704. A property there sold for $449,000 in March in just 6 days. There are currently two actives on the same exact street and they are almost identical models. They have 51 and 73 days on the market, respectively. They are priced between $440,000 and $450,000 and sitting. But they were originally priced in the 470,000 range. I personally believe that had these sellers priced their homes in the range between $445,000 and $449,000, they would have sold within the first two weeks at, or close to, list price. But now they have a stale listing, and a savvy buyer will take advantage of this to get a price some $10,000 below what it should have been priced at.

I can tell you that I have lost out on a couple of listings recently to other agents that agreed to price listing at rates that were way too high. When I see them hit MLS, I breath a sigh of relief that I did not get that listing. Slow and steady wins the race, folks.

The take-away: if you’re a buyer, this is good time to get a decent deal compared to the 24 months preceding June. If you are seller, you can still sell, you just have to be reasonable with your list price. Don’t let greed lure you into selling your home lower than you should ultimately be getting. The DYI pricing program is over. Now more than ever do you need a qualified and service oriented agent. And, if you are reading this, well guess what? You’re on the right track :)

If you have enjoyed this article and want to keep tabs on whats going on in Austin, like our Facebook Page by clicking that link.

We have some great articles below.

Texas inventory is up for the first time in years. – Check it out.

If you have lived in Austin for a while, you probably have heard people at some point saying that Austin is losing its identity with its growth. Well, thats song has been played for nearly 30 years now. Check out this article showing that people have been worrying about that since 1983. 30 years later and we still love it! Story here.

Alamo Drafthouse South Lamar and the Highball are finally reopening, and what a reopening it is! The Greatest Karaoke Bar In The World. The End.

And, finally, here are the Austin real estate stats for July, 2014.

What happens if my Texas property does not meet appraisal?

I recently worked with a home buyer that asked this question on a property he was buying, worried that it would not appraise.

It impacts everything. The buyer has a complete out if that happens. There are four ways that that can go down:

  1. The seller drops the price to meet appraisal price
  2. The buyer brings in over and above whats needed to meet value
  3. The Seller and the buyer meet in the middle
  4. The contract is canceled and you go your separate ways

But no matter what way it goes, the buyer’s earnest money is protected. A couple of years ago I priced a downtown condo at $299,000 and about we got a full priced offer on it. Well, about a week after the property went under contract a similar unit closed at $295,000. The appraiser gave us a value of $296,000 and my seller agreed to drop the price to $296,000. But the buyer was getting cold feet and, in an act of pure lunacy, submitted through his agent that he would move forward with the property if we lowered the price to $275,000. Seller’s can lower the price to appraise value, but buyers are NOT obligated to purchase the property if they don’t want to. Well of course we sent him a rejection and listed and sold the home within days at $296,000.

Many consumers (and some agents) believe that the date on the third party financing addendum is the date that the buyer needs to have his appraisal complete and back in order to get his earnest money refunded.  This is simply not true.  In the example above, appraisal came in 4 days before we were set to close and days after the third party financing period expired.

Appraisals in Austin can be especially difficult in hot areas where few properties sell and there is a lack of data for comparable properties with about the same square footage. You see, appraisers have to “bracket” the property with comps that have square footage of 200 above to 200 below.

I have been very lucky (and skillful to some degree) in my listings because if I have any doubt there will be an appraisal problem, I change the access instructions to say “appointment with agent” and then put on MLS that there is no lockbox, even though there might be. The point of this is to make the appraiser go through me to access the property, that way I can go over pricing and what comps I use.

I’ve been doing this so long that every now and then I get an appraiser that say “Ryan I’m doing an appraisal on one of your listings, whatcha got?”. And now a days appraisers are required in many instances to reach out to listing agents for the past comparable properties and ask about the house. Some listing agents see this as a nuisance to have call an appraiser about a property that is already sold. I see this as an opportunity to build good will with an appraiser that could very well be the appraiser on my next listing.

No, a personal relationship is not supposed to effect the outcome of an appraisal. But, it sometimes does, especially if its right on that line of meeting value or not. This is a relationship business and it pays to build a relationship with each and every person you meet in this industry.

Feel free to call me at 512 965 1480 if you have questions about this.  Or email ryan@spyglassrealty.com.

Brewed in the Heart of Texas

CentralTexasBeer01

It’s an old friend, a new love, a daring adventure, a celebration of special events, a bonding moment, a refresher on a hot day or a hearty feast on a cold one. Beer is one of the most popularly accepted alcoholic beverages and is the third most fashionable drink after water and tea. They come in different types and can be categorized according to the color, ingredients and alcohol content. These altogether are known as beer styles, which continues to vary due to the weather and climate of their brewery location. This guide highlights the darlings of the local Central Texas beer world. An industry in a category of it’s own, reflecting the
style, culture, climate and eccentric personality of Central Texas.

Click here to download the guide.

Why You Shouldn’t Sell Off Market

As you know, this market is red hot. For most sellers, the question remains, “What separates a regular agent from one who stands out and what can a stand-out agent do to increase my odds for a higher price in a shorter amount of time?”

In our quest for differentiated value, we’ve studied the techniques of top producing agents around the country and have adopted the ones that we feel are most productive to our clients.

I see properties that are pending on sites all the time that never hit the market. There are obviously rare cases where this will be beneficial for the seller, such as not wanting a bunch of people in the house or for privacy reasons. But in this market, if you do not expose the property to the masses (by way of MLS), there is a good chance that the seller is leaving money on the table.

We go to great lengths to expose our listings to the public, long before a property is listed. We use Zillow and Trulia, Facebook and Google adwords (all run through professional advertising companies), and we also push the properties out through our vast network of top producing agents. The difference between us and other brokerages is that we rarely (unless instructed) allow the buyers or their agents to preview the property until its listed on MLS. We drive demand to the property and collect names and numbers of potential buyers and their agents so that, when the property is listed, we have the potential for several offers at once.

By not allowing pre-views of the property before it’s listed, we prevent the seller from feeling pressure to sell before the market has a chance to react to the listing. We firmly believe that the only way to affectively market a home is to provide a strong pre-MLS advertising package. We’ve yet to see one that provides as much coverage as the package that we employ.

I’d be happy to go over this with you.

Austin the Shining Star

Austin, the Shining Star of the National Stage

You’d have to live under a rock to not know that the housing market in Austin is hotter than ever. Don’t be fooled into thinking that the rest of the country is faring as well as we are. Yes, they are doing well, but with the latest unemployment numbers hitting 4.4% in Austin, we are the shining star in the real estate national stage.

So it brings us to the question that I get on an almost daily basis: If I sell my home, where am I going to go? That’s a great questions. I’ve been fortunate enough, these past couple of years, to be in a position where I work 60% to 70% listings compared to buyers. Many of my sellers, for one reason or another, are moving out of Austin. That’s’ great for them, in the sense that they don’t have to try to fight this market, but if you are selling a home in 78704 and trying to downsize, that’s where you get into the madness of multiple offers. It boils down to this: the cheaper the home (for the most part), the harder it is to acquire. Special consideration to where you are going to go needs to be made before you even list your home. If its downsizing, you need to be prepared for the possibility that you are going to have to fight for that home.

As an avid Dave Ramsey follower, I have, in past years, been extremely reluctant to advise my clients to buy BEFORE they sell their home. That’s not the case any more. With current market conditions, I now believe you would be in better situation by buying first. Obviously there are risks and we do our best to put a plan into place to mitigate those risks. But now more than ever are those risks tolerable.

If you are upsizing your home, things get better. The higher the price point, the smaller the pool of buyers. It’s still no cake walk, but we see less multiple offers the higher the price range a buyer is looking in.

If you are considering selling a home and want to talk about the plans we put into place to help you navigate these issues, feel free to call me for a consultation.