Monthly Archives: February 2015

Residential Sales Continue to Soar

Blue Pin, 3/5/02, 5:49 PM,  8C, 1122x1416 (1806+134), 100%, bent 5 stops, 1/100 s, R72.2, G66.2, B79.7

 

Austin-area home prices hit all-time high for January, home sales rise in January 2015

Austin Board of REALTORS® releases real estate statistics for January 2015

AUSTIN, Texas – February 20, 2015 – The Austin-area housing market started the year strong in January 2015, with single-family home prices reaching all-time highs for the month of January and home sales posting double-digit increases according to the Multiple Listing Service (MLS) report released today by the Austin Board of REALTORS®. This marks the fifth-straight month of annual home sales increases and the fourth-straight month of double-digit gains in home prices, as housing affordability continues to be a challenge in the Austin market.

Barb Cooper, 2015 President of the Austin Board of REALTORS¬®, explained, “With housing affordability already a challenge for many Austin residents, this increasing pace of home price growth is concerning. More than half of the homes sold in the Austin-area are now priced out of an affordable range for much of Austin’s workforce.”

In January 2015, the median price for Austin-area homes increased 13 percent year-over-year to $240,000 and the average price jumped 14 percent to $310,187 during the same time frame. January 2015 marks the highest year-over-year home price increase since September 2013 and all-time high for home prices in the month of January.

According to the report, 1,547 single-family homes were sold in the Austin area in January 2015, an 11 percent increase compared to January 2014. However, 54 percent of the homes sold during this time frame were in the $200,000-$500,000 price range, whereas only 35 percent sold for less than $200,000 – the typical price range for first-time and low-income homebuyers.

“Housing inventory is rising, but the current pace is not enough to alleviate Austin’s affordability challenges,” added Cooper. “Furthermore, more homes on the market will not increase housing affordability if those homes are all priced for move-up homebuyers. Austin needs a regulatory environment that will ensure development of all housing types, priced in an affordable range for all Austin residents.”

Austin-area monthly housing inventory was 2.2 months in January 2015, 0.2 months higher than January 2014 but still well below the 6.5-month inventory level the Real Estate Center at Texas A&M University cites as a balanced housing market.

Active listings in January 2015 rose nine percent year-over-year to 5,005 listings, while new listings increased one percent to 2,360 listings from January 2014. Austin-area homes spent the same time on the market as January 2014, or an average of 63 days, and pending sales increased four percent to 2,026 sales during the same time frame.

Cooper concluded, “While single-family homes will always be a part of Austin’s fabric, Austin’s city leaders should consider housing types that cost less to develop and can allow for a greater range of affordable infill options, such duplexes and small apartment buildings, in neighborhoods where they are needed most. The Austin Board of REALTORS® is hopeful that the Austin City Council will embrace changes to the land development code and permitting process to allow for an abundance of housing in all neighborhoods.”

January 2015 Statistics

    • 1,547 – Single-family homes sold, 11 percent more than January 2014.
    • $240,000 – Median price for single-family homes, 13 percent more than January 2014.
    • $310,187 – Average price for single-family homes, 14 percent more than January 2014.
    • 63 – Average number of days single-family homes spent on the market, unchanged from January 2014.
    • 2,360 – New single-family home listings on the market, one percent more than January 2014.
    • 5,005 – Active single-family home listings on the market, nine percent more than January 2014.
    • 2,026 – Pending sales for single-family homes, four percent more than January 2014.
    • 2.2 – Months of inventory* of single-family homes, 0.2 months more than January 2014.
    • $479,859,289 – Total dollar volume of single-family properties sold, 27 percent more than January 2014.

The following sections describe trends in other sectors of the Austin real estate market.

Townhouses & Condominiums

The volume of townhouses and condominiums (condos) purchased in the Austin area in January 2015 was 135, which is 30 percent less than January 2014. In the same time period, the median price for condos was $218,250, which is four percent more than the same month of the prior year. When compared to January 2014, these properties spent five fewer days on the market, or an average of 48 days.

Leasing

In January 2015, a total of 1,279 properties were leased in Austin, which is two percent more than January 2014. The median price for Austin-area home leases was $1,430, which is four percent more than the same month of the prior year.

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The Austin Board of REALTORS® (ABoR) builds connections through the use of technology, education and advocacy to strengthen the careers of its 11,000 members and improve the lives of Central Texas families. We empower Austin REALTORS® to connect their clients to the region’s most complete, accurate and up-to-date listings data. For more, contact the ABoR Marketing Department at marketing@abor.com or 512-454-7636. For the latest local housing market listings, visit AustinHomeSearch.com.

* The inventory of homes for a market can be measured in months, which is defined as the number of active listings divided by the average sales per month of the prior 12 months. The Real Estate Center at Texas A&M University cites that 6.5 months of inventory represents a market in which supply and demand for homes is balanced.

NEW FEMA RULES GIVE THAT SINKING FEELING    BY JEFF STEWART, CCIM, SRES

ccim logo    Last week I participated in a webinar for professionals who deal with flood insurance.  Lenders, insurance agents, real estate brokers and municipal floodplain administrators were the intended audience.  The subject matter pertained to the recently passed Homeowner Flood Insurance Affordability Act 2014 (HFIAA). HFIAA was a Congressional response to the previous act that they had passed known as the Biggert – Waters Act, which had the unintended consequence of making flood insurance virtually unattainable for many Americans.

The goal Congress had in mind when they passed the Biggert – Waters Act was to make federally funded flood insurance self-supporting.  Instead, they found that thousands of homeowners could not afford flood insurance and therefore were in default on their mortgages.  Federally regulated mortgages require flood insurance if the structure is deemed to be in a 100-year flood zone.  Most deeds of trusts state that if a property is in the 100-year flood zone, or remapped and determined to have been changed to that status, the borrower must buy flood insurance.

The federal flood insurance, known as National Flood Insurance Program (NFIP), has been heavily subsidized by the federal government ever since its inception.  In recent years flood events such as Hurricane Andrew and Katrina have helped to bankrupt the system.  Congress passed the Biggert – Waters Act as a vehicle to work toward a balanced budget for NFIP within a few years.  The over-reach became obvious almost immediately and HFIAA was quickly passed in an effort to lessen the impact, but still move towards a solvent NFIP.

Here are some highlights as I understand them.  Modifications are still coming so some things may vary.

  • Some properties will still be grandfathered, but it was unclear exactly how.
  • As of April 1, 2015 all NFIP policies will have a surcharge: $25 per year for primary residence and $250 per year for all other policies.
  • The Surcharges are non-refundable and will be in place until the program is self-supporting.
  • Primary residences will see policy rates go up 18% per year and all others will escalate 25% per year until at FULL (unsubsidized) market rates.
  • The current maximum deductable will escalate to an optional $10,000 deductable, resulting in a 40% savings to the insured.
  • The deductable must be the same for the building and the contents.
  • Lenders may not accept the larger deductable since many borrowers cannot afford a $20,000 out of pocket loss.
  • NFIP policies may be assumed.

This is decidedly an incomplete representation of what to expect.  The only thing that is certain is that the federal government intends to wean property owners off of the subsidized flood insurance rates.  The end result will be a substantial write-down in values of areas that are hard hit by the climbing rates.  Areas like Lake Travis, where the 100-year flood plain has been elevated six feet (now 722′ above sea level), and the coastline will continue to see major price adjustments due to the affordability of flood insurance.  The only reason the Lake Travis area has not been a hot topic is that the low lake level has all but halted demand.  Once the lake is full again, the new insurance rates will demand more attention.  I predict most sales below the 722′ level will have to be cash and will be discounted accordingly.

At the moment, the tax appraisal office is getting a free ride and the waterfront owners are getting soaked since the public has yet to figure all this out.

Jeff Stewart, CCIM

Stanberry & Associates, REALTORS

jstewart@stanberry.com

A Place for Your Stuff By Jeff Stewart, SRES, CCIM

A Place for Your Stuff               By Jeff Stewart, SRES, CCIM

No matter your age or stage in life, I find it most instructive to revisit George Carlin’s famous discussion about “A place for your stuff.”  It is one of the most humorous routines in comedy for the simple reason that it is so very accurate. I am sure you remember it. “A house is only a place for us to put our stuff.”  I especially like the line, “A house is just a pile of stuff with a cover on it.” Can you relate?

As a Realtor of the Boomer generation, it seems that I am having daily discussions with other Boomers about how to minimize their “stuff.” I am afraid many of us are drowning in stuff.  Stuff to be maintained, stuff to be insured, stuff that is taxed, stuff to be stored, our grown children’s stuff, our parents’ and grandparents’ stuff (which our kids do not want), our ceramic owl collection (which our kids do not want), our collection of perfectly good answering machines and VCRs (which no one wants),   decades of obsolete books and paperwork, and yard tools we would not use on a bet.  I can feel you nodding in agreement!   So what do we do about it?

First, we need to dispense with the counterproductive term “down-sizing.” In the business world, downsizing equates to layoffs . . . a bad thing.  This is not the same.  The new, suggested term is “right-sizing.” Right-sizing is a perfect description since it applies to every generation.  A growing family requires more room, hence a need to right-size.  A young couple moves downtown to a pricey condo and they have to condense their belongings to fit in a smaller space – again, right-sizing. Why should change be a bad thing when the ultimate goal is a more rewarding lifestyle?  Wouldn’t we rather live the life we choose, rather than be held captive to “stuff?”

So Boomers, do you have a plan?  What would you like to do next?  Recently I have had friends and clients buy second homes near the grandchildren. Others have bought homes in the country or in a lake community for retirement. Others have taken the opposite approach and have chosen to have fewer properties and responsibilities and have sold their rent properties, lake house, or place in the country.  It comes down to having a plan for finding the freedom to do what you most want. To be weighted down with “stuff” comes with a price.  If you are seeking a freer lifestyle, here are some suggestions.

  • Make an effort to cut the “stuff” 1/3 to 1/2.  Remember, the 80/20 Rule.  We only use 20%.
  • Start in the rooms that are not emotional.
  • Questions: Difficult to replace?  Can it be rented?  Was it used last year?
  • Take good photos of sentimental items which have no use or keep a representative piece.
  • Find a good home for your collections.  You get the satisfaction of knowing they are wanted.
  • Have a family get-together & pass out treasured belongings and explain their importance to you.
  • Be charitable. It can be very rewarding to find someone who will treasure your gifts.

If you have been lamenting the fact that you are captive to your home maintenance, yard work, property taxes, or whatever, maybe now is time to take charge of your future!  If you are ready to make some changes to simplify your life, I can help.  Please feel free to give me a call and I will be glad to share my network of resources with you.

Jeff Stewart, CCIM, SRES

Senior Real Estate Specialist

Stanberry & Associates, Realtors

jstewart@stanberry.com

Austin MLS Year-end Review

 

 

Austin-area home sales set records for the month of December, annual home sales volume in 2014

Austin Board of REALTORS® releases real estate statistics for December 2014 and 2014 year-end totals

AUSTIN, Texas – January 21, 2014 – According to the December 2014 and Year-End 2014 Multiple Listing Service (MLS) report released today by the Austin Board of REALTORS®, the Austin-area housing market set a record for single-family home sales volume for the month of December, as well as a record for annual home sales volume in 2014. This marked the fourth-straight year of annual home sales increases.

Barb Cooper, 2015 President of the Austin Board of REALTORS®, explained, “The Austin area experienced a strong, stable housing market in 2014, with year-end 2014 showing similar market conditions to those one year ago. Last month, the U.S. Census Bureau named Austin the third-fastest growing big city in America since 2000. That steady job and population growth has continued to drive increases in home sales volume and, combined with low housing inventory levels, home prices as well.”

According to the report, 2,283 single-family homes were sold in the Austin area in December 2014, a 14 percent increase compared to December 2013 and an all-time high for Austin-area home sales in the month of December. In 2014, home sales volume slightly exceeded 2013 levels to set a new record for the number of Austin-area homes sold in a year with 27,768 homes sold, a two percent increase from 2013.

Over the course of 2014, median price increased eight percent over 2013 to $242,500. In December 2014, the median price for Austin-area homes was $246,530, 10 percent higher than December 2013. As a result, the total sales dollar volume for single-family homes in 2014 topped $8.6 billion, an increase of more than $673 million from 2013.

Housing inventory levels remained low in 2014, despite breaking an 18-month trend of monthly decreases in the second quarter of 2014. In December, Austin-area monthly housing inventory was 2.2 months, 0.2 months higher than December 2013 but still well below the 6.5-month inventory level the Real Estate Center at Texas A&M University cites as a balanced housing market.

This slow rise in housing inventory was driven by an influx of listings throughout the last half of 2014. Active listings in December 2014 jumped 12 percent year-over-year to 5,077 listings, while new listings rose 10 percent to 1,546 new listings from December 2013. Throughout the year, new and active listings each rose four percent in 2014 to 35,423 and 5,734 listings, respectively.

In 2014, homes spent an average of 47 days on the market, or three days fewer than homes sold in 2013, while pending sales increased one percent from 2013 to 28,325 sales. Homes sold in December 2014 spent three more days on the market than December 2013, or an average of 55 days, and pending sales increased 18 percent to 1,623 sales during the same time frame.

Cooper concluded, “The Austin-area housing market is consistent, but so are its challenges. More homes on the market, at all price ranges and throughout all areas of Austin, will be crucial to maintaining Austin’s affordability in 2015. As one of the fastest growing metropolitan areas in the U.S. we must look to our new city council for a regulatory environment that stimulates and grows housing stock in a healthy, sustainable way.”

December 2014 Statistics

  • 2,283 – Single-family homes sold, 14 percent more than December 2013.
  • $246,530 – Median price for single-family homes, 10 percent more than December 2013.
  • $311,082 – Average price for single-family homes, six percent more than December 2013.
  • 55 – Average number of days single-family homes spent on the market, three days more than December 2013.
  • 1,546 – New single-family home listings on the market, 10 percent more than December 2013.
  • 5,077 – Active single-family home listings on the market, 12 percent more than December 2013.
  • 1,623 – Pending sales for single-family homes, 18 percent more than December 2013.
  • 2.2 – Months of inventory* of single-family homes, 0.2 month more than December 2013.
  • $710,200,206 – Total dollar volume of single-family properties sold, 21 percent more than December 2013.

2014 Year-End Totals

  • 27,768 – Single-family homes sold, two percent more than 2013.
  • $242,500 – Median price for single-family homes, eight percent more than 2013.
  • $309,975 – Average price for single-family homes, seven percent more than 2013.
  • 47 – Average number of days that single-family homes spent on the market, three days fewer than 2013.
  • 35,423 – New single-family home listings on the market, four percent more than 2013.
  • 5,734 – Active single-family home listings on the market, four percent more than 2013.
  • 28,325 – Pending sales for single-family homes, one percent more than 2013.
  • $8,607,385,376 – Total dollar volume of single-family properties sold, nine percent more than 2013.

The following sections describe trends in other sectors of the Austin real estate market.

Townhouses & Condominiums

The volume of townhouses and condominiums (condos) purchased in the Austin area in December 2014 was 222, which is six percent more than December 2013. In the same time period, the median price for condos was $229,750, which is five percent more than the same month of the prior year. When compared to December 2013, these properties spent five additional days on the market, or an average of 55 days.

Over the course of 2014, 3,150 Austin condos were sold, which is statistically unchanged compared to 2013; the median price was $215,000, or 10 percent more than 2013; and condos spent an average of 43 days on the market, nine days fewer than 2013.

Leasing

In December 2014, a total of 1,214 properties were leased in Austin, which is 17 percent more than December 2013. The median price for Austin-area leases was $1,450, which is five percent more than the same month of the prior year. In all of 2014, a total of 16,960 properties were leased in Austin, which is four percent more than 2013, and the median lease price was $1,480, or six percent more than 2013.

The Austin Board of REALTORS® (ABoR) builds connections through the use of technology, education and advocacy to strengthen the careers of its 11,000 members and improve the lives of Central Texas families. We empower Austin REALTORS® to connect their clients to the region’s most complete, accurate and up-to-date listings data. For more, contact the ABoR Marketing Department at marketing@abor.com or 512-454-7636. For the latest local housing market listings, visit AustinHomeSearch.com.

* The inventory of homes for a market can be measured in months, which is defined as the number of active listings divided by the average sales per month of the prior 12 months. The Real Estate Center at Texas A&M University cites that 6.5 months of inventory represents a market in which supply and demand for homes is balanced.

 

Major Changes in the Wind By Jeff Stewart, CCIM, SRES

SLOGO JPG

Major Changes in the Wind   By Jeff Stewart, CCIM, SRES

CFPB  . . . it is an acronym of which almost no one outside of lenders and title companies are familiar. That is about to change.  The Consumer Finance Protection Bureau (CFPB) is about to make a big splash, and the ripples will reach most Americans eventually.  Born of the Dodd -Frank Wall Street reforms, the CFPB was established to better protect homebuyers’ interests.  The sweeping changes required by Dodd – Frank are the most comprehensive reforms since the Great Depression.

While stock brokers and banks have been dealing with the fallout of Dodd – Frank for the past several years, residential real estate has largely continued to do business as usual.  For residential sales (with mortgages) of one to four units, that ends August 2015.  No one is exactly sure what to expect.  Like most tectonic shifts the industry will have to experience a shake-out period.  I expect this will eventually drive a number of small lenders out of business.  It may take longer, but there may also be  casualties among title companies and real estate brokers.  More on that in a minute. This is a ten-mile high look at just a few facets of what is to come.

It is a sad fact, but currently title companies almost never have the lenders’ instructions until the day of the scheduled closing.  Invariably, we do not have a dollar amount for the buyers until a few hours before closing.  In a busy market like Austin’s, the closing process is simply controlled chaos. By law, homebuyers have the right to see all the papers they will be required to sign twenty four hours before the closing. It almost never happens. Those of us in the business have grown used to it, but it is a complete disservice to the very homebuyers who are funding this entire circus.  Congress has decided that it is time to do better . . . and I think we will with these new regulations . . .  but it will not come easily.

As of August 1, 2015, the focus of the entire loan and closing process will be on keeping the borrower informed. Consumers (homebuyers) must be kept fully informed throughout the process with required disclosures and strict timelines.  Failure of lenders to fully comply with the federal regulations will result in very expensive penalties.  An example of the disclosures would be that the lender has only three days to furnish the borrower an accurate comprehensive loan estimate.  If during the process the sales price, credit score, or a fee changes, the estimate must be corrected and the timeline begins again.  For instance,  if any change takes place at the closing table, then the disclosures must be corrected, copies furnished to the buyer, and the closing postponed for at least three working days. We have been warned that the new regulations may require 60-90 days to close.

Time frames are not the only change.  For many years now, we have used a closing statement which was furnished by the Federal Housing and Urban Development Department, which we referred to as the HUD statement.  On the traditional HUD form, both buyer and seller debits and credits are shown . . . with the new forms, the buyers and sellers will have separate statements.  None of the new regs apply to reverse mortgages, cash ransaction, or commercial deals.

With the new rules come a few changes in vocabulary: Lenders will be referred to as “creditors”.  Borrowers are now “consumers”, and the closing is now technically called a “consummation”.  I am told that is because in other states the term “closing” does not actually mean the same as we think of it. What we have known as the HUD statement becomes the “Closing Disclosure”, and the buyer must receive it three days prior to the signing – or “consummation”.

The biggest changes on the horizon may not be apparent to the consumer. Lenders, title companies, and eventually even real estate brokers will have to utilize very sophisticated encryption software to safeguard our clients’ financial information. It is not unrealistic to expect the new regulations to drive small lenders, marginal title companies, and technically inept real estate firms out of business. As for our firm and the companies we depend upon, we are planning ahead in order to be well-prepared as the changes become mandatory.

Jeff Stewart, CCIM, SRES

Stanberry & Associates, REALTORS

jstewart@stanberry.com

Austin, Texas