Ah, the feel and smell of spring is in the air. In Austin this means Austenites are walking around sniffling, sneezing and have a stuffy head due to pollen. April showers may bring allergies and spring rains, but it also means buyers are out in force searching for that elusive ‘perfect house’ and when there’s one buyer, there’s a hundred, all looking at the same time, like some cosmic physic beacon stretching across America—aided of course by job transfers, military transfers and the all-consuming school district search.
If you haven’t heard, Austin was once again voted by Forbes Fastest Growing Cities List 2016 as the fastest growing city in America. “Austin regains the No. 1 spot after being toppled by Houston last year. Thanks to its booming technology, pharmaceutical and biotech industries,low cost of living, and cachet, the Austin economy remains on fire. Hordes of people are moving in (Austin’s projected 3.15%population growth rate in 2016 is the highest among the 100 metro areas we examined) to take advantage of Austin’s job opportunities (employment expanded 3.28% last year). The city has topped our list of Fastest-Growing Cities for five of the past six years (last year it slipped to second place).”
For those of you thinking: 3.15% increase in growth isn’t much. You’re wrong. This equates to ~200,000 NEW families to the area in 2015—an area in which we have less than 2 months of housing inventory; translated it means rising home prices. The Austin Board of Realtors (ABoR) February 2016 Travis County update shows the median home price has risen 12% since 2011; this equates to ~$100,000 increase in housing cost.
While such an increase is great for sellers, it’s not so great for home buyers who have “been searching” for a home to purchase. Realtor.com estimates 2016 will see another 1.56% in population growth. The question is where are these new residents going to live? Sure, some will rent which may increase the median rental price in Austin, which as of January 2016 was ~$1600/month, but new rental housing is condominium or apartment style, not single family homes. If investors purchase existing inventory (homes built prior to 2015), this mean home buyers will have less choices, thereby increasing home prices again.
The question for renters is: Is it worth it to continue renting? While there is no easy answer some things to consider are:
Can you afford to keep renting? If you’re barely getting by paying, let’s say $1600/month in rent, you may not be able to continue renting in the area. Rents will increase due to inflation and rising property values. Property investors are not here to see you live comfortably, but to make a profit. As the residence you’re living in is not protected under the Texas Homestead Act, you rent will most likely continue to rise if you’re in the Austin Metro area.
Is there affordable housing still left? The answer is yes and no. Yes, there are still ‘affordable homes’; no they may not be in the exact area you’re living now. If you’re willing to consider other areas of town if you can’t afford your current neighborhood, you can lock in a 30 yr. fixed mortgage which may be less than what you’re paying now.
Are you open to housing options? Is owning a home and reaping the financial rewards that may come with home ownership worth more than ‘the perfect house’. Sometimes, the perfect house is really only 85% of what you want as the additional 15% is what you put in to the home. After searching homes for months or years, have you realized ‘that one’ property actually would have been great but you dismissed it because of something that was actually okay such as age, color, flooring, etc.? If the main structure and layout of the home meet your needs, but requires new flooring, a paint job or even a kitchen or bath remodel, you may want to pursue the property as these are items that can be remedied over time and may cost less than trying to find the perfect home and losing out on an affordable home.
Aren’t closing costs and down payment a lot money? Honestly, yes. Depending on your finance program (conventional, FHA or VA) and credit score (600+) will dictate how much of a down payment you may need which can range from zero to 20%. Veteran loans are the best for those who qualify. Not a military person- no problem, FHA requires only 3.5%, while conventional loans are the easiest to work with when it comes to down payment if you can hold a second mortgage.
As for closing costs, the costs to close on a home can be more than what’s in your savings, but good news—if you have a bonus from work, a tax refund or qualify for down payment assistance or the elusive ‘gift’ from friend or family member, there’s still hope. There are many down payment assistance programs available in our area and you may qualify for one of them.
For those who have been on the fence, it’s time to get down and stand up as Austin home prices are expected to continue to rise, which may price you out of the area (rental or purchase). Sit down, run your financial numbers. Think about where you want to be in 5 years. If you’re still planning on being in Austin, seriously consider home purchase, not because I’m a Realtor looking for a paycheck, but a professional housing consultant wanting you to be able to afford a place to live. Should another 5 years bring another ~$100,000 increase in home prices or $500 increase in rent, will you be able to stay in the Austin [or Texas] area? Contact me or your favorite real property or home finance professionals for a chat as we’re here to help you.
Author:Shapley Realty Phone: 512-380-1823 Dated: March 30th 2016 Views: 4,036 About Shapley: ...
Shapley Realty is a full service real estate company dedicated to doing business differently and setting a new standard for service in the real estate industry. The company was founded by Ray Shapley, a top-producing agent who wanted to bring a consistent, customer-centric level of service to an industry of "hit or miss" service. Shapley Realty is focused on proactive, results based service for our clients.
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We are building a business in which high standards permeate all aspects of our company. Our motto — High Standards, Results, Great Service, Happy Clients — emphasizes that our vision reaches far beyond any single transaction.
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Our clients are the most important piece in our business. Therefore, we go to extraordinary lengths to deliver results, because results are why our clients hired us in the first place.
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There was a time not long ago when the feasibility of owning a home i
"To anyone considering buying or selling a home in the Austin area,
We cannot say enough to convey our appreciation for the Shapley Realty team.
Our needs were very specific and the search was not easy because of how fast things were selling. But the Shapley Realty team made the search painless and offered their opinion on each of the houses we looked at, in some ways almost telling us why we shouldn't buy it as opposed to everything being so wonderful - as we have experienced with other teams in the past. They were also incredibly fast, always ready at a moments notice to show something and answered questions via email instantly as well as picked up the phone when we called.
We knew it was not going to be necessarily easy, because we also had a house that wasn't ready to be listed as it was in need of renovations. But this was nothing scary or unfamiliar to this team. Not only did they help us secure a home that suited our needs perfectly, but they actually negotiated aggressively for the best deal imaginable. What was also really great is how they coached us through the whole process of listing a house in need of updates and repairs with proper estimates for what was needed and coached us on which offers were good and the ones to walk away from.
Everything they could have done to make the process less painful they did, going way above and beyond, even answering questions after the sale was done and it was apparent they aren't just some people in it for a quick profit, but are establishing themselves as a team of experts building lasting relationships. Through it all the Shapley team stood by us and made sure every dollar was accounted for and that we were getting what we paid for and maximized what we got for our old place.
Looking back at the different houses we have purchased over the past 15 years and the other teams we worked with, we can honestly say that the contrast is sharply delineated. I really feel there are few teams in Austin that could have made this as painless, even if they could have pulled it off.
We got the house we needed for tens of thousands under our set budget, and sold our home for much more than we anticipated and would never consider attempting to do this again without them. Not for a moment.
Do NOT hesitate to let a real professional, knowledgeable, hardworking team like Shapley Realty help you."