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Job being created at small companies are outpacing the layoffs at the few remaining tech companies. 42,000 people are moving to Ausitn every month: that wouldn't happen if there weren't jobs for them. About 2/3 opt to rent, the other 1/3 are looking to buy homes. The latest monthly stats are in: sales volume is dowm 30% from 2008, prices are up 6%. Fewer buyers and fewer sellers. Builders can't get financing, so in the next 6 to 24 months the housing shortage will drive up prices. Austin isn't California or New York: prices will follow the historic 3 to 4% appreciation in the long run. For those who fear "losing" equity while ignoring the tax deductions, and reduced auto insurance premiums accruing from home ownership, paying a landlords mortgage is always an option.
Those of us who have lived in Austin long enough remember the tech bubble of 2000 when Dell was over hiring, then 2 years later had massive layoffs. Accompanying this were layoffs at Motorola (now Freescale), AMD, Samsung, Austin Semiconductor, and smaller tech start up companies. Combined, these caused a MASSIVE drop of about 2 % in housing prices.
Austin does not have "bubbles" in housing prices because there is adequate space for builders to meet demand by increasing inventory which keeps prices in check, By definition, if there is no "bubble", there can be no "burst".
Also, no government since the great depression has increased the money supply as fast as the current treasury is about to. Most economists will tell you the greatest threat now is inflation. And the 2 best hedges against inflation are gold and real estate. For those who disagee, I know several landlords who would be glad to have you pay their mortgage by leasing one of their properties.
You really are a pessimist. Depending on whom you believe, we are in the 9th or 12th month of recession. How long do you expect it to last? It must be frustrating having to wait for lower end prices to drop so you can buy dirt cheap. Could it be you have one of those +$1,000,000 homes that aren't selling? . Explain to me, Sherlock, why prices are stable in Austin while dropping 20% nationwide?
Roberto I'm talking about people who know they are going to stay in Austin for a long time and have stable jobs. In certain professions, mobility is a pre-requisite for advancement so leasing makes perfect sense. I don't recommend that college students or their parents buy, since the odds are high they may relocate after graduation.
About 80% of a mortgage payment during the first 5 years consists of property taxes and interest which are both deductable on federal income taxes. Rent is not. 3% is the average (some areas are higher) appreciation rate: over 4 years that amounts to 12%. As you stated, seller closing costs are around 8%. And with interest rates around 5%, in some areas (ie Hutto, Round Rock, Leander, and Kyle), mortgage payments are currently lower than renting a similar size home.
"I own, and can buy 10 homes.." implies that you have a significant amount of cash on hand since lenders are limiting investor financing to 4 properties. I understood the intended sarcasm of " Austin will be completely immune forever..." which sounds as though you are disappointed that median housing prices have not fallen and expect them to do so soon.
It makes perfect sence for an investor with a signifcant amount of cash to want housing prices to drop. But for someone who already owns, such an attitude indicates either ownership in a price range already being impacted (+$1,000,000,000) or pessimism.
Roberto, everyone's situation is different. Can you not see that for thousands of entry level buyers who plan on making Austin their permanent home, even in this economy, buying is a better option than renting? Are you really that self centered?
Mr. Clint West is just another typical Real Estate Agent wanting his big commissions from the higher housing price transactions, and cheering for fake hot real estate opportunities, so they can get more activities going in the market. The truth is that Austin RE Market is about 2 year lag behind California. The Austin RE peak/bubbled in 2007~2008. The California RE slide just started to be seen in Austin RE. People interested in Austin Market should be aware of the 2 yrs lag. All Austin Agents love out of town buyers, because the out of town buyers know so little about Austin Market. Anyone interested in Austin market... just check out the TCAD (Travis County Appraisal District) for trend/ups&downs (crazy ups in 2007 and 2008).
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Is now a good time to buy in Austin?
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Clint West, "Go West"
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Banks are making it difficult for first time buyers to qualify for a mortgage. Landlords are aware of this and have raised their rent a couple of hundred dollars per month over the last 2 years. When you consider the tax deductions, it many areas, mortgages are cheaper than rent.
Additionally, homeowners receive huge discounts on car insurance by bundling their home and auto policies. Interest rates are at historic lows but are expected to rise once banks ease up on qualification criteria.
Over the last 30 years Austin homes have appreciated at a 3 to 5% rate. Central Texas is now seeing its 16th month of stable housing prices (some neighborhoods have even dropped a few points). Later this year when lenders begin to ease up on mortgages, demand along with housing prices will catch up with historic trends.
In the Austin area, for those who qualify, now is a very good time to buy a home.
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