Gretchen Janzow Real Estate Blog

OTHER TAKES

Hejl: The state of the Austin real estate market

Roselind Hejl, LOCAL CONTRIBUTOR

The Austin real estate market is touted as one of the best in the country. Our strong real estate market is supported by a healthy job market. Job growth is in turn propelled by a high quality work force, availability of housing, and desirability of Austin as a good place to live and work. Several studies during the past year have confirmed this:

American Business Journals analyzed employment trends in the nation's 100 largest labor markets, and placed Austin in the #2 spot.

The Milken Institute, an economic think tank, ranked Austin-Round Rock #4 on their list of top performing cities. Their study looked at where jobs are being created in America, as well as salary growth, high tech output, and other factors.

Forbes Magazine named Austin #2 on their list of Best Cities to Buy a Home, and #3 on their list of Most Recession Proof Cities. "This state capitol is a hip area on the rise," they say.

Austin did not have the run up in home prices that occurred over the past five years in many cities. From 2000 to 2004, Austin was recovering from the slow down resulting from the dot.com bust of 2000. The dot.com implosion was fairly localized, and many parts of the country did not notice it. However, Austin experienced elevated inventory and flat appreciation levels during that time.

When the real estate market began to heat up in 2004, there were lots available for builders to increase inventory and balance the demand with supply in suburban areas. In the central neighborhoods of Austin, where supply of homes was tight, we did see some double digit appreciation. However, the overall home price appreciation for Austin in the peak year of 2007 was about 7%. This is up from our usual 5%-6%.

During 2008, the Austin real estate market slowed down in response to the credit crisis affecting the country. The number of home sales in 2008 dropped by about 20% compared with the previous 12 months. This needed to happen in order to bring supply and demand back into balance. Builders have slowed construction, and are working on selling existing inventory. To be sure, neighborhoods where there is an oversupply of homes will experience longer marketing times for the near future.

One of the key ways to gage the condition of the market is to estimate the number of months of inventory on the market for sale. In the Austin area as a whole, we have about 6 months of inventory on the market. This means that it will take about 6 months to sell the current inventory, given the sales rate of the past 12 months. Since 1990, the inventory of homes for sale has been in the range of 4 – 6 months, most of the time. In the peak of the dot.com boom (early 2000) we were down to about 2 months of inventory, and in the worst of the dot.com bust (mid 2003) we averaged just over 7 months of inventory.

Six months of inventory is considered a balanced market. Of course, inventory levels vary throughout Austin. Areas that have higher levels of inventory are often the more popular neighborhoods where builders anticipated lots of demand. These neighborhoods are going to be buyer's markets for the near future, but they will eventually come back into balance. This has happened before. Austin is a resilient economy.

Certainly, the financial uncertainty that is happening now has created a lull. But, we can expect to see some pent up demand when the national economy stabilizes. The important thing is that we have good market fundamentals in Austin. This is recognized by study after study. We have had market slowdowns before, and have come back strong. We are down from a recent peak, but are settling into a normal, balanced market. There are plenty of people with jobs, good credit, and funds for a down payment who want to live and work in Austin.

Here are some great hints about fuel efficiency. I think everyone is feeling the pinch of $4+/gallon 

• Observe the speed limit, every 5 MPH over 60 adds the equivalent of approximately 20 cents a gallon.
• Remove any unnecessary weight from your trunk and back seat. The heavier your vehicle, the more gas it uses. The smaller your vehicle, the more this matters.
• Avoid excessive idling, turn your car off waiting at the bank. The larger your engine, the more fuel used to idle.
• Use cruise control wisely. At highway speeds and on flat roads, cruise control helps maintain a constant speed, using less fuel.
• Check and replace your engine air filter regularly. The air filter prevents debris from entering your engine, if it’s dirty, it requires more energy (more fuel) to pull clean air into your engine.
• Keep your tires inflated to the proper pressure. Under-inflated tires can lower gas mileage by .4% for every 1 PSI drop in the tires.
• Use air conditioning at highway speeds, there is less drag on your vehicle with the windows up.
• Use the right grade of oil. There are many weights of oil, check your owner’s manual for the right one for your vehicle. The manufacturer has designed the engine to run most efficiently on the recommended weight. The heavier the oil, the more energy required to push it through the engine.
• Use the minimum octane requirement for gasoline. Again, check your owner’s manual, unless it says “Premium Fuel Only” you can use the minimum octane fuel listed.
• Don’t “top off” the tank, when the gas pump clicks off, stop. When you “top off”, there is more evaporation, and you pay for fuel that doesn’t even make it in your tank.
• When you are filling up the tank, use the middle setting on the gas pump. You get more fuel and less fumes this way.
• If you fill up when you have half a tank rather than when you are on “E”, you will improve your gas mileage, again, more fuel and less fumes.
• If you fill up in the morning, the underground tanks are cooler.

I hope this is helpful. There is a lot of info coming out about alternative means to fuel our cars. I keep hearing about WATER as fuel. If you have info to share about it, let me know. Also, an 80-year oil tycoon was on the radio last week talking about how he's going to turn the Texas panhandle into a 2,500-unit wind farm. He wants it as his legacy, as he disagrees with the handling of oil production in our country now. He's been in the business for 60 years, he said, and should know...

All for now. Take care and let me know if you have any real estate needs or good news to share.

While in the car this morning, my local public radio station had a story about property taxes. Looks like we have until May 31st-or 30 days after we get our tax bill-to dispute them. Contrary to the rest of the country (almost), most areas in Austin, Texas is still appreciating in value. (This is why we have so much national and foreign investment coming into our market. Hey locals, don't listen to the national housing forecast. Plenty of other folks aren't, and they're capitalizing in this market!) We have areas whose property values went up 30% last year! Lago Vista and Marble Falls are among these. Wow! A local property tax professional said that it behooves all of us in the Austin area when people dispute them. I happen to agree. Call your local Realtor (that'd be me) to get the most recent Comparative Market Analysis in order to dispute your property taxes. It's a great way to save money and exercise our rights as property owners. 

In other news, tomorrow is tax day. I'll head downtown today and pick up my taxes from my trustworthy and wonderful tax person. Thanks, Mickey! It's important to have professionals help us with the various areas of our lives.  A colleague had a "professional organizer" come into her office to help her streamline her business. It cost her about $50 for an hour. My colleague was left with a list of ideas and action items to implement in her business. She got to work immediately with renewed confidence and a fresh outlook. What part of your life needs organizing? Office? Closet? Home office? Kitchen? There are plenty of folks out there who could use your unused wares that are holding you back and getting in your way. It's spring! Clean it out!

If you're local, come see my band, The Austin Family Jewels (www.austinfamilyjewels.com) and the Downtown Farmer's Market this Saturday, April 10th at 9:30 a.m. It's Earth Day, so if you need to talk to me about real estate doings after that, I'll be there as an EcoBroker as well!

Take care of yourself, your business, and your world this week. This is Gretchen signing out!

Tube of Caulk: buy it and seal those windows! Whether Summer or Winter, windows that leak air are useless - you're just heating or cooling the outside.

Compact flourescent bulbs: some electric companies will subsidize swapping out your bulbs. They last longer, use a fraction of the energy cost, and give off more pleasing light.

Light-colored shingles: when you replace your roof, go with light-colored shingles. They reflect more light, so your house costs less to cool in Summer, and they can actually make your house last longer.

Double-pane windows: when you replace a window, go double-pane. The savings will more than pay for the cost-difference, your house will feel less drafty in winter, your air conditioner will last longer, and it'll feel more secure.

Tankless water heaters: have come a really long way, and most countries now use them. Why continually heat and re-heat a giant tank of water all day that you're going to use once or twice? If your plumbing meets the specs, these have gotten cheaper, easy to install, and take up less space. They only heat when you need the water.

If you've got more ideas, leave a comment on my blog; I'd love to hear from you.  -- Gretchen

I'm getting a new site design by Daniel DiGriz, the "edit geek" at www.mixmysite.com

Daniel did a free consultation, assessed my needs, made suggestions, and worked out a package that's right for me. Thanks, Daniel~!