Falling prices make homeownership increasingly realistic in some areas. Just don't expect to make a fast buck.
With house prices falling around the country, many renters are wondering if this is the time to jump in and score a deal.
The answer, of course, depends on where you live. In much of the U.S., you're better off buying despite falling home values, say new data compiled by the National Low Income Housing Coalition and the Center for Economic and Policy Research.
Of the 100 most populous metro areas, 57 have average three-bedroom rental costs higher than the cost of a 6% loan for a typical low-priced house, including Little Rock, Ark., and Akron, Ohio. (The study's authors defined low-priced as 75% of the area's median.) Those renting two-bedroom apartments would be better off buying a low-priced home at a loan rate of 6% in 24 of the 100 largest metro areas.
Of course, a crucial component for renters looking to make the leap is credit history. A prospective buyer with credit worthy of a 6% mortgage will pay a third less in monthly payments than someone who qualifies for an 8% loan – in many cities that can be a difference of hundreds of dollars and push them over the line to where renting actually makes more sense. (For more on the costs of renting versus buying, see "34 cities where it’s still better to rent.")
Even more interesting to potential homebuyers is the chance to build equity. Here, too, there's good news for many major metros. In 66 of the top 100 markets, you'd be in the black in four years should you buy a low-priced home today.
You'd do best in McAllen and El Paso, Texas, where you could build roughly $90,437 in equity with a 6% loan, and just shy of that with a 7% loan. In Syracuse or Buffalo, N.Y., you'd stand to make close to $80,000. In these slow-growing, smaller cities, prices never got run up to the sky. Now, homes are still affordable. And most importantly, the prices aren't likely to come crashing down.
It’s a home, not a get-rich-quick schemeSafe doesn't mean profitable, however. With prices falling in many markets, housing is too risky these days to expect you'll make money on a house deal, experts caution. The object now is to avoid losing money.
"Don't expect these markets to take off," says Danilo Pelletiere, research director for the National Low Income Housing Coalition and co-author of the study, "Ownership, Rental Costs and the Prospects of Building Home Equity."
"The housing boom passed them by because, in many cases, not much is happening in these towns."
Buyers should look at the purchase as a conservative investment that's unlikely to pay off like an oil-patch scheme and may even lose value, Pelletiere, says. Base the decision on more than profit, on intangibles like the chance to build stability, to join a community, to enjoy a neighborhood or love living in a particular home.
"I wouldn't want anybody to interpret this data as saying here's where you should put your money," Pelletiere says. "What I am saying is, if you want to put your money into a home, these are the cities where owning makes sense."
Table: 66 places where owning makes sense
How much equity you'd have by 2012 if you bought a low-priced home today…
Metro area
6% loan
7% loan
8% loan
McAllen-Edinburg-Mission, Texas
$90,437
$89,871
$89,381
San Antonio
$90,017
$89,064
$88,239
New Orleans-Metairie-Kenner, La.
$88,907
$87,473
$86,232
Houston-Sugar Land-Baytown, Texas
$87,837
$86,703
$85,721
Dallas-Fort Worth-Arlington, Texas
$83,880
$82,669
$81,620
Rochester, N.Y.
$82,898
$81,898
$81,032
Syracuse, N.Y.
$80,231
$79,341
$78,571
Buffalo-Niagara Falls, N.Y.
$77,934
$77,045
$76,275
Jackson, Miss.
$77,648
$76,659
$75,804
Austin-Round Rock, Texas
$70,007
$68,530
$67,251
Memphis, Tenn.-Mississippi-Arkansas *
$68,348
$67,286
$66,367
Baton Rouge, La.
$61,802
$60,648
$59,651
Pittsburgh
$61,174
$60,221
$59,397
Tulsa, Okla.
$58,599
$57,624
$56,780
Little Rock-North Little Rock-Conway, Ark.
$58,420
$57,416
$56,548
Augusta, Ga.-Richmond County, S.C.
$57,424
$ 56,465
$55,636
Lakeland, Fla.
$56,960
$55,793
$54,784
Columbia, S.C
$55,993
$54,936
$54,022
El Paso, Texas
$55,100
$54,316
$53,637
Akron, Ohio
$54,594
$53,410
$52,387
Greensboro-High Point, N.C.
$54,592
$53,463
$52,485
Oklahoma City
$54,431
$53,475
$52,648
Youngstown-Warren, Ohio-Boardman, Pa.
$54,014
$53,176
$52,450
Wichita, Kan.
$53,684
$52,764
$51,968
Dayton, Ohio
$51,393
$50,327
$49,405
Detroit-Warren-Livonia, Mich.
$50,599
$49,241
$48,067
Indianapolis-Carmel, Ind.
$49,520
$48,330
$47,300
Albany-Schenectady-Troy, N.Y.
$49,104
$47,630
$46,355
Omaha, Neb.-Council Bluffs, Iowa
$47,823
$46,654
$45,643
Birmingham-Hoover, Ala.
$47,404
$46,276
$45,300
Atlanta-Sandy Springs-Marietta, Ga.
$46,314
$44,730
$43,360
Scranton-Wilkes-Barre, Pa.
$46,251
$45,254
$44,391
Des Moines-West Des Moines, Iowa
$46,078
$44,844
$43,776
Kansas City, Mo.-Kansas City, Kan.
$45,699
$44,413
$43,300
Cleveland-Elyria-Mentor, Ohio
$45,251
$44,025
$42,964
Grand Rapids-Wyoming, Mich.
$44,484
$43,304
$42,282
Toledo, Ohio
$44,009
$42,928
$41,992
Tampa-St. Petersburg-Clearwater, Fla.
$41,847
$40,237
$38,843
Chattanooga, Tenn.-Georgia *
$41,025
$39,955
$39,029
Cincinnati-Middletown, Ind.-Kentucky *
$40,454
$39,184
$38,086
Greenville-Mauldin-Easley, S.C.
$40,268
$39,169
$38,218
Harrisburg-Carlisle, Pa.
$37,456
$36,168
$35,054
Portland-South Portland-Biddeford, Maine
$37,197
$35,204
$33,479
New Haven-Milford, Conn.
$36,521
$34,284
$32,348
Deltona-Daytona Beach-Ormond Beach, Fla.
$36,217
$34,643
$33,281
Charleston-North Charleston, S.C.
$35,592
$34,062
$32,738
Louisville-Jefferson County, Ky.-Indiana *
$33,003
$31,809
$30,775
St. Louis -Illinois *
$32,933
$31,630
$30,503
Sarasota-Bradenton-Venice, Fla.
$31,544
$29,577
$27,875
Charlotte-Gastonia, N.C.-Concord, S.C.
$29,919
$28,524
$27,318
Columbus, Ohio
$28,982
$27,628
$26,457
Albuquerque, N.M.
$28,805
$27,356
$26,102
Jacksonville, Fla.
$26,832
$25,241
$23,863
Nashville-Davidson-Murfreesboro-Franklin, Tenn.
$26,567
$25,181
$23,982
Knoxville, Tenn.
$24,862
$23,663
$22,625
Palm Bay-Melbourne-Titusville, Fla.
$23,090
$21,467
$20,063
Richmond, Va.
$21,500
$19,740
$18,217
Raleigh-Cary, N.C.
$19,004
$17,386
$15,985
Springfield, Mass.
$16,338
$14,591
$13,079
Philadelphia-Camden, N.J.-Wilmington, Del. -Maryland *
$14,492
$12,532
$10,836
Hartford-West Hartford-East Hartford, Conn.
$13,494
$11,405
$9,598
Allentown-Bethlehem, Pa.-Easton, N.J.
$12,779
$11,063
$9,578
Milwaukee-Waukesha-West Allis, Wis.
$12,745
$11,076
$9,632
Virginia Beach-Norfolk-Newport News, Va.-North Carolina *
$10,449
$8,515
$6,842
Orlando-Kissimmee, Fla.
$9,400
$7,433
$5,730
Colorado Springs, Colo.
$4,482
$2,736
$1,224
By Marilyn Lewis, MSN Real Estate
Tuesday, July 8, 2008
Monday, October 29, 2007
Ten Cities Ready to Bounce Back
October 29, 2007
The horror show of America's residential real estate market just keeps getting scarier, what with the sub-prime mortgage crisis threatening to slash demand for homes while the inventory of unsold properties continues to pile up. It's enough to send any prudent investor fleeing to the relative sanity of, say, the stock market.
Don't. Instead, get ready for the bounce-back. The oldest rule of investing dictates that you buy low and sell high. Real-estate buyers aren't at the gate, however, because most local markets have yet to hit bottom. In fact, most cities won't do so for another year.
But Business 2.0, working with Moody's Economy.com, has unearthed 10 major metropolitan areas that are bucking the national housing trend. By the beginning of next year, these markets should be coming back to life -- and in our exclusive rankings, we've projected the house-price appreciation these cities will enjoy during 2008 and 2009. The gains may seem modest -- they range from about 4 to 7 percent -- but remember, in the midst of the current housing meltdown, any gain at all constitutes a minor miracle.
What our 10 cities have in common is that they're relatively affordable. They missed out on the housing bubble, yet they still enjoy steady employment and income growth. Not surprisingly, five of the 10 are state capitals with hefty public payrolls. Even more telling, with the exception of the three Texas metros ( Austin, Dallas, and Houston), the big national builders didn't make significant incursions into these markets.
"These cities didn't draw in speculators or investment the way the coastal markets did,. says Celia Chen, the Economy.com economist who crunched our numbers." "House prices in these places weren't untethered from the underlying fundamentals." These underappreciated -- but soon-to appreciate -- housing markets offer real opportunities to the savvy investor.
Dallas- Fort Worth Projected median sales prices for single-family homes: Q1 2008: $151,930 Q4 2009: $161,690 Growth rate: 6.4 percent
The Metroplex, as locals call the Dallas- Fort Worth region, is smoking, adding jobs at twice the national rate. Better yet, those new jobs are concentrated in well-paying fields like banking, advertising, and health care. Dallas- Fort Worth sits at the center of the Interstate 35 corridor, a "megapolitan" galaxy of urban development that Virginia Tech researchers estimate will add 6.4 million new people and 2.8 million units of housing over the next two decades. Dallas also serves as the North American headquarters for international high-tech employers like Nokia and Ericsson. All of this makes Dallas one of the nation's nine most global metros -- cities that are hubs for international trade and foreign investment -- according to an analysis by Moody's Economy.com.
Dallas has largely avoided the boom-and-bust cycle, which is one reason this market is on track to post the best returns on housing of any major U.S. city during the next two years. An added bonus: The region's service sector has escaped the collateral damage that comes when the bubble bursts and equity-driven spending dries up.
IndianapolisProjected median sales prices for single-family homes: Q1 2008: $122,940 Q4 2009: $130,630 Growth rate: 6.3 percent
Indianapolis is riding a few trends that are bringing about an early recovery in its real estate market. While Indiana's capital city did join in the housing boom this decade, prices didn't reach the stratosphere. Indianapolis still suffered through the downturn, though: Building permits for new homes dropped 30 percent from their peak in 2005. But the housing market hit bottom earlier here than in most parts of the country -- during the last quarter of 2006. Now, with the local economy poised to grow faster than the national average over the next two years, house prices are projected to post a respectable gain.
Indianapolis's low unemployment rate has made it a destination for people fleeing cities like Fort Wayne, Gary, and Terre Haute. It's also relatively cushioned from slowdowns in the national economy because more than a third of its workforce is employed in stable sectors like professional and business services, health care, education, and government. Those white-collar corps also helps boost Indianapolis's median household income to $50,500 a year. Given that you can buy a four-bedroom, 2,000-square-foot home for less than $200,000, this makes the place the nation's most affordable major metro.
New OrleansProjected median sales prices for single-family homes: Q1 2008: $153,850 Q4 2009: $162,600 Growth rate: 5.7 percent
Two years after Hurricane Katrina, New Orleans is a special case. Half of the city's schools remain closed, and 60 percent of its hospitals are shut down. The storm displaced more than a third of the city's population and destroyed or damaged 200,000 units of housing. A rush to buy anything left standing created a short-lived housing bubble last year, but prices have fallen back to pre-Katrina levels. What remains is a shortage of workers -- the unemployment rate has dropped from double digits to right around the national average -- and a lack of affordable housing. That's put extreme pressure on the rental market, with rents jumping nearly 40 percent in 2006, according to the nonprofit Greater New Orleans Community Data Center.
Those topsy-turvy trends make New Orleans the most difficult market on our list to predict. It's actually split into two halves: intact homes vs. those damaged by the flood. The latter represent the bottom half of the housing market, yet that's where the upside lies during the next two years. Local speculators bought up thousands of homes that were selling in the $150,000 range before Katrina for as little as $70,000 immediately after the hurricane. They've been renovating them with bells and whistles like marble countertops and listing the properties for about $200,000, says Arthur Sterbcow, president of Latter & Blum, the largest real estate brokerage on the Gulf Coast.
The locals got in early, but there will be a second opportunity for others to buy distressed properties at a deep discount. Latter & Blum estimates that New Orleans will witness more than 20,000 foreclosures during the next 24 months.
AtlantaProjected median sales prices for single-family homes: Q1 2008: $177,750 Q4 2009: $187,640 Growth: 5.6 percent
Half a million dollars probably won't buy you a home in one of Atlanta's Martha Stewart-style neighborhoods. And that's a good thing, argues Dan Forsman, CEO of Prudential Atlanta. Forsman says the smart money here will move upmarket, in exactly the opposite direction of where it will go in New Orleans. A contrarian by nature, he sees the biggest arbitrage in properties priced at $750,000 in high-end communities northeast of the city -- suburbs like Druid Hills, Duluth, Johns Creek, and Suwanee. The construction cost of a home in those pockets is $260 a square foot; right now, you can pick one off for $180.
Boding well for the local economy, "Hotlanta" boasts one of the highest rates of job growth in so-called creative-class occupations in the country. Why? It's the top destination in America for young professionals, a transportation hub ( Atlanta's airport is the busiest in the world), and a place where most Fortune 500 companies maintain a regional presence. Projections by researchers at the U.S. Census Bureau and Virginia Tech place Atlanta at the center of a "megapolitan" cluster of urban sprawl that will develop over the next quarter-century, encompassing 7 million people.
This points to another niche real estate play: As buildable land around the city disappears, downtown neighborhoods on the brink of transformation are ripe for investment.
MontgomeryProjected median sales prices for single-family homes: Q1 2008: $140,020 Q4 2009: $147,690 Growth rate: 5.5 percent
While layoffs from domestic carmakers depress the economies of northern Rust Belt cities, South Korean car company Kia is injecting jobs into Alabama's Interstate 85 corridor. The new jobs will boost the local economy and light a fire under housing prices. With the city's buildable land filling up, prices will spike.
Earl Martin, general manager of Aronov Realty, says prices will rise the most in new subdivisions on Montgomery's east side, as well as in the small towns along I-85. Other hot spots are bedroom communities like Wetumpka, 15 miles to the north in the so-called river region.
The other pocket seeing a resurgence is Old Cloverdale, a historic neighborhood in the heart of Montgomery where F. Scott Fitzgerald lived during the jazz age. Call it a trickle-down tax effect. After a decade of stagnation, the state government has been on a hiring spree for two years. The oversize public payroll is well represented in Montgomery's center, where about 9,000 state employees work alongside the staffs of 100 different trade associations and lobbying firms.
MemphisProjected median sales prices for single-family homes: Q1 2008: $143,550 Q4 2009: $150,730 Growth rate: 5.0 percent
Graceland aside, Memphis doesn't have many signature landmarks pumping up its property values. In fact, the city has been getting a bad rap because some real estate pros consider it one of the country's foreclosure capitals. But Memphis's housing market should hit bottom within the next few months, and the average home bought in 2003 still managed to sell for 12 percent more last year. Even better, prices have held steady this year, although the average number of days that homes sit on the market has grown larger. The PMI Risk Index, an econometric model developed by PMI Mortgage Insurance that predicts declines in home prices, consistently ranks Memphis as one of the nation's least vulnerable markets. And a survey by the forecasting firm Global Insight and National City Corp. has listed Memphis as one of the most undervalued markets in the United States for several years because of the low cost of housing relative to household income.
You can find some good values near Beale Street, the birthplace of America's blues scene, where a downtown condo-building craze has stranded a swath of empty units on the multiple listing service. But the best investment is one that taps into the collateral damage of the credit crunch. More couples and families will fail to qualify for mortgages and resort to renting single-family homes instead of buying them.
MobileProjected median sales prices for single-family homes: Q1 2008: $134,580 Q4 2009: $140,920 Growth rate: 4.7 percent
A low-wage backwater at the beginning of the decade, Mobile is emerging as the South's next boomtown and a magnet for megaprojects. The biggest is a $3.7 billion steel mill that German industrial giant ThyssenKrupp is building north of Mobile. It will create 2,700 jobs when it opens in 2010, generate almost twice as many spinoff jobs, and bring in 30,000 workers during the construction phase. Next up is a new container terminal that will catapult Mobile into the big leagues as a shipping port. At the top of the food chain, aerospace contractor Eads just opened a facility on Mobile Bay where 150 high-earning engineers will design Airbus's long-range jets.
Just how great is that for the housing market? Mobile has seen scant home construction during the past two decades, and a housing shortage means the real estate market is set to heat up. Already, a three-bedroom, 2,000-square-foot home that sold for $157,000 a year ago now goes for about $170,000. The trend has captured the notice of speculators from California, Colorado, and Florida.
AustinProjected median sales prices for single-family homes: Q1 2008: $186,350 Q4 2009: $195,060 Growth rate: 4.7 percent
In Austin, the rental market takes a backseat to buyers, many of whom hold high-paying jobs with tech giants like Dell, IBM, and Freescale Semiconductors. Austin's population is well educated -- 40 percent have a university degree -- and the Texas capital ranks among the top major metropolitan areas for business startups per capita. Austin also has the highest percent age of residents in the coveted 25- to 34-year-old demographic and, not coincidentally, the highest concentration of live music venues in the country. The labor market is so hot that shortages of engineers and product managers are driving double-digit wage hikes in those occupations.
But unlike other creative-class capitals, Austin doesn't price white-collar talent out of the housing market. At $200,000, the median sales price for a single-family home is about a third of that in San Francisco. But the gap is starting to close: While home prices in San Francisco have barely budged since the market peaked in 2005, prices in Austin have risen by 6 percent. That has prompted major builders to lay groundwork for some of the largest new master-planned communities in the country - at the very time that competitors are fleeing other Sun Belt metros.
HoustonProjected median sales prices for single-family homes: Q1 2008: $154,850 Q4 2009: $161,910 Growth rate: 4.6 percent
Downtown Houston is also one of the places to be these days. The Texas oil capital is notorious for its suburban sprawl and horrendous traffic jams, but within the so-called Inner Loop bounded by Interstate 610 lies a new land of opportunity. That's where a multibillion-dollar expansion of Houston's medical center has spurred an influx of high-earning workers looking to live nearby.
Commuting to the center of the city has gotten worse in recent years, so suburbanites are flocking to the Inner Loop to snatch up older homes just for their lots and location. The trend is none too surprising, given that Houston is the only major U.S. city with no formal zoning code, which makes purchasing older houses and tearing them down to build whatever you want pretty easy. New homes on old lots start at about $1 million and reach as high as $4 million. Meanwhile, Big Oil is keeping Houston humming; the city added nearly 100,000 jobs last year.
St. LouisProjected median sales prices for single-family homes: Q1 2008: $143,920 Q4 2009: $149,710 Growth rate: 4.0 percent
St. Louis's annual per capita income of $36,000 matches the national average, and the metro's economic growth rate closely tracks that of the overall U.S. gross domestic product. Its workforce is light on the kind of high-skilled techies that have made places like Silicon Valley and Raleigh-Durham boom - but then again, the middle of the road is a good place to be during a national housing meltdown. The boom-and-bust fluctuations in hot markets were only felt as ripples here.
Craig Heller, a local developer who owns a company called Loftworks has placed his bets on converting historic buildings and warehouses in the urban core into condos, selling the units at an average of $275,000 a pop. He expects downtown loft prices to increase substantially this decade, thanks to reverse migration from the suburbs.
At the same time, a different brand of gentrification is starting to emerge in outlying towns that have been absorbed by St. Louis's sprawl. Speculators are buying traditional country homes at a discount in enclaves like Glendale, Kirkwood, Sunset Hills, and Webster Groves. They then tear them down and put up McMansions that list for multiples of the property's original sales price.
By Paul Kaihla, CNNMoney.com
The horror show of America's residential real estate market just keeps getting scarier, what with the sub-prime mortgage crisis threatening to slash demand for homes while the inventory of unsold properties continues to pile up. It's enough to send any prudent investor fleeing to the relative sanity of, say, the stock market.
Don't. Instead, get ready for the bounce-back. The oldest rule of investing dictates that you buy low and sell high. Real-estate buyers aren't at the gate, however, because most local markets have yet to hit bottom. In fact, most cities won't do so for another year.
But Business 2.0, working with Moody's Economy.com, has unearthed 10 major metropolitan areas that are bucking the national housing trend. By the beginning of next year, these markets should be coming back to life -- and in our exclusive rankings, we've projected the house-price appreciation these cities will enjoy during 2008 and 2009. The gains may seem modest -- they range from about 4 to 7 percent -- but remember, in the midst of the current housing meltdown, any gain at all constitutes a minor miracle.
What our 10 cities have in common is that they're relatively affordable. They missed out on the housing bubble, yet they still enjoy steady employment and income growth. Not surprisingly, five of the 10 are state capitals with hefty public payrolls. Even more telling, with the exception of the three Texas metros ( Austin, Dallas, and Houston), the big national builders didn't make significant incursions into these markets.
"These cities didn't draw in speculators or investment the way the coastal markets did,. says Celia Chen, the Economy.com economist who crunched our numbers." "House prices in these places weren't untethered from the underlying fundamentals." These underappreciated -- but soon-to appreciate -- housing markets offer real opportunities to the savvy investor.
Dallas- Fort Worth Projected median sales prices for single-family homes: Q1 2008: $151,930 Q4 2009: $161,690 Growth rate: 6.4 percent
The Metroplex, as locals call the Dallas- Fort Worth region, is smoking, adding jobs at twice the national rate. Better yet, those new jobs are concentrated in well-paying fields like banking, advertising, and health care. Dallas- Fort Worth sits at the center of the Interstate 35 corridor, a "megapolitan" galaxy of urban development that Virginia Tech researchers estimate will add 6.4 million new people and 2.8 million units of housing over the next two decades. Dallas also serves as the North American headquarters for international high-tech employers like Nokia and Ericsson. All of this makes Dallas one of the nation's nine most global metros -- cities that are hubs for international trade and foreign investment -- according to an analysis by Moody's Economy.com.
Dallas has largely avoided the boom-and-bust cycle, which is one reason this market is on track to post the best returns on housing of any major U.S. city during the next two years. An added bonus: The region's service sector has escaped the collateral damage that comes when the bubble bursts and equity-driven spending dries up.
IndianapolisProjected median sales prices for single-family homes: Q1 2008: $122,940 Q4 2009: $130,630 Growth rate: 6.3 percent
Indianapolis is riding a few trends that are bringing about an early recovery in its real estate market. While Indiana's capital city did join in the housing boom this decade, prices didn't reach the stratosphere. Indianapolis still suffered through the downturn, though: Building permits for new homes dropped 30 percent from their peak in 2005. But the housing market hit bottom earlier here than in most parts of the country -- during the last quarter of 2006. Now, with the local economy poised to grow faster than the national average over the next two years, house prices are projected to post a respectable gain.
Indianapolis's low unemployment rate has made it a destination for people fleeing cities like Fort Wayne, Gary, and Terre Haute. It's also relatively cushioned from slowdowns in the national economy because more than a third of its workforce is employed in stable sectors like professional and business services, health care, education, and government. Those white-collar corps also helps boost Indianapolis's median household income to $50,500 a year. Given that you can buy a four-bedroom, 2,000-square-foot home for less than $200,000, this makes the place the nation's most affordable major metro.
New OrleansProjected median sales prices for single-family homes: Q1 2008: $153,850 Q4 2009: $162,600 Growth rate: 5.7 percent
Two years after Hurricane Katrina, New Orleans is a special case. Half of the city's schools remain closed, and 60 percent of its hospitals are shut down. The storm displaced more than a third of the city's population and destroyed or damaged 200,000 units of housing. A rush to buy anything left standing created a short-lived housing bubble last year, but prices have fallen back to pre-Katrina levels. What remains is a shortage of workers -- the unemployment rate has dropped from double digits to right around the national average -- and a lack of affordable housing. That's put extreme pressure on the rental market, with rents jumping nearly 40 percent in 2006, according to the nonprofit Greater New Orleans Community Data Center.
Those topsy-turvy trends make New Orleans the most difficult market on our list to predict. It's actually split into two halves: intact homes vs. those damaged by the flood. The latter represent the bottom half of the housing market, yet that's where the upside lies during the next two years. Local speculators bought up thousands of homes that were selling in the $150,000 range before Katrina for as little as $70,000 immediately after the hurricane. They've been renovating them with bells and whistles like marble countertops and listing the properties for about $200,000, says Arthur Sterbcow, president of Latter & Blum, the largest real estate brokerage on the Gulf Coast.
The locals got in early, but there will be a second opportunity for others to buy distressed properties at a deep discount. Latter & Blum estimates that New Orleans will witness more than 20,000 foreclosures during the next 24 months.
AtlantaProjected median sales prices for single-family homes: Q1 2008: $177,750 Q4 2009: $187,640 Growth: 5.6 percent
Half a million dollars probably won't buy you a home in one of Atlanta's Martha Stewart-style neighborhoods. And that's a good thing, argues Dan Forsman, CEO of Prudential Atlanta. Forsman says the smart money here will move upmarket, in exactly the opposite direction of where it will go in New Orleans. A contrarian by nature, he sees the biggest arbitrage in properties priced at $750,000 in high-end communities northeast of the city -- suburbs like Druid Hills, Duluth, Johns Creek, and Suwanee. The construction cost of a home in those pockets is $260 a square foot; right now, you can pick one off for $180.
Boding well for the local economy, "Hotlanta" boasts one of the highest rates of job growth in so-called creative-class occupations in the country. Why? It's the top destination in America for young professionals, a transportation hub ( Atlanta's airport is the busiest in the world), and a place where most Fortune 500 companies maintain a regional presence. Projections by researchers at the U.S. Census Bureau and Virginia Tech place Atlanta at the center of a "megapolitan" cluster of urban sprawl that will develop over the next quarter-century, encompassing 7 million people.
This points to another niche real estate play: As buildable land around the city disappears, downtown neighborhoods on the brink of transformation are ripe for investment.
MontgomeryProjected median sales prices for single-family homes: Q1 2008: $140,020 Q4 2009: $147,690 Growth rate: 5.5 percent
While layoffs from domestic carmakers depress the economies of northern Rust Belt cities, South Korean car company Kia is injecting jobs into Alabama's Interstate 85 corridor. The new jobs will boost the local economy and light a fire under housing prices. With the city's buildable land filling up, prices will spike.
Earl Martin, general manager of Aronov Realty, says prices will rise the most in new subdivisions on Montgomery's east side, as well as in the small towns along I-85. Other hot spots are bedroom communities like Wetumpka, 15 miles to the north in the so-called river region.
The other pocket seeing a resurgence is Old Cloverdale, a historic neighborhood in the heart of Montgomery where F. Scott Fitzgerald lived during the jazz age. Call it a trickle-down tax effect. After a decade of stagnation, the state government has been on a hiring spree for two years. The oversize public payroll is well represented in Montgomery's center, where about 9,000 state employees work alongside the staffs of 100 different trade associations and lobbying firms.
MemphisProjected median sales prices for single-family homes: Q1 2008: $143,550 Q4 2009: $150,730 Growth rate: 5.0 percent
Graceland aside, Memphis doesn't have many signature landmarks pumping up its property values. In fact, the city has been getting a bad rap because some real estate pros consider it one of the country's foreclosure capitals. But Memphis's housing market should hit bottom within the next few months, and the average home bought in 2003 still managed to sell for 12 percent more last year. Even better, prices have held steady this year, although the average number of days that homes sit on the market has grown larger. The PMI Risk Index, an econometric model developed by PMI Mortgage Insurance that predicts declines in home prices, consistently ranks Memphis as one of the nation's least vulnerable markets. And a survey by the forecasting firm Global Insight and National City Corp. has listed Memphis as one of the most undervalued markets in the United States for several years because of the low cost of housing relative to household income.
You can find some good values near Beale Street, the birthplace of America's blues scene, where a downtown condo-building craze has stranded a swath of empty units on the multiple listing service. But the best investment is one that taps into the collateral damage of the credit crunch. More couples and families will fail to qualify for mortgages and resort to renting single-family homes instead of buying them.
MobileProjected median sales prices for single-family homes: Q1 2008: $134,580 Q4 2009: $140,920 Growth rate: 4.7 percent
A low-wage backwater at the beginning of the decade, Mobile is emerging as the South's next boomtown and a magnet for megaprojects. The biggest is a $3.7 billion steel mill that German industrial giant ThyssenKrupp is building north of Mobile. It will create 2,700 jobs when it opens in 2010, generate almost twice as many spinoff jobs, and bring in 30,000 workers during the construction phase. Next up is a new container terminal that will catapult Mobile into the big leagues as a shipping port. At the top of the food chain, aerospace contractor Eads just opened a facility on Mobile Bay where 150 high-earning engineers will design Airbus's long-range jets.
Just how great is that for the housing market? Mobile has seen scant home construction during the past two decades, and a housing shortage means the real estate market is set to heat up. Already, a three-bedroom, 2,000-square-foot home that sold for $157,000 a year ago now goes for about $170,000. The trend has captured the notice of speculators from California, Colorado, and Florida.
AustinProjected median sales prices for single-family homes: Q1 2008: $186,350 Q4 2009: $195,060 Growth rate: 4.7 percent
In Austin, the rental market takes a backseat to buyers, many of whom hold high-paying jobs with tech giants like Dell, IBM, and Freescale Semiconductors. Austin's population is well educated -- 40 percent have a university degree -- and the Texas capital ranks among the top major metropolitan areas for business startups per capita. Austin also has the highest percent age of residents in the coveted 25- to 34-year-old demographic and, not coincidentally, the highest concentration of live music venues in the country. The labor market is so hot that shortages of engineers and product managers are driving double-digit wage hikes in those occupations.
But unlike other creative-class capitals, Austin doesn't price white-collar talent out of the housing market. At $200,000, the median sales price for a single-family home is about a third of that in San Francisco. But the gap is starting to close: While home prices in San Francisco have barely budged since the market peaked in 2005, prices in Austin have risen by 6 percent. That has prompted major builders to lay groundwork for some of the largest new master-planned communities in the country - at the very time that competitors are fleeing other Sun Belt metros.
HoustonProjected median sales prices for single-family homes: Q1 2008: $154,850 Q4 2009: $161,910 Growth rate: 4.6 percent
Downtown Houston is also one of the places to be these days. The Texas oil capital is notorious for its suburban sprawl and horrendous traffic jams, but within the so-called Inner Loop bounded by Interstate 610 lies a new land of opportunity. That's where a multibillion-dollar expansion of Houston's medical center has spurred an influx of high-earning workers looking to live nearby.
Commuting to the center of the city has gotten worse in recent years, so suburbanites are flocking to the Inner Loop to snatch up older homes just for their lots and location. The trend is none too surprising, given that Houston is the only major U.S. city with no formal zoning code, which makes purchasing older houses and tearing them down to build whatever you want pretty easy. New homes on old lots start at about $1 million and reach as high as $4 million. Meanwhile, Big Oil is keeping Houston humming; the city added nearly 100,000 jobs last year.
St. LouisProjected median sales prices for single-family homes: Q1 2008: $143,920 Q4 2009: $149,710 Growth rate: 4.0 percent
St. Louis's annual per capita income of $36,000 matches the national average, and the metro's economic growth rate closely tracks that of the overall U.S. gross domestic product. Its workforce is light on the kind of high-skilled techies that have made places like Silicon Valley and Raleigh-Durham boom - but then again, the middle of the road is a good place to be during a national housing meltdown. The boom-and-bust fluctuations in hot markets were only felt as ripples here.
Craig Heller, a local developer who owns a company called Loftworks has placed his bets on converting historic buildings and warehouses in the urban core into condos, selling the units at an average of $275,000 a pop. He expects downtown loft prices to increase substantially this decade, thanks to reverse migration from the suburbs.
At the same time, a different brand of gentrification is starting to emerge in outlying towns that have been absorbed by St. Louis's sprawl. Speculators are buying traditional country homes at a discount in enclaves like Glendale, Kirkwood, Sunset Hills, and Webster Groves. They then tear them down and put up McMansions that list for multiples of the property's original sales price.
By Paul Kaihla, CNNMoney.com
Friday, October 26, 2007
Austin Housing Market
October 10, 2007
A new release from the National Association of Realtors has some good news about Austin real estate, amid all the national gloom and doom.
The release follows:
Conditions in the mortgage market are improving for consumers, which should help to release some pent-up demand in early 2008, according to the latest forecast by the National Association of Realtors.
Lawrence Yun, NAR senior economist, notes that widening credit availability will help turn around home sales. "Conforming loans are abundantly available at historically favorable mortgage rates. Pricing has steadily improved on jumbo mortgages since the August credit crunch, and FHA loans are replacing subprime mortgages," he said.
Yun said it's important to place the current housing market in perspective, and that 2007 will be the fifth highest year on record for existing-home sales. "Although sales are off from an unsustainable peak in 2005, there is a historically high level of home sales taking place this year - a lot of people are, in fact, buying homes," he said. "One out of 16 American households is buying a home this year. The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains."
He emphasized all real estate is local with naturally large variations within a given area. "Markets like Austin, Salt Lake City and Raleigh have been outperforming recently and will continue to do well next year," Yun said. "Other areas like Denver and Wichita will likely move up in the price growth rankings due to very positive local economic developments."
Existing-home sales are expected to total 5.78 million in 2007 and then rise to 6.12 million next year, in contrast with 6.48 million in 2006. New-home sales are forecast at 804,000 this year and 752,000 in 2008, down from 1.05 million in 2006; a recovery for new homes will be delayed until next spring.
"A cutback in housing construction is a positive sign for the market because it will help lower inventory and firm up home prices," Yun said. Housing starts, including multifamily units, are likely to total 1.37 million in 2007 and 1.24 million next year, down from 1.80 million in 2006.
Relators President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said, "Housing is still a good long-term investment, and we'll be seeing a broad, modest improvement in home prices in 2008. With widely varying conditions, the best advice for consumers is to consult a Realtor in their area to learn about local market conditions because supply and demand can change from one neighborhood to the next."
Existing-home prices will probably slip 1.3 percent to a median of $219,000 in 2007 before rising 1.3 percent next year to $221,800. The median new-home price should drop 2.1 percent to $241,400 this year, and then increase 1.0 percent in 2008 to $243,900.
The 30-year fixed-rate mortgage is expected to average 6.4 percent for the next two quarters and then edge up to the 6.6 percent range in the second half 2008. Additional cuts expected in the Fed funds rate will help to keep mortgage interest rates historically favorable.
Growth in the U.S. gross domestic product (GDP) is estimated at 2.0 percent this year, below the 2.9 percent growth rate in 2006; GDP is likely to grow 2.7 percent next year. The unemployment rate is forecast to average 4.6 percent this year, unchanged from 2006. Inflation, as measured by the Consumer Price Index, is expected to be 2.8 percent in 2007, compared with 3.2 percent last year. Inflation-adjusted disposable personal income will probably increase 3.6 percent in 2007, up from 3.1 percent last year.
Austin American Statesman
A new release from the National Association of Realtors has some good news about Austin real estate, amid all the national gloom and doom.
The release follows:
Conditions in the mortgage market are improving for consumers, which should help to release some pent-up demand in early 2008, according to the latest forecast by the National Association of Realtors.
Lawrence Yun, NAR senior economist, notes that widening credit availability will help turn around home sales. "Conforming loans are abundantly available at historically favorable mortgage rates. Pricing has steadily improved on jumbo mortgages since the August credit crunch, and FHA loans are replacing subprime mortgages," he said.
Yun said it's important to place the current housing market in perspective, and that 2007 will be the fifth highest year on record for existing-home sales. "Although sales are off from an unsustainable peak in 2005, there is a historically high level of home sales taking place this year - a lot of people are, in fact, buying homes," he said. "One out of 16 American households is buying a home this year. The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains."
He emphasized all real estate is local with naturally large variations within a given area. "Markets like Austin, Salt Lake City and Raleigh have been outperforming recently and will continue to do well next year," Yun said. "Other areas like Denver and Wichita will likely move up in the price growth rankings due to very positive local economic developments."
Existing-home sales are expected to total 5.78 million in 2007 and then rise to 6.12 million next year, in contrast with 6.48 million in 2006. New-home sales are forecast at 804,000 this year and 752,000 in 2008, down from 1.05 million in 2006; a recovery for new homes will be delayed until next spring.
"A cutback in housing construction is a positive sign for the market because it will help lower inventory and firm up home prices," Yun said. Housing starts, including multifamily units, are likely to total 1.37 million in 2007 and 1.24 million next year, down from 1.80 million in 2006.
Relators President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said, "Housing is still a good long-term investment, and we'll be seeing a broad, modest improvement in home prices in 2008. With widely varying conditions, the best advice for consumers is to consult a Realtor in their area to learn about local market conditions because supply and demand can change from one neighborhood to the next."
Existing-home prices will probably slip 1.3 percent to a median of $219,000 in 2007 before rising 1.3 percent next year to $221,800. The median new-home price should drop 2.1 percent to $241,400 this year, and then increase 1.0 percent in 2008 to $243,900.
The 30-year fixed-rate mortgage is expected to average 6.4 percent for the next two quarters and then edge up to the 6.6 percent range in the second half 2008. Additional cuts expected in the Fed funds rate will help to keep mortgage interest rates historically favorable.
Growth in the U.S. gross domestic product (GDP) is estimated at 2.0 percent this year, below the 2.9 percent growth rate in 2006; GDP is likely to grow 2.7 percent next year. The unemployment rate is forecast to average 4.6 percent this year, unchanged from 2006. Inflation, as measured by the Consumer Price Index, is expected to be 2.8 percent in 2007, compared with 3.2 percent last year. Inflation-adjusted disposable personal income will probably increase 3.6 percent in 2007, up from 3.1 percent last year.
Austin American Statesman
Tuesday, October 16, 2007
Austin Market Conditions
Austin, Texas, the 4th largest city in Texas, saw demand drop 10 percent at the end of summer, despite an increase in inventory of homes on the market. Supply rose 21 percent in August of this year.
Despite these figures, CNNMoney reports projects that Austin will see a 4.7 percent growth appreciation rate in 2008.
For now, the average sales price is up 16 percent for the year to $256,000.
Local expert Delilah Fuentes reports, "Though the Austin housing market is not as robust as it was in 2006, the area is still outperforming most U.S. markets."
Add these factors to a median household income of $64,000, and you have yourself one affordable city, which ranked on CNNMoney's "Best Places to Live" list in 2006.
Despite these figures, CNNMoney reports projects that Austin will see a 4.7 percent growth appreciation rate in 2008.
For now, the average sales price is up 16 percent for the year to $256,000.
Local expert Delilah Fuentes reports, "Though the Austin housing market is not as robust as it was in 2006, the area is still outperforming most U.S. markets."
Add these factors to a median household income of $64,000, and you have yourself one affordable city, which ranked on CNNMoney's "Best Places to Live" list in 2006.
Wednesday, May 9, 2007
Downtown development gets an assist from NBA legend Earvin Johnson.
Wednesday, May 09, 2007
First it was Willie Nelson.
Now stepping to the line: basketball legend Magic Johnson.
The NBA superstar turned businessman is the latest high-profile figure to lend his name, money and expertise to Block 21. By early 2010, the project may transform a vacant downtown block into a flashy complex with live music, a W hotel, luxury condominiums, and shops and restaurants.
Earvin "Magic" Johnson and his private equity fund, Canyon-Johnson Urban Fund, will invest $50 million in the $260 million project that Austin-based Stratus Properties Inc. plans to start building in September on a lot north of City Hall.
Johnson said the redevelopment is a good fit for some of the nearly $1 billion the fund has committed to help foster $3 billion worth of urban revitalization and mixed-use projects in cities such as Los Angeles, San Diego, Miami, Milwaukee, Baltimore, Boston, Chicago and Brooklyn, N.Y.
"We just want to do business in a great city," said Johnson, who likes Austin and has friends here, including many University of Texas athletes. "Every guy that plays here, they don't want to leave. What is it that makes Austin magical like that?"
Johnson and K. Robert Turner, Canyon-Johnson's managing partner, said Austin fits the profile of cities where the fund likes to invest, from growing areas such as Central Texas to ethnically diverse neighborhoods in densely populated metro areas.
The Block 21 project is expected to create thousands of construction jobs and hundreds more jobs when the project opens, Turner and Johnson said.
"We are committed to creating opportunities for the people in Austin, and I feel blessed and fortunate to be able to bring our expertise and our money to the City of Austin," said Johnson, who led the Los Angeles Lakers to five NBA championships and became one of the NBA's most popular players ever.
Since announcing that he had HIV in 1991, he has crusaded for AIDS prevention and made socially conscious investments and donations.
Block 21 is the fund's first investment in Austin.
Canyon-Johnson Director Neville Rhone first targeted Austin for investment two years ago. Executives later paid visits to Mayor Will Wynn and other city officials who steered them to the Block 21 deal, Turner said.
The partnership resulted from a "two-punch knockout," with Wynn selling Canyon-Johnson officials on his long-range vision of Austin and Beau Armstrong, Stratus' chairman and CEO, selling them on "the uniqueness" of Block 21.
Stratus' plans for Block 21 include an upscale 250-room W hotel and 200 luxury condominiums in a 35-story tower, plus new homes for the Austin Children's Museum and KLRU's acclaimed "Austin City Limits" music program.
The condos are expected to be priced from about $400,000 to more than $3 million, Armstrong said.
In addition to the television studios, Live Nation will operate a 2,200-seat live music/performance space venue when "ACL" isn't taping. Willie Nelson and nephew Freddy Fletcher will be partners with Stratus in the "ACL" venue, lending financial and technical support.
The venue is expected to raise the show's profile and provide locals and tourists with a destination entertainment attraction, with five times the capacity of the existing quarters on the University of Texas campus.
Armstrong said the music component resonated with Canyon-Johnson, particularly Rhone and Turner, who are big fans of "Austin City Limits" and its public television sponsor.
"They thought that was really great to have that energize the development," Armstrong said.
Turner added that the goal of getting the highest level of green building certification for the project was a selling point.
Armstrong said Canyon-Johnson has been interested in the project from the outset, with a phone call from Rhone coming soon after the city chose Stratus to purchase and redevelop the site after a competitive process.
"They liked the concept," Armstrong said, but at that preliminary stage, discussions didn't go much further.
Rhone "kept calling back," Armstrong said. "And as we continued to make progress, I kept them informed and kind of struck up a good relationship."
Stratus chose Canyon-Johnson over a number of other "very qualified" prospective partners, Armstrong said, adding that the fund's Block 21 investment could yield double-digit returns."
Johnson said he's looking forward to attending Block 21's ribbon-cutting. "I'll be there for sure," he said. "We don't just write a check. We also get involved with the city."
By Shonda Novak
AMERICAN-STATESMAN STAFF
First it was Willie Nelson.
Now stepping to the line: basketball legend Magic Johnson.
The NBA superstar turned businessman is the latest high-profile figure to lend his name, money and expertise to Block 21. By early 2010, the project may transform a vacant downtown block into a flashy complex with live music, a W hotel, luxury condominiums, and shops and restaurants.
Earvin "Magic" Johnson and his private equity fund, Canyon-Johnson Urban Fund, will invest $50 million in the $260 million project that Austin-based Stratus Properties Inc. plans to start building in September on a lot north of City Hall.
Johnson said the redevelopment is a good fit for some of the nearly $1 billion the fund has committed to help foster $3 billion worth of urban revitalization and mixed-use projects in cities such as Los Angeles, San Diego, Miami, Milwaukee, Baltimore, Boston, Chicago and Brooklyn, N.Y.
"We just want to do business in a great city," said Johnson, who likes Austin and has friends here, including many University of Texas athletes. "Every guy that plays here, they don't want to leave. What is it that makes Austin magical like that?"
Johnson and K. Robert Turner, Canyon-Johnson's managing partner, said Austin fits the profile of cities where the fund likes to invest, from growing areas such as Central Texas to ethnically diverse neighborhoods in densely populated metro areas.
The Block 21 project is expected to create thousands of construction jobs and hundreds more jobs when the project opens, Turner and Johnson said.
"We are committed to creating opportunities for the people in Austin, and I feel blessed and fortunate to be able to bring our expertise and our money to the City of Austin," said Johnson, who led the Los Angeles Lakers to five NBA championships and became one of the NBA's most popular players ever.
Since announcing that he had HIV in 1991, he has crusaded for AIDS prevention and made socially conscious investments and donations.
Block 21 is the fund's first investment in Austin.
Canyon-Johnson Director Neville Rhone first targeted Austin for investment two years ago. Executives later paid visits to Mayor Will Wynn and other city officials who steered them to the Block 21 deal, Turner said.
The partnership resulted from a "two-punch knockout," with Wynn selling Canyon-Johnson officials on his long-range vision of Austin and Beau Armstrong, Stratus' chairman and CEO, selling them on "the uniqueness" of Block 21.
Stratus' plans for Block 21 include an upscale 250-room W hotel and 200 luxury condominiums in a 35-story tower, plus new homes for the Austin Children's Museum and KLRU's acclaimed "Austin City Limits" music program.
The condos are expected to be priced from about $400,000 to more than $3 million, Armstrong said.
In addition to the television studios, Live Nation will operate a 2,200-seat live music/performance space venue when "ACL" isn't taping. Willie Nelson and nephew Freddy Fletcher will be partners with Stratus in the "ACL" venue, lending financial and technical support.
The venue is expected to raise the show's profile and provide locals and tourists with a destination entertainment attraction, with five times the capacity of the existing quarters on the University of Texas campus.
Armstrong said the music component resonated with Canyon-Johnson, particularly Rhone and Turner, who are big fans of "Austin City Limits" and its public television sponsor.
"They thought that was really great to have that energize the development," Armstrong said.
Turner added that the goal of getting the highest level of green building certification for the project was a selling point.
Armstrong said Canyon-Johnson has been interested in the project from the outset, with a phone call from Rhone coming soon after the city chose Stratus to purchase and redevelop the site after a competitive process.
"They liked the concept," Armstrong said, but at that preliminary stage, discussions didn't go much further.
Rhone "kept calling back," Armstrong said. "And as we continued to make progress, I kept them informed and kind of struck up a good relationship."
Stratus chose Canyon-Johnson over a number of other "very qualified" prospective partners, Armstrong said, adding that the fund's Block 21 investment could yield double-digit returns."
Johnson said he's looking forward to attending Block 21's ribbon-cutting. "I'll be there for sure," he said. "We don't just write a check. We also get involved with the city."
By Shonda Novak
AMERICAN-STATESMAN STAFF
Saturday, May 5, 2007
Austin home market appears to be cooling
New figures about March indicate sales are stalling.
Saturday, April 21, 2007
The once-sizzling Central Texas home market appears to be cooling off. The number of homes sold in March was flat, the third month in a row that sales have stalled or declined.
Sales of preowned single-family homes in March totaled 2,343 for the month, a slight 1 percent increase over the year-ago period, according to the Austin Board of Realtors.
The national mortgage mess has knocked many first-time buyers out of the market, real estate experts say, and Central Texas is seeing the effects of the collapse of the subprime lending market.
"The lenders are becoming a little bit more leery about the loans they are making and underwriting," said Jim Gaines, a research economist at the Real Estate Center at Texas A&M University.
A subprime loan is typically given to someone with a less-than-stellar credit history and may not require a down payment.
The subprime shakeout is hitting first-time buyers harder and is contributing to slowing sales in lower price ranges — $180,000 and below.
"Tightening credit standards will impact these lower price points more than the upper price changes, so we can expect to see further slowing in sales in these lower price points as it becomes more difficult for those buyers to qualify for a mortgage," said Eldon Rude, director of the Austin office of Metrostudy.
Builders are also slowing production, Rude said. And because builders list some of their new homes in the Board of Realtors' database of available inventory, that pullback is showing up in the existing-home sales numbers, and also partly explains the slower sales in the lower price ranges.
But real estate agents noted that although Central Texas is not seeing any more double-digit increases in the number of homes sold, Austin is still doing better than the rest of the nation.
"Austin is still continuing to be a fairly strong market," Gaines said. "Nothing goes up forever. Eventually you will hit a year when it's not better than the year before."
The median price rose to $177,080, up 6 percent from a year earlier when the median was $167,000. In some hot areas, agents are seeing multiple offers. One house near U.S. 183 and Duval Road generated eight offers over Easter weekend, said Tom Polk, a broker with Stanberry & Associates Inc.
"The frenzy is fueled by the increasing number of people moving to Austin," Polk said. Areas close to the city's core remain popular with new Central Texas residents.
"There's always been a percentage of those who want to be close to where the action is," Polk said.
Homes sold at a faster pace in March, in about 65 days, which is a 4 percent decrease from the same month a year earlier.
In March, the number of condominiums and townhomes that sold was also flat compared with the year-earlier period. But the median price of a condo or townhome increased 14 percent from last year to $170,000.
Even though sales overall slowed in March, Rude said, "we remain a solid market."
By Lilly Rockwell , Shonda Novak
AMERICAN-STATESMAN STAFF
Saturday, April 21, 2007
The once-sizzling Central Texas home market appears to be cooling off. The number of homes sold in March was flat, the third month in a row that sales have stalled or declined.
Sales of preowned single-family homes in March totaled 2,343 for the month, a slight 1 percent increase over the year-ago period, according to the Austin Board of Realtors.
The national mortgage mess has knocked many first-time buyers out of the market, real estate experts say, and Central Texas is seeing the effects of the collapse of the subprime lending market.
"The lenders are becoming a little bit more leery about the loans they are making and underwriting," said Jim Gaines, a research economist at the Real Estate Center at Texas A&M University.
A subprime loan is typically given to someone with a less-than-stellar credit history and may not require a down payment.
The subprime shakeout is hitting first-time buyers harder and is contributing to slowing sales in lower price ranges — $180,000 and below.
"Tightening credit standards will impact these lower price points more than the upper price changes, so we can expect to see further slowing in sales in these lower price points as it becomes more difficult for those buyers to qualify for a mortgage," said Eldon Rude, director of the Austin office of Metrostudy.
Builders are also slowing production, Rude said. And because builders list some of their new homes in the Board of Realtors' database of available inventory, that pullback is showing up in the existing-home sales numbers, and also partly explains the slower sales in the lower price ranges.
But real estate agents noted that although Central Texas is not seeing any more double-digit increases in the number of homes sold, Austin is still doing better than the rest of the nation.
"Austin is still continuing to be a fairly strong market," Gaines said. "Nothing goes up forever. Eventually you will hit a year when it's not better than the year before."
The median price rose to $177,080, up 6 percent from a year earlier when the median was $167,000. In some hot areas, agents are seeing multiple offers. One house near U.S. 183 and Duval Road generated eight offers over Easter weekend, said Tom Polk, a broker with Stanberry & Associates Inc.
"The frenzy is fueled by the increasing number of people moving to Austin," Polk said. Areas close to the city's core remain popular with new Central Texas residents.
"There's always been a percentage of those who want to be close to where the action is," Polk said.
Homes sold at a faster pace in March, in about 65 days, which is a 4 percent decrease from the same month a year earlier.
In March, the number of condominiums and townhomes that sold was also flat compared with the year-earlier period. But the median price of a condo or townhome increased 14 percent from last year to $170,000.
Even though sales overall slowed in March, Rude said, "we remain a solid market."
By Lilly Rockwell , Shonda Novak
AMERICAN-STATESMAN STAFF
Families again flocking to Central Texas
More people moving here, but most are from elsewhere in Texas rather than California
Strong job growth, relatively affordable housing and a reputation for a good quality of life are bringing people to Central Texas from all over the United States in increasing numbers.
Many more people moved here from Houston and San Antonio than from Los Angeles or San Jose in 2005, according to an analysis of Internal Revenue Service filings for the most recent year available. Nearly 70 percent of the households moved here from elsewhere in Texas, and the No. 1 source of migration to Hays, Travis and Williamson counties was a county next door.
But the number of Californians who moved into Hays, Travis and Williamson counties in 2005 did jump 32 percent from the previous year, and real estate agents helping many of the transplants buy homes here said the numbers did not decline in 2006.
Travis County had a net gain of 2,847 households from elsewhere in the United States in 2005, almost five times the net gain in 2004.
In Hays County, the number doubled in 2005, to 1,142 households, according to an analysis of IRS filings for the most recent years available. Williamson County had a net gain of 4,090 households, up 14 percent from 2004.
The gains were less than each county experienced in 2000 and 2001, but that's not surprising, said Brian Kelsey of the regional planning group Capital Area Council of Governments, because growth rates tend to slow as once up-and-coming cities such as Austin become more established.
Growth in Central Texas also was slowed by the severe economic downturn after the 2001 tech bust and Sept. 11 terrorist attacks. Tens of thousands of jobs were lost, and domestic migration into the area slowed significantly as the number of people moving away increased.
There are a number of reasons why more people are moving to Central Texas than at any other time since the tech bust, said Daniel Kah, director of research for Austin-based Angelou Economics.
"I would agree that the economy plays a pretty big role in it, but at the same time, it's probably not 100 percent of the equation," Kah said.
"Austin's quality of life, affordability on the national scale, location in a relatively moderate climate, the environment — all of those types of things we all like about Austin — make it very appealing to a wide number of people (including) folks looking for jobs and people looking to move their businesses or retire somewhere."
Short and long moves
Most transplants to Hays, Travis and Williamson counties just moved from the county next door.
More people moved into Williamson County from Travis County than from any other place, and vice versa. And Travis County supplied the largest number of new Hays County residents.
Central Texas also was a popular destination for people moving from Dallas, Houston and San Antonio.
Mark Hood says he shut down the hedge fund he managed in Dallas and moved to Austin with his wife and daughter in 2006 in search of a slower-paced life in a city his family had often visited for fun.
"I think most people move for job reasons, but we moved for love," Hood said.
Now a private investor and business consultant, Hood said he doesn't miss anything about Dallas except his friends.
"We sold our $70,000 SUV and bought a Prius," Hood said. "One of the funniest responses that we got was from a girlfriend of my wife who said, 'I didn't realize you'd be converted so quickly.'"
Far fewer people moved here from California than from elsewhere in Texas, but their numbers are rising.
The number of people moving to Hays County from California more than doubled from 2004 to 2005; the number moving into Williamson County increased 60 percent. Travis County experienced a 22 percent jump.
Stephanie and John Landers moved from the Laguna Beach area of California to Austin with their two young sons in February 2005, leaving behind a bluff-top home overlooking the Pacific Ocean.
They said they considered Atlanta, the Raleigh-Durham area of North Carolina, and Austin, eventually settling on Central Texas in part because of its schools and friendly, positive vibe.
They said Austin's growth rate and spending habits seemed a good match for the flooring business they wanted to open. The couple bought a home in Steiner Ranch in western Travis County and opened Landers Premier Flooring on Burnet Road near U.S. 183.
Stephanie Landers said Lance Armstrong, the University of Texas' 2006 national football championship, and the SXSW and Austin City Limits music festivals have raised Austin's profile for many Californians, while its relatively affordable real estate market has made it an attractive place to relocate for California homeowners looking to cash out.
"Everybody made a lot of money on real estate out there, but it's kind of like golden handcuffs," Stephanie Landers said. "If you don't leave the state, you can't move anywhere else."
The tremendous amount of money from real estate gains coming out of California helps explain why this relatively small group is often blamed or credited for rising housing prices in Central Texas, even though the majority of California transplants have median incomes no higher than those in the areas into which they are moving.
John Rosshirt of Stanberry & Associates real estate agency said California buyers are accustomed to much higher home prices and generally are prepared to pay more than buyers from Texas.
This has a ripple effect on the market, Rosshirt said, because buyers who lose out on one house to a California buyer with a higher bid often are willing to pay more the next time.
Not all Californians moving here are cash-rich from recent home sales.
Steve Nelson and fiancé Korilyn Colburn rented in the San Francisco Bay Area before moving here in July 2005.
The couple said they wanted a change and had considered Boulder, Colo., and Tucson, Ariz., before settling on Austin because of its job opportunities, low crime rates, well-educated population and friendliness.
The couple, who have no children, moved with just enough money to survive for three months without work. Both have found jobs, he as a conference service manager at Barton Creek Resort & Spa, and she as a marketing consultant.
Now they are homeowners in South Austin near Slaughter Lane, Nelson said, and their new life has met their expectations.
"I feel like we've been welcomed with open arms by our neighbors, and my colleagues professionally have been very welcoming and supportive in my transition," he said. "We're just jazzed about how you can take a little bit of that Southern hospitality and Texas pride, and wrap it up with a little bit of chic and trendy and culture, and mix it all together. It's a good place to be."
Relative importance
So, how important are these new residents to Central Texas?
In terms of overall population growth, they aren't as important as newcomers used to be.
In the 1990s when the Austin metro area was smaller, people moving here from elsewhere in the country including Texas accounted for 65 percent of the area's population growth, said Steve Murdock, state demographer of Texas.
Natural increase — the number of people who were born minus the number who died — accounted for 28 percent of growth; international immigration added 8 percent.
But as Central Texas' population grew from about 846,230 in 1990 to about 1.5 million in 2005, the natural increase and international immigration became bigger contributors to the area's overall growth.
In the first five years of this decade, natural increase accounted for 41 percent of the 202,766 additional people in Central Texas; international immigration contributed 23 percent. Domestic migration added 36 percent.
That change is one reason the Austin area continued to grow even as it shed tens of thousands of jobs after the tech bust.
"We've typically seen our population grow in recent years at about twice the rate of job growth roughly speaking," Kah said.
Strong natural growth is good news for Central Texas.
"The natural population growth is very important because it points to sustainability without having to rely on relocating individuals, and it points to a young population, which is very important," Kah said.
But attracting residents from other U.S. cities is also vital to the region's economy, Murdock said, because they tend to have higher incomes and education levels than international immigrants and people born here.
"Domestic migrants tend to be kind of the cream of the crop," Murdock said.
Saturday, February 10, 2007
Strong job growth, relatively affordable housing and a reputation for a good quality of life are bringing people to Central Texas from all over the United States in increasing numbers.
Despite their high profile these days, it's not the Californians who are overrunning the place. It's the Texans.
Many more people moved here from Houston and San Antonio than from Los Angeles or San Jose in 2005, according to an analysis of Internal Revenue Service filings for the most recent year available. Nearly 70 percent of the households moved here from elsewhere in Texas, and the No. 1 source of migration to Hays, Travis and Williamson counties was a county next door.
But the number of Californians who moved into Hays, Travis and Williamson counties in 2005 did jump 32 percent from the previous year, and real estate agents helping many of the transplants buy homes here said the numbers did not decline in 2006.
Travis County had a net gain of 2,847 households from elsewhere in the United States in 2005, almost five times the net gain in 2004.
In Hays County, the number doubled in 2005, to 1,142 households, according to an analysis of IRS filings for the most recent years available. Williamson County had a net gain of 4,090 households, up 14 percent from 2004.
The gains were less than each county experienced in 2000 and 2001, but that's not surprising, said Brian Kelsey of the regional planning group Capital Area Council of Governments, because growth rates tend to slow as once up-and-coming cities such as Austin become more established.
Growth in Central Texas also was slowed by the severe economic downturn after the 2001 tech bust and Sept. 11 terrorist attacks. Tens of thousands of jobs were lost, and domestic migration into the area slowed significantly as the number of people moving away increased.
There are a number of reasons why more people are moving to Central Texas than at any other time since the tech bust, said Daniel Kah, director of research for Austin-based Angelou Economics.
"I would agree that the economy plays a pretty big role in it, but at the same time, it's probably not 100 percent of the equation," Kah said.
"Austin's quality of life, affordability on the national scale, location in a relatively moderate climate, the environment — all of those types of things we all like about Austin — make it very appealing to a wide number of people (including) folks looking for jobs and people looking to move their businesses or retire somewhere."
Short and long moves
Most transplants to Hays, Travis and Williamson counties just moved from the county next door.
More people moved into Williamson County from Travis County than from any other place, and vice versa. And Travis County supplied the largest number of new Hays County residents.
Central Texas also was a popular destination for people moving from Dallas, Houston and San Antonio.
Mark Hood says he shut down the hedge fund he managed in Dallas and moved to Austin with his wife and daughter in 2006 in search of a slower-paced life in a city his family had often visited for fun.
"I think most people move for job reasons, but we moved for love," Hood said.
Now a private investor and business consultant, Hood said he doesn't miss anything about Dallas except his friends.
"We sold our $70,000 SUV and bought a Prius," Hood said. "One of the funniest responses that we got was from a girlfriend of my wife who said, 'I didn't realize you'd be converted so quickly.'"
Far fewer people moved here from California than from elsewhere in Texas, but their numbers are rising.
The number of people moving to Hays County from California more than doubled from 2004 to 2005; the number moving into Williamson County increased 60 percent. Travis County experienced a 22 percent jump.
Stephanie and John Landers moved from the Laguna Beach area of California to Austin with their two young sons in February 2005, leaving behind a bluff-top home overlooking the Pacific Ocean.
They said they considered Atlanta, the Raleigh-Durham area of North Carolina, and Austin, eventually settling on Central Texas in part because of its schools and friendly, positive vibe.
They said Austin's growth rate and spending habits seemed a good match for the flooring business they wanted to open. The couple bought a home in Steiner Ranch in western Travis County and opened Landers Premier Flooring on Burnet Road near U.S. 183.
Stephanie Landers said Lance Armstrong, the University of Texas' 2006 national football championship, and the SXSW and Austin City Limits music festivals have raised Austin's profile for many Californians, while its relatively affordable real estate market has made it an attractive place to relocate for California homeowners looking to cash out.
"Everybody made a lot of money on real estate out there, but it's kind of like golden handcuffs," Stephanie Landers said. "If you don't leave the state, you can't move anywhere else."
The tremendous amount of money from real estate gains coming out of California helps explain why this relatively small group is often blamed or credited for rising housing prices in Central Texas, even though the majority of California transplants have median incomes no higher than those in the areas into which they are moving.
John Rosshirt of Stanberry & Associates real estate agency said California buyers are accustomed to much higher home prices and generally are prepared to pay more than buyers from Texas.
This has a ripple effect on the market, Rosshirt said, because buyers who lose out on one house to a California buyer with a higher bid often are willing to pay more the next time.
Not all Californians moving here are cash-rich from recent home sales.
Steve Nelson and fiancé Korilyn Colburn rented in the San Francisco Bay Area before moving here in July 2005.
The couple said they wanted a change and had considered Boulder, Colo., and Tucson, Ariz., before settling on Austin because of its job opportunities, low crime rates, well-educated population and friendliness.
The couple, who have no children, moved with just enough money to survive for three months without work. Both have found jobs, he as a conference service manager at Barton Creek Resort & Spa, and she as a marketing consultant.
Now they are homeowners in South Austin near Slaughter Lane, Nelson said, and their new life has met their expectations.
"I feel like we've been welcomed with open arms by our neighbors, and my colleagues professionally have been very welcoming and supportive in my transition," he said. "We're just jazzed about how you can take a little bit of that Southern hospitality and Texas pride, and wrap it up with a little bit of chic and trendy and culture, and mix it all together. It's a good place to be."
Relative importance
So, how important are these new residents to Central Texas?
In terms of overall population growth, they aren't as important as newcomers used to be.
In the 1990s when the Austin metro area was smaller, people moving here from elsewhere in the country including Texas accounted for 65 percent of the area's population growth, said Steve Murdock, state demographer of Texas.
Natural increase — the number of people who were born minus the number who died — accounted for 28 percent of growth; international immigration added 8 percent.
But as Central Texas' population grew from about 846,230 in 1990 to about 1.5 million in 2005, the natural increase and international immigration became bigger contributors to the area's overall growth.
In the first five years of this decade, natural increase accounted for 41 percent of the 202,766 additional people in Central Texas; international immigration contributed 23 percent. Domestic migration added 36 percent.
That change is one reason the Austin area continued to grow even as it shed tens of thousands of jobs after the tech bust.
"We've typically seen our population grow in recent years at about twice the rate of job growth roughly speaking," Kah said.
Strong natural growth is good news for Central Texas.
"The natural population growth is very important because it points to sustainability without having to rely on relocating individuals, and it points to a young population, which is very important," Kah said.
But attracting residents from other U.S. cities is also vital to the region's economy, Murdock said, because they tend to have higher incomes and education levels than international immigrants and people born here.
"Domestic migrants tend to be kind of the cream of the crop," Murdock said.
AMERICAN-STATESMAN STAFF
Subscribe to:
Posts (Atom)