Austin residential real estate market stabilizing? (Dallas, Plano: sale, rental market, loan)

[Trainwreck20]

Have a co-worker looking for a house in S/SW Austin in the ~$300k range. 4-6 offers withing a day or two seems to be the normal for the niche he is looking in.

[Austin97]

Originally Posted by Idlewile

Do you think it was just your offer and the winning offer or were there multiple offers? Would you describe it as a bidding war or did you each just make one offer? I can't help myself; I like hearing these "from the trenches" anecdotes.

There are quite a few 600/700K homes going on over there (Westwood and Anderson), I don't save them but I see them come and go. More than high 400s and 500s it seems.

asking price was 675. There were multiple offers (at least 3) they did not do a bidding war and we would not get into one.

My agent is trying to find out the actual sales price.

I asked my agent to let them know we are a backup and to find out if it was a cash offer etc.

[Idlewile]

Originally Posted by Austin97

asking price was 675. There were multiple offers (at least 3) they did not do a bidding war and we would not get into one.

My agent is trying to find out the actual sales price.

I asked my agent to let them know we are a backup and to find out if it was a cash offer etc.

Interesting. And your offer sounded very solid too. Who knows, maybe it was indeed cash. Good luck!

[Aquitaine]

I don't think demand is going to slacken in Austin. I am curious to see what effect the Fed raising rates (FINALLY) is going to have on our real estate market as borrowing power contracts. I don't think borrowing power was super great to begin here, given the amount of cash offers and investors in the market, but it'll still go down when you can't get a 30 year at 3.5%.

[austin-steve]

Originally Posted by Aquitaine

I don't think demand is going to slacken in Austin. I am curious to see what effect the Fed raising rates (FINALLY) is going to have on our real estate market as borrowing power contracts. I don't think borrowing power was super great to begin here, given the amount of cash offers and investors in the market, but it'll still go down when you can't get a 30 year at 3.5%.

When rates go up, and people really start believing that the low interest rate train is leaving the station for good, there will be a dash to jump on board, causing an initial burp in demand.

Then that will slowly recede and afterward I think the market will eventually settle into another lull period or even a slight dip as sellers try to jump on the "sell high" train as it's leaving as well. Supply will increase while buyers are backing off.

That's my best guess. Whether it unfold this year or next, I don't know.

At present, not everything is getting multiples that I would expect. Plenty of that still happening, but it's kind of spotty. I just listed two Easter weekend, one in Travis Heights and one in Circle C. Both had massive open house attendance but no offers. So now I feel like a dunce.

Use to be we were happy to sell a listing in 90 days or less. Now if we don't have multiple offers in 48 hours it's like your life has ended and you feel like a big stupid idiot and a failure. Strange times.

Steve

[Aquitaine]

one in Travis Heights and one in Circle C

I've noticed a lot of inflated prices in Circle C and houses staying on the market for 2-3 months - and then others that get swept up. There is one on my street right now that has the same floor plan as mine (different bedroom configuration though - 5 to our 3) and lower level finishings and they listed about $50k above what our realtors advised us to list at in December (though ours won't actually hit the market until June, so it'll get another look then).

It doesn't seem to be an isolated incident - maybe driven in part by Standard Pacific jacking up their prices on new construction, but some folks in Circle C definitely think they are getting North of $450k for a house they paid $200-$350k for within the last 5-6 years.

[riaelise]

Originally Posted by Aquitaine

I've noticed a lot of inflated prices in Circle C and houses staying on the market for 2-3 months - and then others that get swept up. There is one on my street right now that has the same floor plan as mine (different bedroom configuration though - 5 to our 3) and lower level finishings and they listed about $50k above what our realtors advised us to list at in December (though ours won't actually hit the market until June, so it'll get another look then).

It doesn't seem to be an isolated incident - maybe driven in part by Standard Pacific jacking up their prices on new construction, but some folks in Circle C definitely think they are getting North of $450k for a house they paid $200-$350k for within the last 5-6 years.

Yeah, for some reason people translate the market as I can sell at whatever price I think it's worth and there will be hordes of buyers waiting. I think the rules still apply, overprice at your own risk. What is overpriced? Being substantially more than the comps, IMO. Those houses sit, in austin and elsewhere. On principle, I will never pay more than appraisal.

[austinite_02]

I do ponder on the income levels of the folks bidding for the homes in the 600K to 700K range.

I'm used to the view that a good estimate for a mortgage is 2.5X of gross income. So if one makes $100K, then a $250K mortgage at 4% is reasonable. This will enable one to ride the ups and downs of economy, markets etc. Provided they are able to sustain that income level.

I live in cedar park and find a number of folks in my neighborhood buying new homes (Stan Pac, Drees etc) in the 600K - 700K range (3500 to 4000 sq feet). Most of them moved from CA or from north east. And based on their roles in their respective industries don't believe them to have very high income levels (250K+). So the question is are they equating Austin to be those markets where there is reasonably continuous housing demand and liquidity (i.e. sell within few days of listing). The norm there is to bid for a house at those levels in desirable locations. Or will Austin become one of those cities?

My hunch is no. It will take a at least a decade or two for Austin to have that diverse and voluminous employment opportunities like NY, SFO, PA etc. First we have to fix and plan for infrastructure to accommodate that (roads, utilities, water!). IMHO we are in a bubble and need to revert to the mean. Was undervalued 3 years back, shot up significantly in the last 2 years and need to get back to that above than average appreciation level.

[scm53]

Originally Posted by austinite_02

I do ponder on the income levels of the folks bidding for the homes in the 600K to 700K range.

The mistake you are making is in thinking they are leveraged to the max. According to my mortgage banker sister, there are all kinds of people showing up in the Austin market with 250-350K of equity cashed out of their old place on the east or west coasts. Also forgetting most are dual income families. So, suddenly, that $700K house has a $350K note, which is quite do-able on $150K of household income. And they are in hog heaven, because they are living high on the hog. I had a friend visit from NoVa. He said my house would be $2.5M in Falls Church.

As long as people are moving here and keeping close to their east or west coast salaries - and bringing their equity - we have plenty of escalation left.

[eirenecat]

Originally Posted by scm53

The mistake you are making is in thinking they are leveraged to the max. According to my mortgage banker sister, there are all kinds of people showing up in the Austin market with 250-350K of equity cashed out of their old place on the east or west coasts. Also forgetting most are dual income families. So, suddenly, that $700K house has a $350K note, which is quite do-able on $150K of household income.

I work in the tech industry, and I think that is exactly what is happening. We are getting a lot of Californians who sold 900 sq foot $700-900k shacks in Oakland or elsewhere coming in with enough cash to pay an enormous down payment, if not buy it outright. One of my friends who is leaving Pixar is doing just that here.