Austin Market has truly gone to **** (Round Rock, Pflugerville: for sale, how much, new home)

[VAF84]

No joke! I'm kicking myself for not locking in a house in the Wolf Ranch subdivision where we'd like to eventually move to. Luckily, picked up a house that didn't make it to the MLS in the Round Rock area.

[riaelise]

the homes in our round rock neighborhood are 29% higher than they were at the end of 2020. the recent sale of $875k just raised the ceiling. 550k now gets you less than 3k sq ft.

[blazerj]

Originally Posted by n0rCalFellow

That you're overpaying for a house by 25% in more in a matter of months. And it's tad too much for a house that is simply perhaps not spending.

‘This Is Unprecedented’: Why America’s Housing Market Has Never Been Weirder

The supply of houses is down significantly due to COVID (people don't want to let others inside of their house and don't want to tour other people's houses) and material costs have increased (demand & transit times have increased a lot, maybe some Trump tariffs too). Also, older people don't want to go to nursing homes now and are staying put.

It's not just Austin, it's everywhere. I'd assume supply will increase slowly after everything is "normal".

[austin-steve]

Originally Posted by blazerj

...

It's not just Austin, it's everywhere. I'd assume supply will increase slowly after everything is "normal".

This is true. In the spectrum of "hot" markets though, Austin does seem to be on the leading edge of the "frenzy factor".

Normal seasonality (spring/summer selling season), and the relaxing of CV19 concern, and the re-normalization of everyday life, should see more inventory coming online. But maybe not.

There are a number of different categoy of sellers.

Move Up Sellers, Same City
These sellers benefit not at all, and maybe are even hurt by the strong seller's market. Think of a couple, late 30s, mid-career, two kids, ready for something bigger and the middle/highschool tracks they want to move into.

Yes, they can sell at a premium, turn around and buy up, but, also paying a premium. So it's a wash. This will prompt some, or maybe many, to invest in uppgrades or more space in the current home and stay. Thus, their home does not become "inventory".

That's just one example. Then the move-up buyer a rung beneath them on the move-up ladder, don't have a home to move up to either, because there are not any.

Finally, the first-time buyers are suffering the most. They typically by a resale from someone moving up/out of their starter home. That "starter home" is now being scooped up by the inventory-starved mid-level move-up buyers who are priced out of the $400K-$600K neighborhoods, so they (mid-level move-ups) end up downshifting, paying $500K for a $400K home in Pflugerville or East Round Rock instead of the area that was their first choice.

In doing so, displacing/outbidding first-time buyers who can't compete for FHA/VA loans because they cannot afford to waive the appraisal and cover the gap with cash at close.

[ashbeeigh]

Originally Posted by austin-steve

Finally, the first-time buyers are suffering the most. They typically by a resale from someone moving up/out of their starter home. That "starter home" is now being scooped up by the inventory-starved mid-level move-up buyers who are priced out of the $400K-$600K neighborhoods, so they (mid-level move-ups) end up downshifting, paying $500K for a $400K home in Pflugerville or East Round Rock instead of the area that was their first choice.

.

And this is where the rental market gets impacted, specifically those class A properties. I was talking to a neighbor who is up for renewal. We're both coming up for renewal at about the same time and we were chatting about incentives and other newer complexes that are opening up nearby. He is looking for a unit with a yard. He said another one of our neighbors is buying a house in San Antonio and moving out. Since she's moving to SA it's a different market, but for those of us who are getting close to financially being able to purchase are getting stuck in renting. In the long run that could be okay so we can save and buy a better home, but for those that are getting close to ending their lease and are ready to end their lease they're going to be screwed with the squeeze of the market.

[riaelise]

Originally Posted by austin-steve

This is true. In the spectrum of "hot" markets though, Austin does seem to be on the leading edge of the "frenzy factor".

Normal seasonality (spring/summer selling season), and the relaxing of CV19 concern, and the re-normalization of everyday life, should see more inventory coming online. But maybe not.

There are a number of different categoy of sellers.

Move Up Sellers, Same City
These sellers benefit not at all, and maybe are even hurt by the strong seller's market. Think of a couple, late 30s, mid-career, two kids, ready for something bigger and the middle/highschool tracks they want to move into.

Yes, they can sell at a premium, turn around and buy up, but, also paying a premium. So it's a wash. This will prompt some, or maybe many, to invest in uppgrades or more space in the current home and stay. Thus, their home does not become "inventory".

That's just one example. Then the move-up buyer a rung beneath them on the move-up ladder, don't have a home to move up to either, because there are not any.

Finally, the first-time buyers are suffering the most. They typically by a resale from someone moving up/out of their starter home. That "starter home" is now being scooped up by the inventory-starved mid-level move-up buyers who are priced out of the $400K-$600K neighborhoods, so they (mid-level move-ups) end up downshifting, paying $500K for a $400K home in Pflugerville or East Round Rock instead of the area that was their first choice.

In doing so, displacing/outbidding first-time buyers who can't compete for FHA/VA loans because they cannot afford to waive the appraisal and cover the gap with cash at close.

Steve, why do you continue to crap on Pflugerville and East Round Rock and single those cities out? You do know that many people who move there aren't 'downshifting' and it is their first choice. People move to both because they are closer in to Austin and the biggest issue used to be commute time but now that people are doing more remote work, distance from downtown isn't a factor anymore and opens these cities up for consideration. My friends, who paid over 500k for their Blackhawk home TWO AND A HALF YEARS AGO, wanted to move to Pflugerville from Austin. The area they live in is close to the toll, shopping, they have a bigger newer house and the area has good schools. My East Round Rock neighborhood zones to good schools for the most part and is centrally located and near many amenities including the Kalahari. Both cities are getting a huge influx of out of state buyers, willing to pay anything. As I stated upthread, a home in my neighborhood recently sold for 875k. It was listed for 675k and was bought for 540 three years ago. To the Colorado buyer that purchased it and probably put down a lot of money, 875k for a .57 acre lot, 3500 sq ft custom home was worth it.

You can say the same for Leander, people paying 500k for a 400k home. Leander was the sticks and even now is still playing catch up in terms of amenities. The schools that are actually in Leander aren't good either. But the homes are selling at a rapid clip, and I'm talking cookie cutter developments here. Prices are inflated everywhere.

[Roadking2003]

Originally Posted by 10scoachrick

Well, it appears to be unofficially official...
$400K is the new $300K
SOMEbody is having a field day with these increases in new construction in the northern burbs. Plans that were UNDER $300K last year are in excess of $400K now...at least some showing that increase just since December!!!

I'd love to see a breakout of the numbers on a home in a third or fourth phase of a development that has seen that increase. Construction costs may have ticked up a bit, land was already purchased, sales are virtually instantaneous....sounds like a serious windfall to me!!! Dang

Is it time to start up a construction business?

[Roadking2003]

Originally Posted by austin-steve

They typically by a resale from someone moving up/out of their starter home. That "starter home" is now being scooped up by the inventory-starved mid-level move-up buyers who are priced out of the $400K-$600K neighborhoods, so they (mid-level move-ups) end up downshifting, paying $500K for a $400K home in Pflugerville or East Round Rock instead of the area that was their first choice.

If that home is selling for $500k, it's not a $400k home. It's a $500k home.

[austinnerd]

Originally Posted by Roadking2003

If that home is selling for $500k, it's not a $400k home. It's a $500k home.

Yes and no right? If the majority of houses follow the trend, then yes, it's a $500k house. If it's an outlier, then not so much. In the end, it's all about the timing.

[austin-steve]

Originally Posted by riaelise

Steve, why do you continue to crap on Pflugerville and East Round Rock and single those cities out? ....

Sorry, I didn't know I was "crapping" on those areas. But I can see how it can seem that way.

I'm sure many buyers see Pfl/RRE as "first choice" areas for a lot of good reasons today compared to 20 years ago. So I won't disagree with you. Both areas have certainly matured out of their original "bedroom community", commuter categories over the decades.