Is Austin Housing Market Inflated? Is there a Bubble? (Pflugerville: condo, mortgage)

[10scoachrick]

Originally Posted by sliverbox

You sound EXACTLY like someone from the Bay Area. I'm sorry, but a $400k house that comes with an automatic 3% property tax is in fact an overpriced house.
.

:d ubious:,

No, the rundown $400k house(that needed $200k in rehab) we looked at in Balcones CC area last year was overpriced...$400k for our house would have been a very good deal.

[sliverbox]

I'm a real estate owner and investor.

That's all we have to read in order to know that you're totally going to blow sunshine out of your rear in favor of housing- no matter what. Your prediction is just that- a prediction.

If I were to make my own prediction, I'd say if anything, you're probably going to see either a total flat lining to even a slight depreciation in prices. If history serves as a reminder, real estate busts are followed by a period of stagnation- or "stagflation". Remember- inflation is typically around 4% per year. So unless your house goes up that amount or more, then you're not really " making" any money.

There is some bubbly action going on in Austin at exactly the wrong time, when jobs are being hacked left and right and the supply of out of state buyers has dwindled. Yet we're all supposed to believe that you're so right that there's basically nothing to discuss here? You are just guessing at this point. Maybe you will be right and somehow even though just about everywhere else in the US is falling off a cliff, magic pixie dust will protect Austin and somehow those housing prices will climb 10-15% per year forever. Sorry, but that's likely not to happen. Then again, we'll see.

Bottom line, you aren't making anything other than a guess, and in my opinion, not a very educated one. I'm doing the same thing. I'm not going to say that Austin is going to crash and that its written in stone. But I have every bit- if not more- of a valid claim that things aren't going to be as rosy as you think.

Again- There are many, many people like you in SF, who bet too much on real estate, and believed the bubble for too long, who believe that their area is "special" and thus incapable of falling under the knife of financial fundamentals. Some people act surprised that we are in the position we are in now economically. I'm not surprised in the least. All it takes is a few million people with a tiny amount of financial knowledge to make them dangerous who make bets and bet wrong.

[didadi]

austin-steve:
"I study and prepare detailed market stats and trend analysis for austin every month. You drove 1,200 miles in 4 days. I've lived in Austin since 1985. You drove 1,200 miles in 4 days. All of my investors own property in Austin worth more than what they paid. You don't own any real estate in Austin, but claim to know more than those of us who actively invest."

- When you make this statement, some facts and figures will be helpful. Not everybody on this forum has patience or education to do the trend analysis that you are doing. That might be your profession or hobby.

Oh yea, if those reports are pay-per-view ($ LMAO $), thats a different story. I'm not trying to mock you up, just substantiate what you are trying to convey.

[sliverbox]

It also doesn't take a mad genius to study market trends. All you have to do is study the MLS and the various sites that show market conditions, sales and pricing trends, and so on. Throw in other factors such as unemployment, migration patterns, new home building, existing homes sales, and foreclosure activity. Not all that complicated.

Trust me- I did it for years in the Bay Area. I told most of my friends circa 2004-2005 that there was going to be a huge crash and prices would collapse.I got a lot of resistance from housing investors because all they had known was rising prices for the better part of a decade. Then it crashed and the same investors for some reason acted shocked.

My observations from reading about prices in Austin is that you're due for a correction, perhaps not for the entire region, but definitely in some of the overpriced neighborhoods which have been too heavily reliant on out of state capital.

[centralaustinite]

Steve's stats and market analysis are freely available on his blog which is easy enough to find with some googling. I do not know him at all except through C-D and reading his blog but you can DM me for the link, or even better DM him.

Austin is a tricky, complex market, generalizations are hard to make. But I think that you are largely missing his point, he says that smaller, closer-in properties associated with exemplary schools with increase in value. I would agree with that. He does not say that every 3000 sq ft house built in a new development 45 minutes from downtown will increase or even hold its value.

In the end, buy a house as a place to live! The house will depreciate, with luck and some planning, the land underneath will appreciate. But not in far off communities surrounded by empty land (especially not if gas prices rise).

Unlike the Bay area, home prices here have largely stayed in touch with incomes. Yes, the medium income may only be $68,000 but I just saw stats in the Statesman today that showed that 16% of Austin area households make more than $100K a year, that is plenty of folk to support quite a number of $400K houses, property tax included.

ca

[austin-steve]

When you make this statement, some facts and figures will be helpful. Not everybody on this forum has patience or education to do the trend analysis that you are doing. That might be your profession or hobby.

There are a lot of sources for real estate stats for Austin. I'm not allowed, under forum rules, to post links that would be deemed "advertising", but one could find them easy enough.

I was at the Texas Association of Realtors Convention in Dallas earlier this month. Mark Dotzour, Chief Economist for Texas A&M gave his usually economics and real estate update speech during the convention. It contains a lot of valuable data, facts, figures, historic data, and insight, so I recommend anyone interested in the sort of dynamics that underpin this discussion to watch the 25 minute video of the speech and then form your own opinion. Dotzour is neither a cheerleader or a naysayer, he presents things in a fairly balanced way (aside from his rants about government interference).

Here is a link to the video.

[didadi]

Thank you!. centralaustinite/Steve, could you please dm me with the links as well.
I'll go through the video tonite.

[sliverbox]

There is one more key factor that's important to recognize when it comes to Austin and a few other cities like it in the current home buying public's mind: Is it affordable. You see, the two fastest growing cities as of last year were Raleigh Durham, and Austin Texas. The No.1 reason people were moving to these cities wasn't because of jobs, tech, or even perhaps natural beauty. The No.1 reason is that they have a reputation for being affordable when compared to other major cities such as SF, NY, Boston, and Miami.

So while I suppose rising home prices would be nice for homeowners and investors, there's only a certain level they can rise before the reputation of affordable living gets overtaken by the reputation of being either not as affordable to not affordable at all. Affordable housing is Austin's no.1 economic resource at this point. If it loses it, say bye-bye to growth.

And Steve... there were a LOT of real estate seminars in SF at the time of the boom too. You need to remember these are all salespeople who want to get your money and convince you that real estate is a win-win situation. Let me ask- do you read any books by Robert Kiyosaki? Just curious.

[Jennibc]

Originally Posted by centralaustinite

Steve's stats and market analysis are freely available on his blog which is easy enough to find with some googling. I do not know him at all except through C-D and reading his blog but you can DM me for the link, or even better DM him.

Austin is a tricky, complex market, generalizations are hard to make. But I think that you are largely missing his point, he says that smaller, closer-in properties associated with exemplary schools with increase in value. I would agree with that. He does not say that every 3000 sq ft house built in a new development 45 minutes from downtown will increase or even hold its value.

In the end, buy a house as a place to live! The house will depreciate, with luck and some planning, the land underneath will appreciate. But not in far off communities surrounded by empty land (especially not if gas prices rise).

Unlike the Bay area, home prices here have largely stayed in touch with incomes. Yes, the medium income may only be $68,000 but I just saw stats in the Statesman today that showed that 16% of Austin area households make more than $100K a year, that is plenty of folk to support quite a number of $400K houses, property tax included.

ca

It was actually closer to 30%:
$100,000 to $149,999 15.6 percent

$150,000 to $199,999 7.1 percent

$200,000 or more 8.1 percent

[centralaustinite]

Originally Posted by Jennibc

It was actually closer to 30%:
$100,000 to $149,999 15.6 percent

$150,000 to $199,999 7.1 percent

$200,000 or more 8.1 percent

Yes!

You are exactly right, I need another cup of coffee! I hadn't thought to add those above $100K together. And those income levels do help make sense of the Austin market.