Interesting article in Statesman - What does it imply for Austin's future growth? (Bee Cave: for sale, real estate market)

[inthecut]

Concerns grow about commercial loan defaults (http://www.statesman.com/business/content/business/stories/realestate/2009/07/10/0710commercial.html - broken link)

My two cents....Hmmmm...depends on how connected Austin's commercial RE market is to the larger financial community, and the larger economic issues...tough call...some say Austin is regional, and hence stands high-and-dry of such national financial problems......

Was surprised that they said the national commercial real estate market will not bottom out for three years, along with the high current default rate on commercial properties across the nation....again, could that be a monkey wrench in OUR growth, largely dependant on commercial financing?
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Exerpts ftom article:

"New construction projects have slowed substantially.
That means reduced tax revenue for local governments and fewer construction jobs, said Jeffrey DeBoer, chief executive of the Real Estate Roundtable, an industry group. The commercial property industry is "not going to turn around until consumers and businesses start spending money again," he said.
Total losses in securities backed by commercial property loans could be as high as $90 billion in the coming years, Deutsche Bank analyst Richard Parkus said, adding that even more losses — up to $140 billion — are expected from construction loans made by regional and local banks, rather than those sold as securities held by investors.
"We believe the bottom is several years away," Parkus told lawmakers."


"The pain is spreading throughout the economy.
In April, the country's second-largest owner of shopping malls, General Growth Properties Inc., buckled under $27 billion in debt and filed for Chapter 11 bankruptcy protection.
Central Texas has seen some signs of the problem, including the foreclosure and bankruptcy of the Hill Country Galleria in Bee Cave and the foreclosure of the River Place Corporate Park in Northwest Austin.
At the hearing, an official said the Fed is paying extra attention to banks' books as losses from commercial real estate loans keep mounting."
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Again....simple math.....growth needs financing.....no financing means no growth....
at least till things pick up, which seems to be at least three years from now, acording to same article......

Good chance for Austin to finally catch up with its infrastructure in the interem?

[chickenfry]

commercial real estate is the next shoe to drop. if we think the economy is bad now, wait until the commercial goes (not necessarily here but country wide). plant a garden, get a cow and a few chickens

[inthecut]

Actually, in a city like Austin that relies heavily on growth vectors, commercial slowdowns can have a larger effect than a metro that is essentially stable, population-wise.....just a bit boring to go through these stats and implications, but things like future job growth directly
relate to this......

Question....if job growth in Austin flatlines for 2-3 years, following the commercial fall-out, will people markedly stop moving to Austin? What connection DOES the pop growth have to do with jobs?

[austinite45]

right now, watching the drama unfold (bankruptcies, foreclosures, mushrooming for sale/for rent signs around town, half vacant apt complexes and the lies the managers are telling potential tenants) is more exciting and fun than speculating on the future of Austin's real estate IMO.

[inthecut]

Originally Posted by austinite45

right now, watching the drama unfold (bankruptcies, foreclosures, mushrooming for sale/for rent signs around town, half vacant apt complexes and the lies the managers are telling potential tenants) is more exciting and fun than speculating on the future of Austin's real estate IMO.

Sounds like a good time to rent a place, even a house, anyway....I moved into one of those Ginormous apartment complexes off McNeil when I first moved to Austin....I would say they easily had 400 apartments...I think they built those presuming there would always be a ton of people moving to the city.....I can def see the big complexes begging for tenants....

Also, the poor wages in Austin are a factor as well....less than the national av even in good times, now that times are tight, folks simply don't have the bucks for the high rents.....and only so many people can double up...

I think it is simply an overbuilding in good times issue...WAY too many mega-apartment complexes all over the north/NW and north/south burbs........

[BentBow]

Originally Posted by inthecut

Also, the poor wages in Austin are a factor as well....less than the national av even in good times, now that times are tight, folks simply don't have the bucks for the high rents.....and only so many people can double up...

You can factor the poor wages in the construction trades, to the fact that Austin is an illegal alien Sanctuary City.

The going rate for what I do, has not increased with the cost of living here. Actually "the going rate" has been stagnant for 20 years now, and in some cases, it has gone below what I have ever made in my craft. That is in direct relationship to the massive amount of illegal aliens, supressing wages for everyone that is a tax paying American, Austinite.

[austinite45]

Originally Posted by inthecut

Sounds like a good time to rent a place, even a house,

I'd say renting is better than buying. Wait till the bubble is completely gone, and blood is running in the streets. Buy when the pendulum swings past the bloodbath , as we like to say about stocks. Too bad there is no shorting in real estate.

Beware, however, that the real estate agents / apt managers are doing their best to keep the rents at inflated levels while trying to charge high security deposits.

Do yourself and the rest of the city a favor - drive a hard bargain and play the agents/ apt managers against each other. There is NO NEED to play nice with people charging high rents.

I believe Austin has a long way to fall. Heck, America has a long way to fall for that matter. There is no way the Obama administration can reverse the colossal damage inflicted on America by 8 horrendous years of Bush reign.

[inthecut]

Originally Posted by austinite45

I'd say renting is better than buying. Wait till the bubble is completely gone, and blood is running in the streets. Buy when the pendulum swings past the bloodbath , as we like to say about stocks. Too bad there is no shorting in real estate.

Beware, however, that the real estate agents / apt managers are doing their best to keep the rents at inflated levels while trying to charge high security deposits.

Do yourself and the rest of the city a favor - drive a hard bargain and play the agents/ apt managers against each other. There is NO NEED to play nice with people charging high rents.

I believe Austin has a long way to fall. Heck, America has a long way to fall for that matter. There is no way the Obama administration can reverse the colossal damage inflicted on America by 8 horrendous years of Bush reign.

The "mega-complex" orientation makes it easier to keep rates "fixed"...most are owned by REITS, and most REITS own several complexes...a few own many of them.......I think that answers any questions of how they fix rents in a slowing market..

Learn how they keep Austin's apartment rents skyhigh for yourself........

http://www.rebuz.com/Directory/Apartment%20REITs.htm (broken link)

http://www.wikinvest.com/wiki/Apartment_REITs

[austinite45]

Originally Posted by inthecut

The "mega-complex" orientation makes it easier to keep rates "fixed"...most are owned by REITS, and most REITS own several complexes...a few own many of them.......I think that answers any questions of how they fix rents in a slowing market..

Learn how they keep Austin's apartment rents skyhigh for yourself........

Apartment0 REITs (Real Estate Investment Trusts) Directory | Rebuz.com (http://www.rebuz.com/Directory/Apartment%20REITs.htm - broken link)

Apartment REITs

Many small apt complexes are owned by individual speculators, some from out of state, or even out of the country - Brazil, Mexico, the Middle East and Asia. They were suckered into the speculative frenzy thinking that they could get something for free and get rich fast. They were not interested in managing the properties themselves or keep them as long term investment - they were looking to flip, avoid paying mortgage out of their own pocket by hiring a management company (e.g. 512realty, Premier, CampusCondos etc), spike the rent to compensate for monthly outlays and make a killing later on.

Now that their apts are half-empty, many are struggling to pay their monthly expenses from their savings!

The banks won't give a damn about the soured bets, and will advise against lowering the rents lest the value of the properties decline.

And I have absolutely no sympathy for the greedy real estate speculators and management companies (e.g. 512Realty)

[inthecut]

Originally Posted by austinite45

Many small apt complexes are owned by individual speculators, some from out of state, or even out of the country - Brazil, Mexico, the Middle East and Asia. They were suckered into the speculative frenzy thinking that they could get something for free and get rich fast. They were not interested in managing the properties themselves or keep them as long term investment - they were looking to flip, avoid paying mortgage out of their own pocket by hiring a management company (e.g. 512realty, Premier, CampusCondos etc), spike the rent to compensate for monthly outlays and make a killing later on.

Now that their apts are half-empty, many are struggling to pay their monthly expenses from their savings!

The banks won't give a damn about their soured bets, and will advise against lowering the rents lest the value of the properties will decline.

And I have absolutely no sympathy for the greedy real estate speculators and management companies (e.g. 512Realty)

intersting(per the out-of-area speculators)....didn't know that.......in that case, between REITS and out-of-area investors, I can see how they jack and KEEP the rates jacked up, and pressure folks to sign long-term leases.....

Another vestige of what happens when you lose local control....look at my other posts for what that implies per our local shopping dollar(franchises/bigbox hell)...