Is Austin Housing Market Inflated? Is there a Bubble? (Houston: sale, HOA fees)

[BentBow]

Originally Posted by semperubisububi

Hi, I'm wondering if maybe some real estate agents out there (who DONT work in Austin) can tell me if they think the market is inflated in Austin, and to what degree

I'm considering buying a BRAND NEW home in Leander in the 240 range, 4 bedroom, 3.5 bath, 2 story with a study.

I really don't want to buy if there is going to be a big downturn. I've read that Texas is usually slow in terms of following national trends, so maybe slow to a housing downturn too?

From looking at the prices in Dallas, it looks like I can get a similar BRAND NEW house for under 200. But I'm not too fond of Dallas because it's too fast paced, especially on the roads.

I remember about 1990-1996, the jump in home prices. They doubled in 6 years.

What was being built for $80,000, were now built and sold for $150,000, just 6 years later.

Those same homes now are in the $250,000-$300,000.

Everyone from Silicon Valley, moved here, with the Cali greed in mind. Sold there small cali homes for $500,000 and move here and buy a home to live in and 2 homes to call rentals.

[Jennibc]

Originally Posted by BentBow

I remember about 1990-1996, the jump in home prices. They doubled in 6 years.

What was being built for $80,000, were now built and sold for $150,000, just 6 years later.

Those same homes now are in the $250,000-$300,000.

Everyone from Silicon Valley, moved here, with the Cali greed in mind. Sold there small cali homes for $500,000 and move here and buy a home to live in and 2 homes to call rentals.

I call BS on this. The reasons prices rose is because you had more people chasing the a set number of homes. While there was tremendous amount of homes being built the numbers couldn't keep up with the influx. That has to do with supply and demand and not "Cali greed" Remember, it was Texans that were receiving higher prices for the homes they were selling to the folks moving in.

[OneJackson]

Originally Posted by 10scoachrick

Yawn on any sort of REAL housing shortage in Austin. .... but the Austin metro ain't gonna run out of houses in a year and a half.

+1

I have to agree with this. I spend the better part of my weeks and weekends looking for houses and I find that there are a plethora of for sale/foreclosed homes all over Austin and surrounding areas. And although a lot of people are moving here, 9 times outta 10 their first step is usually an apartment to get their foot in the door of living here, which we have a lot of. Then find a house. By then they've already been here 6 months to a year and the housing market is steadily turning over with people moving or losing their homes so finding one will not be an issue.

So is Austin's housing market overcrowded? I'd say no.

Now is Austin's home builders quality suspect in certain price points? I'd say yes.

There are lot better built/looking homes in Dallas and Houston within the $180K-$250 range than there is in Austin. and with more sf. but that's just my opinion.

[inthecut]

Originally Posted by OneJackson

+1

I have to agree with this. I spend the better part of my weeks and weekends looking for houses and I find that there are a plethora of for sale/foreclosed homes all over Austin and surrounding areas. And although a lot of people are moving here, 9 times outta 10 their first step is usually an apartment to get their foot in the door of living here, which we have a lot of. Then find a house. By then they've already been here 6 months to a year and the housing market is steadily turning over with people moving or losing their homes so finding one will not be an issue.

So is Austin's housing market overcrowded? I'd say no.

Now is Austin's home builders quality suspect in certain price points? I'd say yes.

There are lot better built/looking homes in Dallas and Houston within the $180K-$250 range than there is in Austin. and with more sf. but that's just my opinion.

Well, I always thought it was because of the warmer weather, per the skimpiness of sunbelt/austin homes, compared to the north, but, come to think of it, what a great excuse to skimp on materials. You have to admit it, how can they have built out the sunbelt, from west(southern cal, vegas, Phoenix, DFW, Houston, 'lanta, and all of fla) to east, without throwing crap up, and let whatever sticks sticks?......

....ever heard of 'Planned Obsolescence', brought to you by the Ford motor company in the 60's? well, they say builders do the same thing so you get out of the house soon as it starts coming apart and buy another one 5-7 miles away in the next greenbelt....

Just call it the american way!

[lpc123]

Originally Posted by achtungpv

Just curious, if someone has a mortgage that is 2.5x+ what their gross income is, are you saving sufficiently for retirement, college, etc?

We're at 1.5x and have no debt other than 2 car payments and our mortgage. With day care, 401k contributions, a college fund, and investment accounts, I can't imagine paying more for a house.

Yep, we are going with 1.5X gross as well. We evaluated the cost of rent vs. what equity we can expect to build over a 5-7 year time frame, and buying is the way to go IMHO. Certainly, with any real estate market, you have to be selective. I am assuming that I can pick a good property, and that the Austin market will be a stable or growing market over 5-7 years. Certainly that is no guarantee, but I think the right attitude is not to view your house as an investment, but it is a store of wealth. In the end you have to live somewhere. I want to live somewhere nice.

[fatemalib]

my family and I are new in he Austin region. We are cosidering buying a home in Southwest Austin for approx 5 years to stay in. What are the housing predictions for the next 5 years - we don't obviously want to lose money so can anybody give us some advice!

[orbius]

Originally Posted by fatemalib

my family and I are new in he Austin region. We are cosidering buying a home in Southwest Austin for approx 5 years to stay in. What are the housing predictions for the next 5 years - we don't obviously want to lose money so can anybody give us some advice!

Personally I'm seeing red flags out there. Rents are lowering, record number of homes are turning up on the County foreclosure auction. Signs that to me indicate more trouble in the real estate market ahead.
If it was me I would wait but who knows maybe if you look around you can find your dream house and put a reasonable offer on it that you could live with if home prices take another dip.

[Southern Phoenician]

my family and I are new in he Austin region. We are cosidering buying a home in Southwest Austin for approx 5 years to stay in. What are the housing predictions for the next 5 years - we don't obviously want to lose money so can anybody give us some advice!

SW Austin is a popular area, particulary Circle C. I would probably buy now before interest rates go up.

I live in Cedar Park (Twin Creeks) and just put my house on MLS on Friday. I've had four showings already (4 days on market). I'm in the low $400k price range and wasn't expecting this much traffic.

[Trainwreck20]

Predictions for the next 5 years is a little bit of a crap shoot, no one can really tell you what will happen. That said, the general rule of thumb that I have heard is that if you are going to live somewhere for 5 years, buy a house. If you are going to live somewhere 2 years or less, don't buy a house. In between is a bit more of a toss-up.

[austin-steve]

If you are staying for 5 years, you will be fine. Google "Rent vs. Buy calculator" and enter in your specific income and values and you'll get an idea.

To give you some numbers to use as a basis, an 1800 sqft home in Circle C that rents for $1600/mo. would sell for about $250K. Over the next 5 years I think it would be safe to figure a 3% annual appreciation on the home value (though 2010 may be flat). SW Austin continues to see strong demand due to location, good schools and lifestyle amenities.

Austin has a shortage of developed lots that isn't readily apparent to the casual observer but which will cause home prices to rise in the near term, probably by next Spring. Lumber costs are also very high again, which will make it more difficult for new homes to out price resale homes.

That said, if you know for a fact that you'll only be in Austin 5 years, it wouldn't be foolish to just rent the entire time. 5 years is about the cutoff in my opinion. But the hassle and hidden cost of renting (which none of the Rent Vs. Buy calculators factor in) is if you keep getting non-renewed (because landlord returns or wants to sell) and have to move 3 or 4 times during that 5 year period. If that happens, you'll wish you had bought.

So you have to ask yourself what particular value you place on the stability of owning. Especially if you have small kids and don't want to be scrambling with 30 days notice to find a rental in the same school attendance zone if your landlord sells or returns.

Welcome to Austin.

Steve