As I mentioned in my last blog on Investing in Austin, I attended a class on investing which piqued my interest because I found a source for 100% financing on investment properties.  Combine that with other strategies and you could be looking at being able to buy investment properties with no downpayment and no money out of pocket for your closing costs.  Before I get too far down that path, let me back up a little...

Most people I talk with want to buy investment property but most I speak with have something that is holding them back.  Here are the common obstacles and answers to those obstacles:

• "I don't know what to look for" - I do, I am the expert, and that's why I am here to help you.  As your Realtor it is my job to monitor the market and find the properties that I believe will work for you and your investment goals.  I also consider it my job to educate you to the point that you feel comfortable and confident in the decisions you make.
• "I feel unsure/insecure about the future of real estate" - That's an easy question to understand right now with the news dominating the national headlines.  Know this though, real estate in Austin has appreciated at an average rate of over 6.5% annually over the past 30 years and the outlook for the Austin market appears to be strong well into the future.  The 50 year growth trend line for real estate in the United States is also 4.5%.  If your investment goals include building wealth, investing in real estate should be a part of your investment strategy.
• "My budget can't handle negative cash flow" - I certainly understand, that is why I will help you find a property that will minimize those risks and help you structure the deal so that you can have positive cash flow in your first year. 
• "I can't afford the downpayment" - Most people believe they need 20% down for an investment property.  That isn't the case in most instances.  As I've mentioned, I now have a source for lending that can obtain 100% financing which means no money out of pocket for your downpayment.
• "I don't have time to manage it" - There are plenty of capable management companies in town who will manage your property for a small fee.  Frankly, I think its a fantastic idea to let someone else manage it.
• "I have past credit issues" - The lending industry has loan products for almost any situation.  Don't let this fear hold you back from exploring your options.

The reasons people buy investment properties vary.  Some of the main reasons for buy investment properties are:

• Accumulate wealth
• Retirement Income
• Capital Preservation
• Capital Appreciation
• Rental Income
• Career Opportunity

What reasons are important to you?  That is a critical question to determine so that you can assess what the best type of property is for you and what the best strategy is for you.  Not every property works for every situation.  Each client's situation is unique and every property is different.

Questions? Call me, James Brinkman, West Elm Properties,  at 512.698.3525 or email to Brink@WestElmProperties.com

A recent article from the Los Angeles Times discusses a complaint that has been lodged against the recently launched Zillow.com website.  Zillow, which was 'turned on' 8 months ago, is being accused by a fair housing advocacy group of being purposely misleading.  The complaint apparently says that misinformation about values of homes is being used by many within the real estate industry, such as lenders and real estate agents, to take advantage of consumers.

I have actually been quite curious of the Zillow experiment.  Over the past few months I have noticed that they have made strides to provide information regarding local markets such as historical trends and county and state averages.  The trouble with Zillow, in a state such as Texas, is that our sales information is not public data.  With a system that is based on compiling sold information from public resources, Zillow will seemingly always be lacking in Texas. 

Just to see how Zillow is doing, I went ahead and ran my own home through their system.  I did the same six months ago.  Over the past 6 months it says the 'zestimate' is up $30k.  Is the market really up $30k - no, not at all.  Additionally, they have a heading at the top that says my "30 Day Change" is down $10,464, which is interesting given that the market in Austin has shown consistent growth.  Also kind of weird to me is the "1 year value change" graph which looks like every stock performance chart I've ever seen. 

That said, I do believe the value of this home is within what they give as their 'value range', a task which isn't too difficult given they are giving me a value range of $120,000.  Other magic involved in their value is the 3 comparables they provided me with.  My home is in the Spicewood/Balcones area.  One of the sales is in my neighborhood.  In fact, it's only 1/3 mile away.  The second comparable is in Canyon Creek.  Huh?  Canyon Creek of down Anderson Mill Road, out on 620 and then into Canyon Creek, Canyon Creek?  That's not comparables.  Hmmmmm.  Let's see about the 3rd comparable sale...in....Northwest Hills?  Seriously?  The home they gave me is just west and south of the intersection of 183 and Mopac, 4.17 miles away, according to their own estimates.  I don't know how far in actual driving terms. 

Okay, I'm trying to be fair.  Really!  I am.  However, there are just so many quirks in the system I can completely see where the fair housing advocacy group is coming from.  I truly hate the fact that anybody would use the site and take anything away from it other than entertainment.  A Zillow statement referenced in the article states that "zestimates are designed to be a starting point for consumers who want to learn about the value of homes".  The problem is, what if the starting point is wildly inaccurate.  And honestly, in my own case, what good is a starting point with a range of over 35% of the value of the home?  I would guess that your average consumer is familiar enough with a neighrborhood they are researching to understand the values within 35%.  In truth, a valuation system that doesn't come up with a value within 10% is useless.

This actually brings me to my next point, and that is the treatment of the property valuation like a stock or some similar commodity.  To me, the 1 year value chart makes me want to laugh and shake my head at the same time.  Privacy precludes me from sharing the actual chart with you, but if I did you would see a chart that goes up $10k, then down $15k, then up $30k, then down $5k, then up $15k, then down $20k, all within a 12 month period.  I am not saying that there will not be fluctuations in what you can get for a home over the period of a year as the market conditions change and the seasons change but I don't believe it looks anything like a line graph of specific plotted points.  A better representation might be a range.  Real estate values are not a fixed, exact amount.  Two people can look at the numbers and come up with a different value for the home and honestly that doesn't mean either value is incorrect.  Typically there is not an exact replica of the property to use as a comparable so adjustments will need to be made to the comparable.  Typically new construction is the closest you will get to a set, standard value point.  In the end though a home is worth what someone who likes it will pay for it.  I think technology has opened up many doors and provided us, as the consumer, with so many tools and the ability to access so much more information.  I continue to believe that technology will lead us to some amazing places and provide us with so many new and exciting opportunities.  However, right now in Texas, online property valuation is not something that is tenable.  If you want a property valuation you best bet is to hire an appraisal or I can complete a free Comparative Market Analysis or Broker's Price Opinion.  Just contact me: James Brinkman, West Elm Properties, 512-698-3525, Brink@WestElmProperties.com

As an aside, I just don't feel the whole zillow, zestimate, zindex things is cute at all.  It's seems like one of those things that someone thought, 'let's be clever and throw a 'z' on the front of some words!' (typically words beginning with vowels other than the zillow itself).  Well, to me it's kind of zannoying!

It's time to do a little catch-up on the week that was in real estate, given that some interesting national statistics were released this week.

According to the US Commerce Department the median price of a single family home was down 2.5% from September 2005 to $219,800, the largest year-over-year price decline in records going back four decades.(from the National Association of Realtors).  Even more staggering was the news for new home sales, which saw a decline of 9.7% on the median price to $217,000 (also the largest year-over-year decline since 1970).  The number of new homes sold did rise 5.3% in September but new home sales are down 14.2% in the past year.  Nationally there was a 6.4 month inventory/supply of homes, given the sales rate in September.  Mortgage rates inched up to a 6.40% average for the week of October 26.  I read recently that rates were thought to be headed to 7% by the end of the year but now the thought is that it won't get to that point, at least not yet.  The Federal Reserve's decision Wednesday not to raise rates was at least part based on the housing market slowdown.

September in Austin looked like this:

Current Market Summary
September 2006

All Single Family Sales

2006 2005

2,341 2,280

+  3%

All Active Single Family Listings

2006 2005

8,203 7,835

-  5%

Single Family Median Price

2006 2005

$167,000 $161,750

+  3%

Single Family Pending Sales

2006 2005

2,332 2,030

+ 15%

The average home price in Austin was up 6.5% year-over-year to $227,948 from $213,946.  These are all certainly respectable numbers in light of the sharp declines in national numbers.  Of course, as I always say, all real estate is local.  It is interesting however to keep track of how the national averages shake out.  It will also be interesting to see how long this downturn in the national numbers will continue.

I've been working recently on my Neighborhood Guide so that the West Elm Properties website can help people get to know the neighborhoods in Austin a little better as they try to decide which neighborhood feels 'right' to them.  Many factors go into that thought process, including schools, area amenities, geographic considerations, pricing, home styles, tax rates and utilities, among other things so this is what I have attempted to capture on each neighborhood page in a clear, concise manner.  The first MLS area I undertook was area 1N, which, geographically runs between 2222, 360, Parmer and McNeil/Spicewood Springs (basically).  Within this MLS area I found 30 distinct neighborhoods.  Many of these neighborhoods are typically grouped in with the larger neighborhood - say, Sierra Vista with Great Hills or Walnut Crossing with Milwood - but I found that there are enough distinct differences that each deserved its own page, so that buyers can really hone in on what specific neighborhoods they really prefer.

It's quite been quite the undertaking working up the statistics and information for these pages, and I still have to add some 'representative home' photos for several of the neighborhoods, but it has actually been a good exercise in understanding as well.  My hope is that you, as buyers and sellers and homeowners in the Austin area, will find them very useful.  If you live in one of these neighborhoods and would like to add any information, or you see something that is no longer accurate, please feel free to email me and I would be happy to make the change.

My next venture with the Neighborhood section will be to write-up some of the larger neighborhoods in other MLS areas.  If there is a neighborhood you would like to see more information regarding please feel free to contact me on that as well and I would be happy to work up that information.  I'm guessing that if someone emails me asking me for information on a neighborhood, there are probably 10 others who are interested who didn't email, so it helps me meet my mission statement goals.  Eventually I this site will have a cross reference ability where if you want to see what neighborhoods feed to a certain elementary school you can click on the school link.  For example, when the Laurel Mountain Elementary page is there you will be able to see that Barrington Oaks, Canyon Mesa, The Dominion at Great Hills, Great Hills, Spicewood Hills, Westhill Estates and Yaupon Terrace feed to Laurel Mountain Elementary in MLS area 1N (Additionally you would see that The Bend and sections of Spicewood Estates go to Laurel Mountain Elementary as well).

Please let me know if there is anything I can do to make this site more useful for you.  My goal is to serve you and make this website a great reference for your home buying, selling and owning needs.

Have a great weekend!

jb

Here is the latest information as to month on month comparison for the Austin real estate market.  As I mentioned in the review of July's statistics, we are still seeing a slight leveling on pricing (compared to the 15% month on month we saw in the Spring months) which I would project will continue through the remainder of the year.  This provides an optimal time for buyers to buy a home before the run-up in pricing I expect once we get to 2007. 

Current Market Summary
August 2006

All Single Family Sales

2006 2005

2,805 2,634

+  6%

All Active Single Family Listings

2006 2005

8,137 8,302

-  2%

Single Family Median Price

2006 2005

$182,500 $169,400

+  8%

Single Family Pending Sales

2006 2005

2,891 2,549

+ 13%

The average sales price in Austin for August 2006 was $243,684. 

Time to catch up a little on recent articles.

First is on Allandale.  The article writes on how Allandale is becoming increasingly popular for "young families and professionals".  A good percentage of my clients over the past few years have bought in that general area and I have actually noticed that as well.  When areas closer in to town, such as Hyde Park, became cost prohibitive for many younger buyers, neighborhoods such as Allandale provided the right combination of affordability and the older home charm/funkiness that many of those buyers sought (and still seek).  There are actually several sections of Allandale including Allandale Estates, Allandale North, Allandale Oaks, Allandale Park, Allandale Terrace and Allandale West.  There are over 2,200 homes in these combined areas.  Between October 2005 and October 2006 there were 122 homes sold.  The average size of those homes was 1,680 square feet with an average sales price of $256,797, or $157.20/per square foot.  The average list price was $261,570 and on average it took 29 days to get the home under contract.

Sales in the New Home market remain strong.  Nationally sales of new homes are down 14.4% whereas Austin is up over 18%.  Nationally there is a 6.6 month supply of unsold new homes.  In Austin that number is less than 2 months.  Interestingly enough I still get plenty of broadcast emails from certain builders offering incentives for some of their inventory.  Typically I share any commission incentives above 3% with my clients if they decide to purchase one of the new home builder's home.  It seems appropriate to me.  The article does urge caution as the new home sales might be slightly inflated by investors, which I have seen myself.  I've read a couple of articles quoting out-of-state 'investors' saying that they couldn't believe how low some of the prices were for some of the new homes, mostly bedroom communities outside of Austin.  It would seem common sense but maybe it should be said - just because something would be a 'deal' where you live, doesn't mean it's a deal where it sits.

Six years ago, in the summer of 2000, I sat in my car outside a home in Jester Estates waiting to meet a client.  It was a Friday morning, about 8:50AM.  The instructions posted in the MLS said the home would not be shown until Friday at 9AM.  When I pulled up to the home I thought I might as well be going to a party because of the amount of cars sitting outside the home.  Outside my windshield I saw no less than 6 other Realtors and their clients waiting in a scattershot, makeshift line in front of the house.  The listing agent might as well have put a number dispenser at the front of the house and a little “Now Serving Number” digital board over the front door.  As I got out of my car I thought to myself, “Well, this is no good”.

Demand.  I saw a lot of the ‘Demand’ side of supply and demand that summer.  I’ve mentioned it before, but I had 7 different buyers that lost out on a home in best and final situations in July of 2000 alone.  Being in a market with multiple offers, many significantly over asking and actual market value, is not the boon to real estate (and for that matter, Realtors) that many people believe it to be.  Buyers are frequently are disappointed or frustrated and many end up overpaying for the home in that market scenario.  (I, personally, tried to be diligent and make sure the prices my clients paid were supported by comparable sales.) 

While many were caught in the euphoria of the thought of never ending price escalation, I was stuck with the feeling that the Austin boom was about to come to an end.  The words of Dr. Stephen Pyhrr’s article “ Austin ’s Persistent Real Estate Cycle” were resonating.  He wrote that Austin has historically experienced ‘up’ cycles of 8-10 years and ‘down’ periods of 3-5 years.  In 2000, the last ‘bottom’ of the cycle, the beginning of that cycle’s ‘up', had begun in 1991.  We were well into our 9^th year of the ‘up’ and it was becoming evident that cycle had run its course.  The real question was starting to look like, how bad would be the down cycle?

At that same time, in California the market was just beginning to really heat up.

........................................

Six years later it’s hard not to see all the stories and articles about how the boom is over.  It has become one of the bigger business stories of the year and I would wager that most of the major media outlets have at least run one ‘Boom is Over’ in the past month or so.  Yesterday I ran across this article prominently featured on the MSN home page.  It is an article from Forbes magazine titled ‘How Low Will Real Estate Go?’ (Lacey Rose).  The first sentences in the article read, “Get used to it – the seller’s market is closing up shop.  The days of fat, fast home value increases are gone.  Pack away those flipping fantasies.  “The boom is definitely over, there’s no debate about that,” said Mark Zandi, chief economist of West Chester, PA – based research firm Moody’s Economy.com.  “Now the question is more how hard is it going to land, if it lands at all.” ”

So the boom is over, huh?  What boom?  Where have I been?  Last I check Austin went through its down cycle from the Fall 2000 to the Fall of 2004.  Here in Austin , we experienced zero growth, for the most part, between 2000 and 2004.  Since the Fall of 2004 we have seen steady growth, commensurate with that of a market in the beginning cycle of growth.  Growth, based on past history, that should continue through to 2012, maybe even 2014.

Even within the article there is a link title “How Low Real Estate Will Go In 15 Metro Areas” there are examples of markets that look like they will fair just fine during this ‘bust’.  The link graphs out the projected growth for the next 10 years in 15 different markets.  Seattle, Dallas and Houston all are projected to fair just fine during this terrible, terrible time (tongue firmly planted in cheek).  Boston, Los Angeles, Miami, New York, Phoenix and Washington are the only cities they show that appear to actually have a retreat in pricing at some point over the next 10 years.  For those keeping score, that’s 6 out of the 15 cities cited, and yet the article/link is “How Low Will Real Estate Go…”. 

I don’t think it is a big jump in logic to say that the stories we read and see, written for national consumption, are heavily influenced by the east and west coast in this country.  Is it too much to ask that broad brushes not be used when writing the stories though?  Of the 6 cities that actually appear to have price decreases on the way, only Phoenix does not fit the mold as a major east or west coast market.  It definitely appears that this is coloring the news and, in spite of evidence to the contrary in plenty of markets, is causing the writers and reporters of these stories to make such grand sweeping statements as “the seller’s market is closing up shop”. 

I’ve said it before and I’ll say it again: all real estate markets are local.  When a market is down in your town, I’ll find you a market that is up in another.  Point me to a seller’s market in one city and I’ll point you to a buyer’s market in another.  There is no ‘national’ real estate story when it comes to a national real estate market.  Yes, certain factors influence all markets.  A spike in interest rates will have some influence over all real estate markets, but the impact will be different depending on the local factors. 

In Austin we are influenced by technology and the state government, among many other factors.  When the tech options vaporized and the stock market fell in late 2000 and 2001, the Austin real estate market followed.  The record highs of the real estate market in Los Angeles and Miami over the next few years had absolutely no influence as to what was happening in Austin .  Of course it didn’t, why would it?  Yet we heard story after story about how the national real estate market was booming, just as now we are treated to the doom and gloom.  During the last few years, Austinites would ask, ‘What Boom?’ and now, just as easily, they can ask, ‘What Bust?’ 

So as you read and see these stories just remember some simple rules:

Real estate is local.  There are always some points of wisdom to be gleaned from the stories and they are a good way to know what’s going on in different parts of the country but, in the end, what happens with the real estate in New York City has little influence as to what is going on in Austin. 

Real estate cycles are just that – cycles.  They go up and they go down but over the long-term the growth trend line is up.  Nationally, the 50 year growth trend line is up 4.8% per year on average.  Over the past 30 years in Austin the growth trend line is up about 6.7% per year.  Real estate remains one of the best ways to leverage your money over the long term, regardless of the cycle at that moment.

 

Don’t buy into the hype and hyperbole that the reporters use in their stories and articles.  In the end, much of their job is to sell papers, magazines or whatever their medium might be.  The headline, ‘How Low Will Real Estate Go’ will certainly grab one’s attention a lot more than something more pedestrian.

........................................

Six years ago, as I got out of my car outside a home in Jester Estates and got ‘in line’ with my clients I thought to myself what a wild scene it was and how it certainly could not be a good sign for where the market was headed.  My clients actually got the house that day.  There were multiple offers but we stayed within the comparables sales and, after an afternoon of ‘sweating it out’, we got the phone call that their offer had been accepted.  Just a few months later the word came out that Dell would be laying off employees and so began the past downturn in the Austin market. 

Six years later we are still here.  Jester actually did fairly well over the past few years and is a high demand area.  Austin made it through the down cycle and came back out and now we are at the beginning of our growth period.   And, at least for the next few years, the boom starts here.

.......................................

Here is an interesting report on the subject of market performance from First American if you would like to read more on real estate cycles of different market.

Bad news travels fast.  We've all heard it time and again.  So when many of the recent real estate questions I field are related to the housing bust, I know exactly why I'm receiving them.

For the past few years, as the markets in many areas heated up, became sketchy, and then 'popped', resulting in declines in value.  Much of the media is coastally driven - meaning much of our national news comes from people with either an East Coast or West Coast perspective.  I heard and read many stories during the first part of this decade about how 'hot' the real estate market was and the double digit gains many of the major markets were experiencing.  All the while, Austin's real estate market was languishing behind a virtually flat growth trend line from Fall of 2000 to Fall of 2004.  Four years of nada.

More and more there are news stories discussing the slowdown in the real estate market, and the downturn that is actually occuring in many of the markets.  Many people will probably think of 2006 as the year the downturn began.  In all truth the slowdown in many markets began in 2004, according to the Standard & Poor's/Case-Shiller Composite Home Price Index, a housing benchmark that follows 10 major markets.  These markets are San Francisco, Los Angeles, San Diego, Las Vegas, Denver, Chicago, Boston, New York, Washington DC and Miami.

Fall of 2004 is also where I would put the 'bottom' of the last down cycle for Austin's real estate market.

Information released yesterday by the Office of Federal Housing Enterprise Oversight shows that prices declined in 61 of the 275 cities tracked.  Taking it from a local perspective, Austin ranked 123rd with an 8.42% annual growth rate between the second quarters of 2005 and 2006.  Many people might look at that and say, 'well, that's almost right in the middle, whoop-dee-doo'.  Understand that from the first quarters of 2004 to 2005 Austin ranked 7 places away from dead last in the results.  To go from 258th (only 265 markets were tracked at that time) to 123rd over the period of one year is pretty impressive.  When you take into account the historical perspective that Austin typically has worked in cycles of 8-10 years of 'up' and then 3-5 years of 'down', it would certainly appear that Austin is due to continue its climb up the rankings for several more years.

Just remember as you see and read these reports - all real estate is local.  As many of the markets around the country struggle and go down, many other markets will begin to thrive.  My thoughts are that the Austin real estate market should continue to do well for many more years and we will continue to see solid appreciation in Austin home prices through at least 2011.

A couple of Statesman article links for you on this Sunday:

50 Year Mortgages - Aaack! - Count me among those who doesn't really see much good, but a whole lot of potential bad, about these types of loans.  In a perfect world, I would love for all of my clients to be able to put 20% down and have 15-20 year mortgages for their personal home.  Of course, it's not a perfect world so I think there are still plenty of benefits to home ownership with much lower amounts down, but I do think it is pretty important to stay within your means, and much of the time interest only loans, and, by extension, 50 year mortgages, are used to stretch the amount of home a buyer can afford.  Call me silly, but I'd much rather have a client who is able to comfortably make their mortgage payments and actually have a little money to enjoy their life than a client who has to use special financing to stretch themselves into a more expensive home and then be stressed out about having to make the payments every month.  Maybe its just me...

Here's a story regarding what Mark Dotzour, chief economist and director of research at the Texas A&M Real Estate Center, predicted for Austin and Central Texas real estate in 2007.  Good stuff.

Nothing my clients don't already know, but the story here covers the continuing strength of the Central Texas real estate market.  Beyond the overall monthly statistics, I found the jump in sales of high end houses to be particularly interesting, with sales of homes priced over $1,000,000 up nearly 50%.  The article also reference that Travis Heights experience a 27% jump in median prices.  I actually know that to be true as I had a past client who bought in the area email me with a couple real estate related question and then thank me profusely for helping find such a great deal in the Travis Heights area before it popped up again.

If you are looking at buying or selling a home in Travis Heights, or any other Austin neighborhood, I would welcome the opportunity to talk with you about it.  I think it wouldn't take long until you would realize why our past clients keep referring to us and why we say West Elm Properties - just better!

According to Mark Nash, real estate author of 1001 Tips for Buying and Selling a Home, the 10 best cities for real estate (both for investors and home buyers) are:

• Atlanta, Georgia
• Austin, Texas
• Boise, Idaho
• Dallas, Texas
• Houston, Texas
• Las Vegas, Nevada
• Phoenix, Nevada
• San Antonio, Texas
• Seattle, Washington
• Milwaukee, Wisconsin

If you would like to read more on it and his reasonings, you can find it here

I actually believe it seems like a fairly solid list based on what I've been reading as well.  I don't think it's any coincidence that the only city on a coast is Seattle.  That's not a knock on those coastal cities, it's just that after the run-up those cities have experienced over the past few years its only natural to expect a leveling off and cooling period. 

Also not surprising is that Texas landed 4 cities on that list and that Austin is one of those cities.  Being an expert in Austin real estate and the Austin real estate cycle, I did expect Austin to make the list.  While Austin's cycle does run independent from the rest of Texas, as has been shown over the past few years (and particularly evident during Austin's 'down' cycle from 2000-2004), there still is some degree of similarity across the state as to buyer demands. 

Of course, if I had to choose a city in Texas, I think Austin wins hands down, both for quality of life and appreciation potential.  Austin stands unique from those cities and although growth has changed some of the city's characteristics, the desire to keep austin weird still prevails.  Additionally, while the national 50 year growth trend line for real estate averages an 4.8% annual appreciation, Austin's average appreciation over the past 30 years is approximately two percent higher than that.

I fully expect for the next few years to see lists similar to this one, with the majority of the cities resting in the middle parts of the country.  Eventually attention will turn away and back to the coasts, but that is the nature of any cycle, almost like a wave that runs across the country.  For those ready to catch the wave, surf's up in Austin.

Some local Austin stories from the Sunday Stateman:

Housing Starts Stay Strong in Central Texas

Mortgage Rates Fall as Economy Slows

This is the first in a 3 part blog on the real estate cycle in Austin, Texas.  Many people behave as if a certain economic situation will continue into perpetuity.  Many times this is played out all so evidently when a bubble bursts on a particular market, whether it be the stocks in the early 2000s or the real estate bubble that is occurring on the coasts, especially notable in Miami and California.  Operating from the standpoint that because something appreciated 'x' amount last year, it will do so this year, is not only foolhardy, it's just bad business.  It seems so common sense to even say it, but yet time and again I see people repeat the mistakes over and over, giving into greed and trying to make a quick buck, so it bears repeating - and understanding. 

It is with that goal that I undertake these writings, so that the information is out there for all who want it.  For a while there I thought this was really something I could show to my clients - a unique understanding of the Austin market, where it's been, where it is now and where it is heading - and something to hold on to.  In other words, something I could provide to my clients as an incentive for working with me that I feel few other agents understand.

However I've decided that particular line of thought is not the right place to be and is not where I feel good.  I don't want anybody making a decision without this information if at all possible, even if they aren't working with me.  I think it's important information to have for anyone who wants it and so, by writing it here, I hope it finds its way into the hands of the people who are searching for this knowledge and it allows them to make good financial decisions.

I cannot speak in depth on the cycles of the stock market, or even the real estate cycles of California, but I can offer some fairly detailed, yet pretty concise, information regarding the persistent real estate cycle of Austin, Texas.  It's been my home for over 30 years and it's a place that I love and love to understand.  I hope the information I share with you in this series brings you the knowledge you seek.

....................................................................................

In 1994 I was fresh out of college with my BBA in Real Estate/Finance and working for the broker, Doug Gurkin, at Keller Williams Commercial - Shopoff & Gurkin.  I mostly handled much of his real estate sales/listings for many of the small multifamily properties (duplex-fourplex) that his past clients, almost all of which were investors, were 1031ing out of their inventory while he worked diligently on another company he was involved with - Asset Recovery Fund.  On the side from that I did some work for the local CCIM chapter and, in particular, helped in putting together the book that was handed out to all who attended the CCIM's broker forecast. 

It was while working on the CCIM's broker forecast that I ran across an article from Dr. Stephen Pyhrr entitled Austin's Persistent Real Estate cycle.  If there was a more formative moment in my real estate career I'm not aware of it.  I believe I have referenced the article, and the findings of his research, to almost every client I have worked with since that time.

The article was written in the early 90s and it discussed the cycles within the Austin real estate market through the ups and downs of a couple of cycles.  Dr. Pyhrr then graphed out the cycle through the date of the article.  What he found was that Austin has a historical "up" period of 8-10 years and a historical "down" period of 3-5 years.  He then projected how the Austin market would behave through 1999 (at which time he put ???s). 

How did it all turn out?  I'll cover that, as well as more detail on the cycle, in Part 2.

If you would like a PDF of the article, feel free to email me at Brink@WestElmProperties.com and I would be happy to forward it on to you. 

Of note, average home sale price is up to $245,655 for June 2006, up 12% from $219,196 for June 2005.

Current Market Summary
June 2006

All Single Family Sales

2006 2005

2,980 2,462

+ 21%

All Active Single Family Listings

2006 2005

8,477 8,637

-  2%

Single Family Median Price

2006 2005

$182,000 $168,500

+  8%

Single Family Pending Sales

2006 2005

3,286 2,506

+ 31%