Austin’s Housing Growth is Lagging Population Growth

Posted on November 23, 2011 by SCarroll Leave a comment

With Austin’s housing growth, construction of single family homes, condos and multifamily complexes in Austin may be too slow to keep up with the city’s population growth. The squeeze may push up prices at some point.

Austin’s population has historically doubled every 20 years, as shown in the chart below. The current pace of newcomers might even be faster than that.

Many of Austin’s newcomers (particularly the younger ones) are renting dwellings rather than buying them. Economic uncertainty and overly cautious lenders make it hard to buy.

As a result, home sales in Austin have declined, as seen in the chart below.

The housing market has responded by supplying or building more multifamily units and fewer single family dwellings, as seen in the chart below. Multifamily Executive magazine says “MPF Research forecasts that it will be the second best apartment performer this year.”

Multi-Family Building Permits in Austin

When confidence and demand return full force, there may be a lack of supply on the market. Home inventories are shrinking, according to the Austin Board of REALTORS. Sellers are taking their properties off the market, waiting for a better time to sell.

As apartment rents and construction costs continue to rise, younger and first time buyers increasingly will want to buy. With low, low interest rates now, it may be a great time to buy.

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Thankful!

Posted on November 18, 2011 by SCarroll Leave a comment

A Wall Street Journal article by Candace Johnson today reports that luxury homes are on the auction block. Last week brought the recurring rumor that the Federal Housing Administration (FHA) was down to its last 2 billion in cash and will probably require a federal bailout. Another headline reports that as many as 1 in 3 homeowners may be underwater in their mortgage, etc., etc.

In response to the usual doom and gloom, I would rather focus on what I am thankful for this year. First, I’m thankful for a son who was just recalled from Iraq. Second, I’m thankful for living in Austin, Texas. A great city that is the center of state politics, a healthy business climate, and has great music and entertainment virtually everywhere.

Well I’m adopting the holiday spirit early this year. No, not in the mall, but in the spirit of the season (especially the cooler weather) and just enjoying being a part of Austin. With more and more people moving to Austin from out of state I think that sometimes the uniqueness is being diluted. But I think that’s just being a bit myopic.

Austin is evolving and brings new changes and opportunities each day. However, Austin is still home to the state capitol, UT, Barton Springs, and other mainstays that give it vitality and charm. So hopefully I can focus on the spirit of the holidays. Just enjoy the day, the football, the turkey and maybe later, the leftovers.

So maybe I can miss Black Friday at the mall and if I want shopping, I can wait for the Armadillo Christmas Bazaar or just go house shopping. Homes seem to be the biggest bargain in the economy these days.

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The Other South Austin Neighborhood

Posted on November 11, 2011 by SCarroll Leave a comment

When South Austin comes to mind, many people think of Travis Heights. But another neighborhood south of the river is on the rise – Bouldin Creek.

Bouldin Creek is by far the hippest. It has the charm of Travis Heights at lower prices and with more walkability.

Street life abounds because Bouldin sits between S. Congress on the east and S. First Street on the west. The neighborhood is bordered on the north by the river, where it opens to Auditorium Shores and on the south by Ben White.

Long a home for politicians, hippies, musicians and wannabes, Bouldin is an iconic Austin neighborhood that has been around since the 20th century. You can get a flavor at the neighborhood association.

Construction is widespread, with new projects matching the ever-present renovations. Several new condo-style homes are being built on W. Annie and W. Monroe.

Another handful of home sites are announcing future construction or just beginning.

The Austin American Statesman announced that the Wilson Street Cottages at 2610 Wilson Street is being replaced by the Flats on Wilson. You can bet these “Flats” will look much like the ones in the video.

In addition, old established restaurants such as Jo’s Coffee, Guerros and the Magnolia Café are being challenged by new restaurants such as La Perlas, the new Bouldin Creek Café and Larry McGuires’s newest restaurant the Elizabeth Street Café (a Vietnamese restaurant).

In short, Bouldin is a model New Urban neighborhood where people live, work, shop and have fun – all in close proximity. In fact, they often do it on foot or bike!

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What’s going on in Austin?

Posted on November 8, 2011 by SCarroll Leave a comment

Occupy Austin began on October 6, and has lasted for the past 5 weeks. There have been 38 arrests made, but for the most part, the protest has remained peaceful. Occupy Austin is still ongoing in the downtown vicinity at Austin City Hall.

• Occupy Austin website
• Occupy Austin Facebook
• Follow Occupy Austin on Twitter @occupyaustin / @occupyradioatx

Downtown Austin is in the midst of new construction on the corner of Brazos Street and 3rd Street. The development will be 16-stories high, consisting of 277 luxury apartments. We have also learned that the first floor will consist of retail space, including a 6,000-square-foot restaurant.

The Waller Creek Tunnel Project is also underway, which aims to capture and redirect flood waters south of 12th Street to Lady Bird Lake. This video footage of Waller Creek at the Waterloo Park shows where one of the tunnels will be placed to capture and filter the flood water on its way to Lady Bird Lake. View a video of how the Waller Creek Tunnel works here.

• Visit the Waller Creek website for more information
• Visit the Waller Creek Tunnel Project website here

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Maintaining Austin’s Edge

Posted on October 31, 2011 by SCarroll Leave a comment

While Austin has won numerous “Best City” awards in recent years, it needs to think carefully about how to remain a successful city in the future, according to Carol Coletta, host of NPR’s Smart City and CEO of CEO for Cities.

Coletta, a leading urban expert, told the Downtown Austin Alliance on Oct. 28 that Austin needs to maintain it’s attractiveness as a city where people want to live because that’s where jobs come from. People who move for quality of life often create jobs one way or the other, she suggested.

Austin has a chance to implement a number of Coletta’s recommendations through the Downtown Austin Plan that is scheduled to go before city council on Nov. 3. The DAP is a comprehensive plan for Austin’s future growth in the central business district.

The Plan calls for boulevards where it’s easy to walk, more green spaces and more public transit. Waller Creek would be developed with a river walk, and the downtown business district would be connected to the Capitol and the University of Texas. You could walk from downtown to the Capitol or University in 10 minutes.

Some of the obstacles facing Austin are excessive surface parking lots and an outdated belief that just drawing big employers will automatically create jobs. Coletta said. New jobs come from people who want to be in Austin and grow a business here, she said.

A great city needs to attract talent, Coletta said, because talented people “care for a place.” Austin also must create a sense of vibrancy, which she defined as the quality of a place, including the ability to “stumble upon the fun.”

The Downtown Austin Plan would provide a blueprint for that kind of city. Let’s hope the City Council passes it on Nov. 3.

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Austin Homes – cheaper to rent or buy now?

Posted on October 25, 2011 by pg1116 Leave a comment

Evidence suggests that now is a good time to buy a home in the US and in Austin. Claims are in some areas it is cheaper to buy than rent. If you want to do the calculations yourself you could use a “ Housing Affordability Calculator” such as http://www.decisionaide.com/mpcalculators/AffordabilityCalculator/Affordability2e.asp

I have done the numbers based on recent statistics from the Austin Board of Realtors. September showed the median price home in Austin to be $189,000 and the median rent price in Austin of $1300. My calculations show putting down 10% for a purchase with a 4.5% rate that the monthly housing expense would be $1240 versus average rents of $1300.

I serve central Austin and its hard to find a home that is in good condition and in a location that will provide good resale for $189,000. But view the video below and I have outlined three homes within 5-6 miles of downtown that might be bought for the median or less. (Using my office address).

I only showed you three although there were more homes within the 5-6 mile radius that would also work. The numbers do show that buyers would not be paying more than renters. But the financing is the key. It is available but is requiring a 10% down payment. This is reminiscent of the 1980s but the home prices should grow at a slightly higher rate than the eighties.

It’s not cheap to live in central Austin compared to other Texas cities or just Austin’s suburbs such as Cedar Park or Kyle. But central Austin attracts tourist and newcomers, its where they want to be.

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Where Office Market Leads, Residential One Will Follow

Posted on October 18, 2011 by pg1116 Leave a comment

The office market in Downtown Austin is strong and showing signs of good momentum, in contrast to other urban markets.

Office vacancies dropped by 4 percentage points in the 3rd quarter from the previous quarter, according to an article by Shonda Novak in the Oct. 9 Austin American-Statesman. The trend has been downward for nearly two years, as you can see below.

Austin Area Office Market

All this data points to job growth and businesses moving to Austin.

Where the commercial market leads, the residential one will follow. Stagnant lending markets and higher credit requirements have depressed home sales in the past couple of years – but this is changing.

As residential rents rise, tenants will want to become homeowners. Central Austin will attract demand because of its proximity to downtown, ie, business, culture and entertainment offerings.

The lowest interest rates since 1971, new jobs, and an influx of newcomers – all point to a resurgence in the Austin housing market. Don’t be surprised when demand rebounds strongly and prices accelerate.

The 900 block of Congress is an excellent example. Some 4-5 storefronts sit empty in this block, and they need business to keep the Austin flavor alive.

Their location and architecture speak to the old Austin style. The style that makes visitors and newcomers say Austin is a cool place.

More retail in these storefronts is absolutely necessary – as happened with the recent arrival of Brooks Brothers along Congress Avenue.

The City Council should offer incentives to retail or restaurants to come downtown. Sure, hotels are good. But proprietors are the backbone of Austin. The embodiment of the old Austin style.

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Flood Insurance in Austin?

Posted on October 11, 2011 by pg1116 1 Comment

As our record drought moves into its second year, more Austin homeowners may be tempted to drop their flood insurance unless it’s required by a lender. My advice is “stop, look and listen” before you do that.

“Stop” and remember that flood damage from tropical storms or spring rains are not covered under your homeowners policy. During a tropical cyclone intense thunderstorms may develop 100 miles inland from the coast.

Hurricane Irene is a case in point. When that storm hit the Northeastern U.S. in August, inland areas far from the coast were flooded.

At some point Austin is likely to be hit as well, and flooding will occur.

“Look” at this floodplain map of Austin to see how prone you are to flooding: http://coagis1.ci.austin.tx.us/website/NewFloodplain/viewer.htm

The 100-year floodplain is the area likely to be inundated once every 100 years. A home located in the 100 year floodplain is required by lenders to have flood insurance.

Other areas are not mandatory, but often advised. A policy might average $325 per year in a prime flood zone, which would NOT be subject to flooding during normal conditions.

“Listen” to your insurance agent to find out what’s right for you.

Congress is set to renew the national flood insurance program before Nov. 18, 2011, when it expires. Let’s hope it is renewed.

It may seem silly to talk about flood insurance in Austin during the worst one-year drought in our history. But the recent inland flooding from Irene highlights the risks.

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Recent Austin Real Estate Market Indicators

Posted on October 5, 2011 by pg1116 1 Comment

Last week the Case-Shiller Index was released and was up for the fourth month in a row. While most of the gain came from northeastern US, the index did show Dallas rose about 1% for the past three months but still showed a small decline for the past year.

Kiplinger announced that Austin was the “Best City for the Next Decade”. Their criteria consisted of jobs, an entrepreneurial climate, education, safety and lifestyle. Likewise Parenting Magazine proclaimed Austin as its #2 city for “Best Place to Raise a Family”.

Mortgage rates sunk below 4% last week. I wouldn’t expect rate to fall much farther and in fact several large mortgage lenders have announced significant changes to their lending posture.

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Water for All?

Posted on September 26, 2011 by pg1116 1 Comment

Austin is a great city to live in because of the economic and cultural advantages. An active outdoor lifestyle is another attraction.

Hike and bike trails allow us to commune with nature right in the city or close to it. Our proximity to the hill country and to the Gulf Coast enables us to enjoy a variety of environments.

Texas is fortunate to have over 300 miles of coastline, making the bays and beaches of utmost importance to tourism and maritime culture.

These natural environments should not be taken for granted. They must be cared for, especially during devastating droughts like the one we’re suffering.

Dove hunting season opened on Sept. 23, yet the white wing and mourning dove populations already are dwindling rapidly. Migrating hummingbirds are flocking in unprecedented numbers to feeders put out by people.


Shrimp in the bays and Gulf are scarce, speckled trout hard to come by.

As the coastal wildlife and habitats suffer, the Lower Colorado River Authority on Sept. 21 approved an emergency plan to allow extra time before river water is cut off to downstream rice farmers.

Those water releases are obviously important to the survivability of irrigated farming. But they also are important to the survivability of the Colorado River and Matagorda Bay.

Sam Houston almost lost the republic to a second invasion because he put so little importance on the Texas coast and navy. Let’s hope our elected officials now recognize the vulnerability we face from a coastal decline. The bays and estuaries need fresh water releases whether for farmers, fish or folks.

View of the Colorado River downstream from Longhorn Dam: before and after
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