Texas Realty Blog

Texas Apartment Market Update Fall 2006

Whether you are a renter or landlord, you may be interested in this update form the Texas A&M Recon on rental rates in Texas...

The apartment markets in Dallas, Fort Worth, Houston and San Antonio each saw decreases in occupancy and increases in average rent for the year ending October 2006, according to Carrollton-based ALN Apartment Data, a market research firm:

• Austin reported no change in occupancy, holding stagnant at 93.7 percent in October 2005 to October 2006.  Austin had the largest increase in rental rates for the year, going from $731 to $773 (5.7 percent increase).
• Houston had the biggest change, going from 92.9 percent to 90.4 percent (2.7 percent drop).
• Dallas occupancy for October 2005 was 91 percent, compared to October 2006 of 90.2 percent, a 0.9 percent drop. The city had the smallest increase in rental rates, going from $731 to $750 (2.6 percent).
• Fort Worth, as of October 2005, had 90.1 percent occupancy, compared to October 2006 of 89.2 percent (down 1 percent). There was a 3 percent increase from $643 to $662.
• Rents in San Antonio went from $653 in October 2005 to $676 in October 2006.

How does your real estate agent justify their high commission?

I'm a member of several online real estate forums. One of them is AgentsOnline.net. A topic that I just read was on justifying "high" real estate commissions. Oh boy, the commission topic is one that is very sensitive to some people.

THE QUESTIONS: 

Why the heck are sellers paying what they consider "high" commissions on real estate transactions? Is that 25-point marketing plan and placing the home on MLS really worth it? Can't sellers just do it themselves? With all of the discount and internet companies out there, what's the difference among agents?

MY TAKE ON THE INDUSTRY

1) It's too easy to get a real estate license. In Texas and many states, you just need to be over 18 and meet basic requirements before passing a final test. Some new agents want to "try" real estate. They think they just have to get out of bed, show houses, hand out some business card, and boom, they are rich. A professional real estate agent will run a full-time business. If we want to succeed, sooner or later, agents WILL need a marketing budget, business plan and goals, listing and closing systems, assistants, communications systems, customer service processes, etc.

2) With over 1 million members of the National Association of REALTORS®, it's hard for consumers to choose who to work with. Have you ever heard an agent say "I work everywhere" or "I handle everything"? David Knox, Howard Brinton, and other industry trainers teach us that true real estate professionals set themselves apart. If your agent is not a specialist (geographically or with a particular demographic), then they may be a commodity. A commodity is like bread or water. You can find it everywhere and brands do not matter to someone shopping based on price. David Knox said that if an agent finds that they can't compete on value (what the client gets for what they are paying), the agent will compete on price (how much they cost without regard to what they offer).

WHY SELLERS PAY COMMISSION

Dee Copeland Appointed to Agent Leadership Council

November 27, 2006- Austin, TX.  Dee Copeland, a broker-associate at Keller Williams Realty in Austin, has been appointed to the Agent Leadership Council for the Northwest Market Center.

In each Keller Williams office there is a decision-making leadership group called the Agent Leadership Council. The Agent Leadership Council (or ALC) is responsible for making decisions for the franchise as a whole that will resolve any long-term agent issues. ALC makes all of the big decisions for the office, such as whether or not to make large capital expenditures; what companies to enter into business partnerships with; even planning charity and social events.

According to Dave Jenks,Dean of KW University and VP of Research and Development explained, "When agents have a stake in the success of the office, it creates three advantages to the business": 

1. Impetus for growth, which drives revenues
2. Cost controls which limits expenses and raises profits
3. Agent empowerment which encourages loyalty (more of one and two.)

The kickoff meeting for the Northwest Market Center ALC for 2007 will be Tuesday, November 28th. The team will then have a full-day retreat in December.

Is Austin Real Estate Too Hot?

I was thinking today about the Austin real estate market. While other bubbles are bursting, Texas real estate has hit a high-note. Austin and Round Rock are almost always listed as great places to live, which is why we have a huge influx of boomer retirees, investors, and relocating families.

• Austin and Dallas have spawned a new rise in mixed-use retail projects, high-rise condos, and new residential communities. Both cities are getting more metropolitan as new commercial projects and residential subdivisions borrow their architectural details from California and New York. The transit corridor between Dallas and Austin seems to grow together.
• Houston and San Antonio have become meccas to rental property investors. The sprawl of these two big cities continues. Smaller outer cities such as Katy (Houston), Canyon Lake, and New Braunfelds are growing.
• Corpus Christi and coastal areas have rebounded after the hurricanes.

Real estate professionals have recognized that our market is doing great because of our job growth, relatively low cost compared to the other coasts, and  upswing in other economic factors. The question on many minds is when will these good times end? Has Austin and Texas become too hot?

My answer is that no, the market is not "too" hot just yet. Although some are afraid that we're building too many new homes and condos, the bubble (if there will be one) will not burst for at least a few more years  Economists say that Texas is a reliable place to buy a home because most areas have seen steady, slow appreciation. Although our appreciation was typically only 3-4% in Austin, this helped slow any burst of a bubble. We may be closer to 5% appreciation overall, but that's still not the huge leaps we saw in California and Phoenix.

With an estimated 1 Million people who will move to the city by 2016 or so, we should still have a solid economy, which is the foundation for a stable real estate market. If anything, most Austin residents should be concerned about their property taxes increasing each year as a result of higher appraisals. When I see a sign of a slowing market, my blog readers the first to know.

Texas Realty Blog Off for Thanksgiving

Just an FYI that our team will be out of the office in observance of Thankgiving. We will be back on Monday!

How do you buy or sell a home in this real estate market?

USAToday had a good article that explains how to sell in this real estate market. California, Florida, and Arizona are experiences market corrections, so homes are staying on the market longer.

I was having a discussion last night about the real estate housing "bubblettes" that are bursting. Commercial brokers believe that the aforementioned markets will be down only for the short term. Buyers may want to gear up to purchase soon, while sellers and builders are more flexible.

As for sellers, it's back to the basics. The top ways to sell your home fastest are no surprise.

1. Price it right.
2. Get a pre-inspection to limit buyer concerns during the option.
3. Sweeten your deal with buyer incentives such as buying down their interest rate.
4. Make it pretty. If you have an ugly house, be prepared to get repair estimates to have them on file.

Buyers and investors should hold off on the condo craze. Many will probably be in foreclosure within the next 6 months, so you can get a better deal. As for Austin, we have a lot of proposed condo projects, but I've heard the vast majority will not be built. The numbers aren't making sense and the City of Austin is pretty tough to deal with when it comes to their complex development guidelines.

Read more: How do you buy or sell a home in this real estate market? - USATODAY.com.

Is a real estate boom in store for Pflugerville, Hutto?

Pflugerville may be ready for a real estate comeback. The city of Pflugerville straddles both Travis and Williamson Counties. It's just north of Austin and south of Round Rock. The Pflugerville real estate market took a dive in 2002 and still has not fully recovered. I sense that the boom is on the way because more investors and real estate agents are starting to target the area.

There is still a great deal of short sales, foreclosures, sellers with no equity, and overbuilding. On the other hand, retail shops and strip centers are being built at a feverish pace. There are new multifamily developments going on as well, with tracts of land disappearing much quicker than before. As new home subdivisions were being built, so were primary schools. The retail has followed the new rooftops.

Naturally, more commercial real estate brokers and builders are targeting Hutto and Pflugerville as the new Highway SH130 nears completion. SH130 is on the far East side of Pflugerville, where much of the new development has occurred. On the opposite side (west) is Interstate Highway 35, a major artery right down the middle of Central Texas.

Put all of these signs together and the overriding thought is that there is an upcoming new era in Pflugerville real estate. Although we still have a lot of new homes on the market, now may be a good time for buyers and investors to take notice.

Link: Retail in store for Pflugerville, Hutto.

Condos expected to Hook UT Alumni

New condos near University of Texas are aimed to grab the attention of almuni and fans. The developer has done similar projects in other college towns.

The Texas Gameday Center, at Dean Keeton and Red River streets, will include 51 units in a converted apartment building, with another 136 units in a new building nearby. The developer, Atlanta-based Gameday Centers Southeastern LLC, is in negotiations for the site of the new building.

...Work is expected to start next spring on the new building, which could be ready in fall 2008. The new building will have studios and one-, two- and three-bedroom suites ranging from 350 square feet to 2,000 square feet. Amenities will include on-site management, private parking and a clubroom for tailgating before games. Prices will range from $160,000 to $1 million.

Since the City of Austin is already flooded with condo developments, perhaps the unique angle of this one will help it survive the glut.

Link: Condos expected to hook UT alumni.

USA Today Reports the Real Truth About Flipping Properties

USA Today has an interesting article that's circulating in investment circles. Here's the intro to the article, which is titled, "10 Mistakes that Made Flipping a Flop".

In one year, the 24-year-old website-designer-turned-real estate-flipper bought eight homes in four states — and in every case but one, he put no money down. At his peak, in April, Serin had $93,000 he'd taken out of the homes as he bought them. By July, he was broke, desperate for one last deal.

Now? Serin has $140,000 in credit card and credit-line debt and five houses in foreclosure. Last month, he started iamfacingforeclosure.com, a blog that's drawn both notes of condolence and expletive-laced condemnation.

The rise and fall of Casey Serin is a tale with moral and financial lessons for real estate buyers, lenders and regulators. Having consumed real estate guides and seminars, Serin made just about every mistake a newbie could make — most of them, he admits, were no one's fault but his own —
from fudging loan applications to buying homes sight-unseen. That he began with bold dreams of class mobility makes his fall a peculiarly American saga.

I can't write everything in the article, but wanted to link to it so it can be read. The new investor made some very serious mistakes, some of which were illegal. I'd encourage anyone thinking of investing or already investing to read it as a reminder of what NOT to do. Check out the ex-investor's blog as well. (Although I suspect he's trying to make money with it).

Ready the full article on their website.

NAR: Defending the Mortgage Interest Deduction

Few consumers are aware that, In 2005, the President's Advisory Panel on Tax Reform recommended a few things that would cause the cost of home ownership to rise:

1. Convert the mortgage interest deduction into a tax credit, significantly reducing the amount of a mortgage that would be eligible to receive tax benefits.

2. Eliminate the mortgage interest deduction for second homes and for home equity loans and lines of credit.

3. Repeal the deduction for property taxes.

The National Association of REALTORS® has been fighting these issues since the proposals were first announced. Their stance is that this would cause the value of homes to fall while prices would increase. The battle is still waging, so I wanted to make sure you were aware since it affects all real estate investors, buyers, and sellers.

Read more about the entire issue on NAR's website. Link: NAR: Defending the Mortgage Interest Deduction.