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Austin Real Estate Market Update

“Only a con man can sell anything.”  I don’t know who authored these words but they have stuck with me over the years and have influenced my approach with clients.  They also impact how I write a newsletter as I  am challenged to provide accurate information while retaining a sense of optimism regarding the future.  In the years I have been in real estate I have never been as conflicted as I am now regarding what I think the future of Austin real estate looks like.  I will explain this in more detail below, but first…

 

Unfortunately we are having to reschedule our 5th Annual Party in the Park due to the rain forecast this weekend.  We are so disappointed since we had so many of you RSVP.  the new date, however, is Saturday May 1st.  We will have food, drinks, piñatas, events, prizes, and more!  Click here for more details and to RSVP if you would like to attend. 

 

Also, we would like to help you evaluate your property tax appraisals that will be mailed to you in May to ensure you are not being unfairly assessed.  To offset the economic downturn, many municipalities have simply increased the assessed value on private property resulting in significant tax increases for the owners.  On May 22nd we will be at Mozart’s Coffee house reviewing these assessments and providing property owners the documentation they will need to ensure they have not been over-assessed.  So bring us your assessment, drink a cup of jo, and let us go to work for you!  Stay tuned for more information.

 

I have predicted for some time that mortgage rates would increase when the Fed ended its program of buying mortgaged backed securities on March 31st.  The first week in April mortgage bonds dropped 141 basis points before recovering nearly 100 points.  (Remember: mortgage rates increase when bonds decrease.)  Positive economic news typically results in money flowing away from the security of the bond market into the higher yielding stock market.  Investors however are being squeezed by uncertainty on both sides of this equation.  National unemployment persists at 9.7%, not an encouraging sign in light of the trillions of dollars spent to boost our economy, and not helpful to stock values.  On the other hand, though the Fed is down playing their concerns regarding inflation, I believe it will be unavoidable as our debt continues to increase at a record setting pace.  Inflation will have an adverse effect on the bond market and will negatively impact mortgage rates as well.  The uncertainty investors feel between stocks and bonds is increasingly highlighted by the numerous advertisements presenting gold and other precious metals as a better alternative.  These economic issues could have an adverse effect on the real estate market in the long run if high interest rates retard home sales.  For those of you looking to purchase a home this year I would encourage you to buy assumable loans if possible.  I believe home owners with low-interest, assumable loans will have a significant resale advantage in the not-so-distant future if mortgage rates rise sharply.

 

On a positive note, a combined report by the Federal Housing Finance Agency and Moody’s Economy.com indicates that home values in Austin will stop falling in the final quarter of 2010, with a total price decrease of just 4.8% from our high in last quarter 2008.  Forbes predicted a 3.7% decrease with prices bottoming out mid-year 2010.  The Moody report also predicts that Austin real estate values will reach pre-recession levels by 2016.  This is a sharp contrast to less fortunate states such as California, Florida, and Nevada, which will not likely regain peak values until 2025 or later. 

 

As shown on the charts below, the hottest selling areas in Austin are entry level areas in south, north, and east Austin that are relatively close to downtown.  This is likely being driven by the first-time homebuyer tax credit that expires April 30thClick here for details on the tax credit, and call us immediately at 512-275-9675 if you are wanting to take advantage of this $8,000 gift from Uncle Sam.

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