I would just like to acknowledge the last entry"Realestate#1". First of all, are you afraid to use your name? I don't understand why there are so many people(and I am seeing it alot) that have nothing better to do with thier time than to try to stir up controversy. I want to remark on your comment. In all of the blogs I have read and posted, I don't recall anyone ever saying that we are at rock bottom, that prices will never go a penny lower, and that tomorrow they will shoot up through the roof.

However, I have read and posted, that it is a good time to buy, which it is. Merely a fact. I don't know why you don't seem to get that.

Your response is like going to the doctor and him telling you that he is pretty sure you have cancer, and you should probably get treatment, and you telling him that that you don't think it is at its worst yet, so you are going to wait for treatment.

We are proffessionalls that live and breathe in what is going on. And yes things are different in different regions, but I would like to ask you this.

What are the factors that you feel determines the time to buy?

Is it when there is more supply than we have ever seen in our lifetime?

Is it when interest rates are lower than have ever been documented?

Is it when sellers are doing everything they can to get rid of their homes, including dropping the prices so low they are losing money, and it is way below appraised value?

Is it when the government is giving you money to buy?

Well, I can't imagine those not being good signs, so I am saying it's a great time. I forgot my crystal ball at home though, so I can't tell you what will happen tomorrow. But maybe your cancer will be better tomorrow and you will be soooo glad you didn't get that treatment.

Rodney Monk

When you get a few moments, type in "housing Shortage, 2009" in google. They are predicting that home under $200 will be in short supply and prices are expected to go up with demand.

Hi Paul,
The housing market in Austin is actually doing well. It is a great time to buy, especially in South Austin. If you would like more information about the market. Check out my website http://www.CrystalSellsAustin.com
Then click on my blog. I have posted several articles from Yahoo and Google about the Austin real estate market. You will see that it is a great time to buy in Austin. It is very possible to have the sellers contribute towards your closing costs. You will need 3.5% down for FHA, and then some for closing costs. I think that $7000 is a good amount to have saved up. Just work closely with your lender to see how much you need to ask the seller to contribute. My husband is a lender here in Austin. It is important to use someone local, because they will make sure that you close on time. His name is Dominik Kilpatrick @ Sente Mortgage
512-637-9900.
My name is Crystal Kilpatrick
Homes ATX
512-680-5835

The good news is that more sellers are pricing their homes reasonably to start out with. However in general sold prices continue to trend up especially in the price range your interested in. Area 10S is doing particular well because of the number of homes in your price range.

Another thing to consider is rates at their lowest point in 40 years. That may mean you qualify for more house now. If you close by the end of the year ( means you want to be under contract by October if you don't want to take chances - end of November if you like to cut it close) you may qualify for a $8000.00 tax credit when you file your 2010 tax return.

By all means shop carefully. Not everything is bargain priced. However it is not that hard to find bargains. Throw in the fact that builders are cutting back on new inventory (we all know what lower supply does to prices). Combine that with the possibility of higher rates down the road (just a question of when) and the expiration of the tax credit means waiting could cost you a lot of money. Especially if you wait till next year. Losing the tax credit and higher rates alone could be costly.

Let me emphasize once again that I'm not suggesting you just run out and buy something just for the sake of doing so. Shop carefully and take advantage of the current low rates. Make the seller paying as much of your closing costs as possible part of the deal.

Yeh, I sure took a lot of crap for my pessimism. The house I want on Ridge Oak has dropped 40k this month...Keep Dropping!

Dear Paul,
It is still a good time to buy in Austin, prices have remained steady and interest rates are low. you did not mention if you have a Realtor that you are working with. If you have a Realtor they should be able to answer all of your questions. In my opinion, sellers that have vacant homes for sale over 60 days will be far more motivated to sell at a reduced price. Right now it is more difficult to pay for two mortgages, so if they have already moved out of the home they are selling they may accept a lower offer just to get out from under double house payments. I would ask any seller to pay for all or some part of the closing costs if the lender will allow it. I say ask for more, as they will try to give you less, then meet in the middle. Be aggressive and find a Realtor that will help you get the best deal on a home that you will be happy with. If I can help you with your home purchase please let me know.
Sincerely,
Betina

Dino,
In some areas you have seen more of an appreciation than others. We are talking broad brush about Austin though. Austin is like any other city in the country, where there are areas that do much better than others. There are several areas in Austin that are selling faster than almost anywhere in the country. Then you have others that are slower. For instance area 10S has an average of only 45 days on the market (WOW!). Yet downtown, which is an area most people would consider is doing well, is selling at an average of 119. And yes, it is possible some areas tripled in price, however this is not the norm throughout Austin. This is one reason why Austin is doing so well, we have had the average moderate appreciation in most areas. In turn others are seeing that this is a great place to be, and are coming by the droves. On top of that our job market is phenomenal. Add it all up, and yes this is a good market, and great place to buy.

Rodney and all realtors, I see a lot of this in your answers:

"First, the Austin market has not had double digit appreciation during the past few years. During the years from 2001 to 2004, after the Dot.com bust, the market in Austin was somewhat soft. The median price rose by about 3.5% per year, on average. "

Can you please tell me what the appreciation was in any desireable areas in austin? According to my realtor, there has been speculative appreciation in areas 1a/1b/Westlake/Soco. Yes, I understand that soul-less cookie cutters in the burbs didn't skyrocket in price, but what about the areas where I would like to live?

Are you telling me that the $750k listings in Highland Park didn't triple in price in the past 10 years?

According to the Statesman, there was a 20% drop in sales year over year for August. That prices have not yet dropped off is likely because the inventory growth is constrained by builders holding off on new housing starts and continued in migration to Austin.

What happens to supply when the dozen new down town properties are complete? Or if Austin job growth freezes due to the national financial crisis chocking off in migration to Austin. Combined such a scenario with suddenly missing financing options and suddenly this feels like an inflection point and that we are about to have the Austin real estate bubble pop like so many others have.

Hey Paul,
I thought you might appreciate having this article recently published by Inman News. It gives a historical overview of the Austin real estate market over the last 8-10 years and what factors make the future of real estate in Austin continue to look so bright.
*************************
It's Back to the Future for Austin Real Estate!

Inman News

The serious downturn in housing sales in many parts of the country is well known. This downturn was preceded by a strong escalation in home prices. In many areas, prices rose beyond levels that were supported by local salaries and income. The driving force that fueled the growth in home prices was the availability of money. The easy availability of home buying money allowed the demand side of the market to build.

When buyers could expect 10%-30% appreciation and get 6% interest rates, who would not be motivated to buy? It's a no-brainer, right? Right. But, high demand leads to higher prices. And, high demand leads to more inventory, as builders respond to the need for homes.

The sources of money for mortgages came from new and unregulated sources. Prior to this, government regulated entities, such as Fannie Mae, were the main buyers of mortgages from lenders. Then, new Wall Street investors entered the market for buying real estate loans.

Alternative loans, interest-only loans, 100% loans, creative ARM's, no-documentation, and other high risk products became commonplace. Some of these loans began with a low interest rate that the borrower barely qualified for, and then switched to a higher rate after a short time. In many cases, the borrowers did not understand the risk that they were taking.

For most of my experience in real estate, buyers were limited to 80-90% loans, with 28% of their income allowed for mortgage payment, and their income was fully documented. When we began to see 100% financing on contracts, we were concerned by the buyer's lack of personal investment, or skin in the game, as they say. Loans such as these have an underlying expectation that the value of the home will increase quickly, and the buyers will be covered, if they need to sell.

Sub-prime, alternative, or high risk loans are not limited to low income buyers, and are not always predatory. Often, very sophisticated buyers elected to keep their cash and leverage more. On a large scale, the easy availability of money, through higher risk loans, fueled the growth of home ownership and investment in rental real estate. The demand for homes raised prices, and then raised inventories, as builders supplied more homes. Then the cycle was broken.

What caused the break? Foreclosures began to show up. Investors who bought mortgage backed securities realized that they contained more risk than they expected, and stopped buying them. Lenders lost the market for selling many of their loans. When home buying money dried up, demand for homes slowed down, and prices began to fall in many parts of the country.

Of course, real estate markets are local. Many areas will survive this much better. Fortunately, Austin is one of those areas. To be sure, we are experiencing the effects of the reduction in demand for homes, but it is not devastating. Why?

First, the Austin market has not had double digit appreciation during the past few years. During the years from 2001 to 2004, after the Dot.com bust, the market in Austin was somewhat soft. The median price rose by about 3.5% per year, on average.

From 2005 through 2007 our market tightened up, and we began to see very low inventory and strong demand, especially in the central areas. Throughout Austin, especially in suburban areas, builders produced inventory to keep up with demand. Overall, appreciation in Austin has been steady, but reasonable. Home prices have not risen excessively, and are not falling precipitously. Austin home prices are still in line with local salaries.

Second, the real estate market always reflects the job market. Approximately 20,000 new jobs were added during the past year. Our unemployment level is about 3.5%, a level that some would consider full employment. Retail outlets are opening at a fast clip-a result of widespread employment. New jobs are being created as companies move here and Austin companies expand. Jobs bring in people, and people buy homes.

It is true that the "new" restrictions on obtaining a mortgage will have a slowing effect on the Austin market. For the next year, we will see a more balanced market than we experienced in 2006 and 2007. Sellers will have to consider the fundamentals to attract a buyer. They will need competitive pricing, excellent presentation, and top level marketing. Buyers will have to have a down payment, good credit, and proper income for their loan.

So, it's back to the future for the Austin real estate market.

Let me know if you have any questions

Hi Paul,

Great question you asked about the stability of the market. The news media has a tendency to sensationalize the facts of the current market to their liking. Remember, their job is to sell newspapers so the more hyped a story the more papers they sell. Now, there are “some” truths to what they are saying. Here is an up to the minute update on the market and what is going on.



In a bid to ease the credit crunch and restore a sense of calm in the financial markets, the Federal Reserve authorized a $180 billion expansion of its swap line with other world central banks. The funds, which will be provided by the Federal Reserve, can be injected into money markets through overnight and term loans. Stocks like this news so far and this is putting pressure on Bonds/Mortgage rates.



Something to think about – The Fed is attempting to be savvy and creative in its ways to help the financial system get back on track. However, there is simply no one who can draw upon past experience to find the answer here. This situation is historic… and we are living through it.



There is a lot of panic out there. People are very worried about their life savings. Is money in the bank safe? How about if it is in a life insurance policy? How about in bonds? Unfortunately the answer is no, no, no. Yesterday, the panic reached a level that caused such a demand on Treasuries, that the total return of some short-term paper went negative. That’s right… the premium paid was higher than the return provided by the yield. So keeping your cash under the mattress is better than an investment in some Treasuries, and apparently safer than the financial market. Suddenly, guess what may become the most attractive way to protect your money? Think about it… you can touch it, get a tax break and live in it too. Yes, Real Estate is starting to look pretty good, especially since it has become more reasonably prices. Prices are down nationally and rates are still low at 6.0% compared to the last 85 year average of 7.5%. So, should you buy or wait to see what happens? That is the question most buyers are asking. Buying low and selling high is how the wealthy keep getting wealthy. My advice to anyone looking to buy… Buy now before the market starts to turn… and it will turn… For additional information please call me at 512.637.9119 to bounce any ideas off me or continue with market conditions.



Sincerely,



· · · · · · · · · · · · · · · · · ·

Dominik Kilpatrick

Team Coordinator - The Kenton Brown Team



Sente Mortgage

901 S. Mopac, Building IV, Suite 125

Austin, TX 78746

t 512.637.9900

d 512.637.9119

f 512.637.9901

dominik.kilpatrick@SenteMortgage.com

· · · · · · · · · · · · · · · · · · ·

It appears that there are some individuals out there that think Realtors will say anything or do anything in order to make a sale. It is also clear that some of these same individuals are not very fond of Realtors and it is obvious that they have no clear understanding of how supply & demand works or how our housing market (or any housing market for that matter) operates and functions by reading their posts. People will continue to downplay the importance of Realtors and go so far as to make us look as though we are spinning the current situation to make the reality look better than it is.

Is it the right time to buy in Austin? I have seen answers yes and no on here and I certainly have my own opinion as a Realtor. What I would say is that it depends on you, the individual buyer. What is your goal? Is it simply to own your own home? Are you buying to invest in your own wealth? What are your financial goals? For some buyers the answer will be no, while it will be a yes for others. People buy and sell in much worse markets, either for need or simply desire.

And as far as Dino's comments indicating that you should continue to rent, I will say that as a landlord myself, yes, i LOVE renters. They pay my mortgage via their rent checks every month. So in that sense, continue to rent, there are plenty of other landlords who are counting on you to pay their mortgages in the form of your rent payment.

Seriously though, the answer to buy now or not depends on what YOU want. Not what a Realtor is telling you and certainly not what someone appearing to be disgruntled with Realtors is telling you.

From CNN.COM TODAY:

"And if housing prices do fall further, that will only cause more losses in the financial sector and perhaps more failures of banks, insurers and securities firms.

"I would hesitate to say the worst is behind us," Achuthan said.

So even with perhaps hundreds of billions of tax dollars going to AIG, Fannie and Freddie, one expert said the only real solution to the housing problem is for the correction in housing to finish running its course.

"We want home prices to return to normal," said Barry Ritholtz, CEO of Fusion IQ and author of the upcoming book "Bailout Nation."

"Until that happens, you can throw as much money at the market as you want at the situation....and it ain't going to make any difference," Ritholtz said.

So, I'd continue renting and don't listen to the realtors. Buy a house when the average home price is affordable with the average income.

Hey Paul,
Well for starters, right now is a great time to buy. There are record #'s of homes to choose from, and prices are great!!! As far as getting the cold feet, I can understand that, but buying a home is always a good investment, since you have to live somewhere, might as well be somewhere that you can get money back from one day. $7000 is a good # to judge from for down and closing. It is very common for sellers to contribute to closing costs/downpayments. Especiallly right now when sellers are a little more desperate to do what it takes to sell. FHA loans are changing alot right now, so it is important to get prequalified first, and get the real story up front. There are several downpayment assistance programs available right now, but will be going away after October 1st. If you have any other questions, feel free to contact me, and I would be glad to help you with them.

Dear Paul,
I have a local lender that will pay your closing costs. Give me a call and I will give you his number. This will allow you to put that $7000 into your downpayment and give you a lower monthly payment. Also if you can give me some details about what you want in a home, I can set up a search for you to send you homes in the 78723 and 78745 areas. Let me know if I can help you find your next home!
Sincerely,
Betina

Aren't you glad you asked? In every business there are good folks and bad folks. All that aside, find a house you like, then check out the crime stats. Drive around the neighborhood at different times of the day and on different days. Talk to people in the neighborhood. Save enough to have 6 months of reserves (someone else said that and I agree). S*it happens so no doubt the minute you close you will need a new stove but ok you are prepared. Run the numbers. Don't forget to add in property taxes and homw owners insurance. Don't forget your utlitities (which you may not be paying when you rent). Some people use a guideline of not spending more than 30% of your combined monthly income for housing expense (of course unless you live in MA like I do and then 30% gets you my driveway). I would not sit on the fence forever, cause what goes down usually goes up and if anyone knew when then they would not be hanging around this website reading answers or writing answers cause they would also know the lottery number! If you are afraid you cannot make the monthly nut then you probably can't. Be smart and stop listening to those who are overly cheerful or doomsday oriented. You can do this. I did by myself 15 years ago and it was scarey but now everyone thinks I was a genius!

gee, my ears are hot from getting blistered and all i did was read the response --- wow

it's the realtor's job to get the price right the first time, resulting in the 95% list to sales price ratios -- sometimes, the realtor gets over ruled by a client that refuses to believe the facts, which a responsible realtor will have provided in the first place -- more times than not, price reductions are mandated because the owner insisted on listing at a price that was supported by nothing more than lack of knowledge -- then, the property sells at the price a true professional, someone that lives and breaths the market, told them it would go for in the first place -- getting this message, friend?

in addition, a lender isn't going to bet on the come and never has -- they are lending off facts, not opinions--the lending mess is a result of poorly qualified buyers and greedy amatuer lenders that yes, because of the demand drove the prices up -- when you've got hourly workers in california getting a mortgage for $500,000, slapping some paint on some walls and installing sod then reselling it for $600,000 because of DEMAND, then there is a problem -- and we're all dealing with it in one way or another --

tarrytown is a life-style -- that's what folks are buying -- got a magic formula to tell the rest of us what that's worth? just because it isn't to your taste doesn't make it wrong or bad -- just sometimes incredible, huh?

I'm still waiting for one honest realtor to share a story of repeatedly lowering prices to entice an offer for a nice home in Central Austin.

And it's not a bad time to buy a house in any part of Austin except downtown and westlake, the only speculative housing markets in Austin imho. Paul, I think you can look in your 2 zipcodes, low ball to the extreme, be patient, buy your home and start building equity. If you buy the right house (updated, quiet, good schools, nice development), you won't lose in the long run. Happy shopping.

Look at all of 3/2's in tarrytown that aren't remodeled that are selling for $650,000. With no developers wanting to buy those lots for teardowns, where's the market for those homes? Are prices in Shoal creek, Highland Park, Tarrytown, Rollingwood, Travis Heights, SOCO, Westlake going to drop? Those are the only bubble markets imho and the only places where home prices are out of whack with incomes.

To address Jamie Rix's ridiculous comment, "(unlike what Miami and Las Vegas did).", you can't tell me that a Tarrytown house selling at $500/sqft counts as responsible lending, it's absolutely what happened in Florida and Las Vegas.

It's homes like this one:
http://www.realtor.com/realestate/austin-tx-78756-1097859347/

that you need to watch out for, that house is worth $400k tops. Seriously, who's buying that house at $700k? Who's it marketed towards w/ a dinky kitchen like that? A builder who wants to remodel a kitchen and put it back on the market at $800k? Who's buying an $800k house in shoal creek?

Any realtors out there willing to tell us straight? Central Austin homes that actually sold w/i 95% of their asking price w/i past 2 months. Addresses please with real numbers.

Also, regarding the 360 tower, correct me if I'm wrong but aren't those homes slated to come back on the market soon? We don't know what the resale will be on them. We do know that there sure are a lot of listings on craigslist:
http://austin.craigslist.org/search/rea?query=360&minAsk…

Give us some numbers to backup your claims that all is well. Numbers on speculative condos that can’t be resold yet don’t count.

I am asked this question daily. I study the market constantly. I personally believe that Austin's market is still strong, after six years of record-breaking growth and development we are just now leveling out (at a responsible pace). Our population doubled over the last several years and Austin had to build to accommodate all of the transplants. Developers and city planners are more conscious about planning to keep investors out and owner-occupied's in (unlike what Miami and Las Vegas did). Sure you had the over-zealous developers try to plan for 4 buildings at a time, those are mostly the ones that got canned, like the Magnolia on South Lamar. Others never materialized at all, mostly out of town developers with no understanding of our unique market. Then you have developers like Andrews Urban who partnered with Novare to build 360, they sold out in 3 months. I sold two and my buyers are very happy. The did not raise prices when they saw how successful they were selling and now they are planning a second tower over the next several years. I think that if you want to live downtown then the time has never been better, buy when the market is "down" then you can get the good deals! Austin's new emerging urban core is not going anywhere.

Dear Paul,
Here is an except from Forbes magazine. THe article was written by Maurna Desmond with Forbes.

"Lots To Like In The Lone-Star State
Texas dominated our lineup of mortgage-worthy areas. Thanks to a business-friendly tax environment, many large corporations call the Lone Star State home, which creates jobs and tax revenue. The University of Texas campus provides young blood and research-related jobs to No. 2 city Austin. This state capitol is a hip area on the rise. The vacancy rate has fallen by 37.5% in the last 24 months to just 1.5%, despite a lot of building in recent years. And buying isn't much more expensive than renting. An average mortgage payment is $1,022.40, and average rent hits $767." M.Desmond-Forbes


Thist pretty acurately describes our market condition. We are ranked as the number two market to buy in the USA and San Antonio is number five. I hope this helps you. Call me if I can be of service to you. Good Luck!
Betina

"fins to the left, fins to the right, and you're the only bait in town"? j buffet ......

dude, find a mortgage banker that has some experience/knowledge and you feel like will look out for ya'lls money -- then, find a realtor that will do the same and isn't gonna sell 'ya something -- give the realtor a wish list and let 'em show you the options -- if you can buy someone else's equity and it makes sense for your lifestyle, seize the chance to invest in yourself but DO IT ON YOUR OWN TERMS AND OWN TIMELINE -- real estate is a local business -- there are parts of austin where the numbers work and areas where they don't just like there are parts of the nation that fit the same pattern --

btw--my lending sources tell me the down payment program that is ending in october is a "gifting" program called nehemiah under which the seller "gives" the $$ to a non-profit corporation in exchange for a tax write-off -- the "non-profit" in turn charges the buyer a transaction fee and contributes the "gift" from the seller to the buyer to aid with dp/closing costs -- the greatest impact (imho) will be to the national developers that need the $0 down business -- course, that doesn't buy equity does it???

Such pressure from the real estate folks, buy now, really right now. All is rosey and things are never problematic in Austin. We are totally different than every other place in America.

Come on, lets be realistic, there is risk to both sides. If you don't buy, you risk prices appreciating faster than the return on savings and growth in income. If you do buy, you risk prices either depreciating or having slower growth. These folks who are answering are all sales people. Their responses remind me of stepping on a used car lot. Pressure, pressure, pressure. Must do it now!

Do what you feel is right. The below responses seem to be examples of why most people think realtors don't really earn their 6%.

Is now a good time to buy in the Austin Real Estate market? Yes!

The parts of the country that are generating the scary headlines experienced approximately 200% price appreciation from 2000 to 2005. Prices tripled. That's roughly a 25% annual appreciation rate for 5 years. That's a bubble that needed to be corrected. Incomes could not keep up with prices.

Austin appreciated at roughly 7% per year during the same period. That's a healthy rate of return (even better if you factor in tax benefits) however there is is no bubble here that needs to be corrected. National trend's have certainly slowed this market down but it is still healthy and appreciating. Job and population growth combined with low vacancy rates will continue to exert upward pressure on prices here,

Should you buy now? Yes. Price's are likely to go up faster than your savings. You need to be comfortable with your decision but don't wait too long, Just remember that Real Estate is a long term investment whose liquidity varies. As to where in Austin? Where ever you feel comfortable. Beside 78723 and 78745 you might also want to consider 78748 and 78749. As the Austin/ San Antonio corridor grows they will become more of a central population hub.

Hope that helped. Feel free to contact me.

Dear Paul,
There is no such thing as a bad time to buy in Austin. Our market is still strong and prices are going up every day. I am sure the houses you saw last year for $150K are now $160K+. I would not wait, I would jump in with both feet! Call me because I have a lender that will pay your closing costs on a house uder $200K. That will save you about $7000-$8000 that you can put down on the house instead! This will allow you to pay off the loan faster as your payment will be a little less.

There are still some deals to be had east and there are some pockets that are reasonable, 78723 is one of them. Plus you can get a cool older home on a larger lot with real trees, not the twigs the builders are planting in the new communities out on Mars ( I mean Kyle, Buda, CP/Leander). The 78745 zip is very active in the under $250K market, because you are so close to downtown and shopping on SoCo. I can show you properties in any area. Shoot me an email if your interested.
Sincerely,
Betina

Carol,

Which DPA programs are you referring to, as the only one I could find has an eligibility requirement that states the household must make less than 80% of the Austin median family income;

ELIGIBILITY: The DPA Program assists first-time homebuyers who are citizens or legal permanent residents, and whose household earns no more than 80 percent of the Austin Median Family Income (adjusted for family size). See the table below for income limits. All borrowers must also complete the AHFC Housing Smarts education course before applying for DPA. Click here for more information on Housing Smarts.

Hi Paul:

I wondered what you and your fiance decided to do? No one mentioned here that down payment assistance programs will cease to exist on October 1, 2008. You have a short window of opportunity to get something under contract and closed before then. What have you decided to do?

Carol Ann Pease, ABR, CRB, CRS, e-PRO, GRI

For relative safety of neighborhoods, there are some crime stats on the APD website:
http://malford.ci.austin.tx.us/police/zipcode/zipcode/ZIP_2007.pdf
You can also see sex offender informaiton by zip:
https://records.txdps.state.tx.us/DPS_WEB/Sor/index.aspx

Good luck, I would recommend trying to save to 6 months reserves before moving forward. If you save agressively now, it may be that you are in better position by the time you are ready to close. Just remember, once you close you will likely have a dozen unforseen expenses.

Amen, Rebecca.

I couldn't have put it better myself.

Thanks so much for all the answers/advice thus far, Trulia was an awesome find! I have to admit though Paul Perez and Ben Pasmore's replies perfectly summed up both sides of the coin I have been stressing over incessantly up to this point.

On the one hand, Paul's right....although I am not a Libra, I am a notorious fence-sitter as I often look at situations as, what would be the worst case-scenario . On the other hand, Ben's argument has been worrying me as well, as after closing on a house we would most likely only have about 3 months worth in surplus funds.

The thing is, both my fiance and I have been at our jobs for 5+ years, with no indication whatsoever of that security being in jeopardy.

A couple of other questions. I know no one can predict what will happen with the housing market, but those of you referring to the inevitability that rates will go up, what ball park of time frame are we talking here? If we decided to wait until say Dec08/Jan09 to save more cash, could that potentially be too long?

What are your thoughts on where would be a safer investment within the next 5 years, 78745/78748 or 78723. I like 78723 because of it's central location, but there seems to be more "bad pockets" out there vs. south austin. In other words, I want my fiance to feel safe when I'm not home.

Thanks again everyone.

Hi, could you please give examples of some of these HUGE deals you've seen? How do you define a deal as huge?

This market confuses me, the comment from Jmangan about Austin being counter-cyclical scares me. Does that mean we should expect declines when the economy recovers? I'd like to hear a sober assessment of the housing and lending markets in Austin.

I want a HUGE deal on a new TV or a Honda. For my house, I want to make a sound investment. Enough with the enthusiasm, what's really happening out there?

If you have extra money right now and can put down a large downpayment, now IS THE TIME TO BUY. You can get HUGE deals.

It is not irresponsible at all, but saying all "Realtor are starving" is just wrong. You are speaking for over 9,000 people. Now if you can tell me the situation of all of them then maybe I would agree. This makes you sound bitter. You are insulting a whole community.

Austin is on a different path than other parts of the country. Most of what is happening is really in a few states. Austin has only gone up about 28% in the last 5 years. How far do you think we can drop?
I do agree about some of the lending issues, but telling someone not to buy a home in a buyers market is very strange. You should read the Austin Business Journal and other respected publications and not just what is put out there by the popular media.

I agree I don't want to go any further either, but you insulted a lot of people who do a wonderful job in this business and market.
J.

I don't see the bitterness in calling out the highly irresponsible behavior of realtors and mortgage lenders. At the very least, you have to admit that Austin's home prices would drop if lending guidelines were responsibly associated with incomes.

Don't want to turn this into a flame war but I do want Paul to understand what he's buying into and what he'll deal with when ethically questionable lenders and realtors come a knocking. He should understand lending fees, yield spreads and market momentum. With full disclosure and ethical guidance, I gather that he would continue renting in the interim. It's a better deal right now in these times of uncertainty.

Sorry to tell you Dino, but Trulia does not have accurate numbers as Texas is a non disclosure state. Are you sure you are a professional in Real Estate or just bitter in life.
J.

Of course, it's a terrible time to buy a house in Austin. All you have to do is look at the rental market outside of homes with UT supported inflated rents vs. the average incomes of Travis and Williamson counties.

Take a look at this map:
http://www.trulia.com/home_prices/Texas/Travis_County-heat_map/

This tells me that the best place to invest in Austin is on the West Side. There's no point to buy anywhere else as your home's price will be dictated by the market in the more desireable part of town.

Why do you want to own a home? Investment? Speculation? With all this predatory lending out there and the housing market out of whack with the rental market out of line with wages, I'd wait to see what happens. Austin is one of the only markets in the USA that has held up in lieu of the current credit crunch and fiscal crisis. Who's buying all these 500k houses in Northwest Hills, Tarrytown, Rollingwood, Westlake? No one! They're sitting there. The Austin real estate market can't totally live w/i a bubble from the rest of the US. The market must correct or we're going to bankrupt the entire country.

If the fed has to step in and save Freddie and Fannie, the national debt will double to 10 trillion dollars. At the point, you have to assume the t-bill will no longer be supported by the chinese and opec countries. Interest rates will increase and home prices will plummet as demand dries up. You'll be left w/ a crappy house in a crappy neighborhood that you won't be able to sell for the life of you. Just rent a cheap apartment and see what happens. When you've got some savings, buy a desirable house in a solid market, (West Side). Your money will ALWAYS be safer there.

Don't listen to realtors, they're starving...

Hi Paul,

I have absolutely know idea if it is a good time to purchase in Austin right now, as I am not a real estate maven. However, I do know that Austin has a buyer assistance program for those looking to purchase their first home. I don't know what the details are exactly (or if it is even a good idea to do)....but a mortgage broker (or your bank) would be an awesome place to ask all the questions. Actually, I highly recommend speaking to a mortgage broker and your bank of choice. That way you can weigh the information you gather against each other.

I know some really good/helpful mortgage brokers and agents if you would like their names and numbers. Just let me know. :) By the way, I am not an agent or a broker, just someone who enjoys "helping" out.

Take care, and best wishes to you in your home search!

p.s. congrats on the engagement!

Paul,
Of course all the realtors are optimistic about buying in Austin, it is their job and their bread and butter. A couple of facts that say that Austin is overpriced, rental price to sales price ratio is at 20 to 25 in many parts of Austin. This is at the high end and either means that Austin rental rates will increase or that house prices are way overvalued. Additionally, I would be concerned about your situation as you do not seem to have much savings in reserves. This means that if the economy does tank and it were to impact either you or your fiance's income, you would have very little cushion to protect yourself from losing a house. If you cannot have 6 month's (or more) worth of mortgage payments in savings after the purchase of the house, you should wait and save more.
Renting is not fun, but you are putting your financial future in jeapordy by moving too quickly to buy a house without sufficient savings.

I think now is a good time to buy in Austin and not as a "pie in the sky", "everything is just fine optimist"! There are problems in Austin and texas but not the same as other areas and I think the Texas market has escaped suffering many of the dilemmas currently taking place in other parts of the country. I am cautiously confident that we will continue to prosper and grow in spite of the current economic downturn and problems throughout the real estate industry and other parts of the business environment. I do not want to sound overly optimistic or unrealistic but there are several factors that lead to the conclusion.

1) Texas went through the same problems in the late 80’s and early 90’s with many foreclosure and business closings during the S&L crisis. When I first entered real estate in 1989 there were as many as 2,000 foreclosures in the Austin and Central Texas area EVERY month. Many lending requirements were changed back then to safeguard consumers and during recent years you did not see the large volume of predatory loans that were so prevalent in the subprime market.

2) Many of the largest numbers of subprime foreclosures in other parts of the country were created by builders who also had their own loan companies. The builders’ primary focus became that of loan companies and again regulations were stretched or in many cases abused.

3) Although we have escaped many of the problems in the rest of the country, we still have a 24.4% increase in inventory a drop in pending contracts and solds. I feel like it’s more of a case of hesitation (for a number of obvious reasons). Our office tracks open houses and over the month of June and the first part of July, there have been large numbers of Serious lookers in Downtown, Central, West and South West Austin and just this week offers are beginning to appear again.

4) For the third year in a row, more people moved to Texas than any other state. The population growth is keeping our market from dropping and though more of a buyer’s market than in the past, at this point we are just flattening out a bit still making it a great time for buyers
.
5) Texas has consistently been in the top ten in many categories of life style, affordability (although it is more expensive than ever to live in Austin now) and job growth. Employment demand is still high and continues to grow.

I first moved to Austin in 1974 (from West Texas) to attend school and thought it was perfect and should stay the same. Over the years it has grown and developed in good ways and sometimes not so great BUT it is still one of the best places in Texas or the USA and I cannot say enough about our wonderful city. I have been working with buyers and sellers in Central Texas since 1989 and the first buyer I sold from out of state was in 1990. At the time, they told me it would be good to shut the door and Austin would be great without any more people. Last month helped a family from California move into the Eanes school district in South West Austin and they said the same thing! There are a few things I miss about the “old” Austin but honestly, the only thing I can really complain about is…the traffic!

I hope this helps.

Russell M.Lewis
Broker,GRI,CLHMS
AvenueOne Properties, Inc.
901 W. Ninth St. #110
Austin, Texas 78703
(512) 472-3336: Office
(512) 472-4722: Office Fax
(512) 657-8769: Mobile/VM

Hi, Paul:

Now is an excellent time to purchase a home in Austin; it's a Buyer's market! Prices are good and interest rates, too! If you wait, you might see prices fall a bit more; but at the same time, you could see interest rates rise.

That's great that you've done your homework about FHA loans. If you put up 3% as a down payment ($4,500) and also have about another $4,500 for closing costs, and pre-paids (insurance and tax money for escrow account), you will be in great shape. However, Sellers very often contribute money off the sales price towards a Buyer's closing costs. In a Seller's market, the Seller will often add that amount back on the top of the sales price. In a Buyer's market, the Buyer can often get the sales priced lowered by that amount and possibly more.

Hire a great REALTOR who can assist you with these types of negotiations and help you find a great Lender.

If my team and I can be of assistance, please feel free to contact us and search for listings through my website.

Best of luck!

CONNIE HERRON, REALTOR, GRI, ABR
Keller Williams Realty
connieherron@kw.com

Paul, first things first, turn off your T.V. and radio and stop listening to the crap about the housing market. You live in Austin, TX my friend, and we are by no means to be compared with other housing markets. Second thing, Paul are you a libra? I ask because Libra's are notorious for sitting on the fence. You have to really be honest with yourself and compare what you are losing in rent every month with the possibility of owning your own place! Julie was right to a degree about interest rates, but with Indy mac and everyone getting bailed out like they did I can PROMISE you that the interest rates WILL GO UP! Also, any home you buy is a decent investment vs. renting any time in Austin! FHA is definitely the way to go, and with their recent changes it is not too much to ask for sellers to pay a portion, if not all, of your closing costs. Oh yes, as for the original question, it's not at all a bad time to buy in Austin! Actually when compared to the rest of the US, we are probably the best place to buy hands down! AS for the out of pocket, think closer to $9000 if you get no help from the seller. Approximate about 3% CC & 3% DP. Don't forget your appraisal & inspection around another $700. Happy Hunting Paul

Paul ... the $150k and under market in Austin is solid. Different than the past 5 years? Sure but, for example, $150k and under in south Austin (which is getting more and more difficult to find) is still a sellers market. More specifically, area 10S currently has 12 homes on the market and they have been on an average of 40 days. There are 8 that are pending and they were on the market an avg of 33 days and 9 have sold in the last 30 days, on the market an avg of 57 days and most of these sold at or near their asking price; 6 of the 9 had seller paying some closing costs. Interest rates are still very attractive and could go up. As with stocks, you cannot time the market. A 1% increase in interest rate (say from 6 to 7) will offset $10,000 in price ... so waiting is not the best game. We have two buyer specialists who can help you assess your options. We recommend a face-to-face consultation to put together a smart game plan to help you achieve your goals.

OH MY GOODNESS!!!! I feel it is a TERRIFIC time to purchase in Austin! Interest rates are still low compared to several years ago and there are still MANY houses on the market. Yes, financing is a little tougher to obtain than it was a year ago, but if your credit is good and if you and the home qualify for FHA then you are good to go. I would figure 2% for CC. I have 3 saavy lenders I trust my buyers with and would love to pass their information on to you. Any of these guys work well with first time homebuyers and are careful to explain the loans in terms you will easily understand, outlining the overall loan costs, long term commitments, etc. I can assist you in determining overall investment value and what you may expect if you have to sell the home in 3 to 5 years. I look at appreciation values, market conditions, commute times to work, neighborhood amenities and schools, future development, and a host of other information in providing you with the most information in order for you to make the most informed decision....My goal is to find the best home and the best price possible. This is achieved through not only careful investigation of the items already mentioned, but also through determining the goals of the potential Sellers - how quickly they need to move, are they in a distressed situtation, how much do they owe on their note, how much repairs are needed to make the home livable for you, how willing are they to work within your parameters, etc. I have several inspectors I can recommend who are VERY thorough in their inspections who will assess what repairs are needed, and I have contractors who can provide bids as to the costs of the repairs if a price concession is required to make the repairs yourself or if you want the Seller to make the repairs. Also, we will need to make sure the home is insurable.
As for contributing to closing costs, if you go FHA there are Seller contributions as long as the house will appraise for the total amount. Again, I have several lenders I can recommend who are easy to talk to who can explain how that works.
You mentioned how improved your credit is....One thing of note to help you is regarding credit card debt - I recommend not closing out accounts, but keep them open with 0 balances. Or, do not keep more than 30% of your credit limit on the card month to month. If you can discipline yourselves to do that, your credit scores will improve even more. This diligence will show you are a good risk for a lender.

Now is a good time to buy. Interest rates are still low, the market is saturated with homes for sale, the pool of Buyers is not as good as it was last year which lowers Buyer competition, and Sellers are beginning to reduce their prices in anticipation of the August rush to sell their home before school begins. If you can financially handle it, I believe now is the time to buy! Give me a call and I will gladly connect you with a couple of lenders (it's always good to get them to compete for your business). This will start you in your process. The lender will provide you with a pre-approval letter which is needed in presenting your offer on a home. So, your first step is to meet with lenders to determine what you truly qualify for. Then meet with the realtor to find you the BEST home at the BEST price possible in the Best investment area for your price range.
I wish you both the best as you begin the adventure! and your future!

Paul,
If you are looking to live in the home for a few years it can be a good time to buy. FHA is great as you can combine it with other programs and move in for almost zero down. The seller can contribute to closing and that is negotiable. Just ask your lender about different programs. If you have other questions please email me. jkagent@gmail.com

Right now is actually a great time to buy in Austin if you can obtain financing. our market is a little slow right now creating a buyers market. right now it is more common for sellers to pay cc and maybe downpayments. it really just depends on what type of loan you get. I would love to assist you with your search. feel free to contact me.