The Austin Business Journal reported on the 22-story condo project that broke ground in Austin this week. The Shore, a 192-unit residential complex, is slated for completion in January 2008. More than 80 percent of the units in a new high-rise condominium tower on Town Lake are committed even though the project just officially broke ground Wednesday.

"The Shore’s location on the edge of downtown in a neighborhood known as the Rainey Street District will help improve an area that has been underdeveloped in recent years, says Downtown Austin Alliance Executive Director Charlie Betts. As the development’s pre-sales figures illustrate, prime access to both downtown and Town Lake are amenities people are willing to pay, and wait, for.

Now with the nearby Milago Condominiums project close to completion and construction underway on the Mexican-American Cultural Center, Betts says he expects to see more high-density residential developments in the district."

Downtown Austin will continue to grow. We’ve seen the boom coming for years, but it is now in full swing.

Dee Copeland, Investment Specialist
AustinHomeNews.com, Team Dee Residential
eRealtyAlliance Commercial Real Estate

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I had a discussion with someone yesterday to explain my theory on why home values are falsely inflated by zero-down loans. A few decades ago, most homeowners were putting 20% down in order to obtain a loan. Somewhere in the 90s, mortgage brokers and buyers started doing a lot of 100% loans, which became even more popular as home prices increased and interest rates became more affordable. Currently, most loans that I see from non-investment borrowers are completely financed. Closing costs and some repairs are often rolled into these loans.

If you think about it, if you buy a house that is valued at $200k and then roll in $15k of costs, is this home really worth $215k? That’s what the city of Austin and other taxing authorities say, especially when the lender and appraiser agree. Now that buyers are financing everything into their loan, appraisers must value the home at the slightly higher price to adjust. In theory, if the home was not work $215k, it could not appraise. In the real world, most appraisers and lenders hate to be the bearer of bad news and tell a borrower that they need to pay $15k of unexpected costs.

Are the lenders and appraisers to blame or is the agents and buyers? I can’t point to any one group, but we’ve seen property tax values skyrocket in our local areas. Besides shrinking inventory, I believe part of it is due to these 100% loan products. Zero down loans aren’t necessarily a bad thing, but it’s going to take time to see their full effect on the economy and housing markets. If you remember, everyone was in love with Ajustable Rate Mortgages (ARMs) between 2002-2005, but now foreclosures are on the rise because the interest rates have started increasing every 6 months to year for these home purchasers.

Again, only time can really show the zero-down loan’s long-term effect.

Dee Copeland, Investment Specialist
AustinHomeNews.com, Team Dee Residential
eRealtyAlliance Commercial Real Estate

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After several magnificent boom years, signs of a slowing market are appearing in many areas.  But to most economists, this just represents a return to a more “normal” housing market.  It is an eagerly awaited shift for many buyers whose dream of home ownership was frustrated by escalating prices and bidding wars.  The inventory of homes for sale should grow in many markets, giving buyers a greater range of choices.  Because homes will take longer to sell, buyers won’t feel so pressured to make a quick decision or to waive contingencies in order to influence the seller.

Mortgage interest rates are still low compared to a hefty 18% in 1995.  It is expected that interest rates will continue to climb this year with a slow, but steady, pace of increase.  Fixed-rate mortgage loans should be a safer choice than adjustable rate loans in a climate of rising rates.

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USA Today published an article in April that summarized statistics from the National Association of REALTORS® (NAR). Families, couples, and retirees are buying vacation homes and investment property at an astounding rate. NAR reported that almost 40% of homes sold in 2005 were not primary residences. The second home and investment property market continues to boom and is heating up, at least in Texas.

The issue in Texas is how this will effect our economy when other states start having economic and growth issues. For instance, the U.S. has been heavily relying on China for goods and services. We’ve been pouring our U.S. dollars into their economy and they have been buying our debt. Critics wonder what will happen with China decides to sell these "shares" of the U.S. Just like the stock market, will our economy decline?

On a smaller scale, if Californians and other out-of-state owners start having job losses and see an economic downturn, what will happen to our Texas economy when these homes face foreclosure or are sold in masses? Investment loans are more expensive and harder to get in Texas because lenders know that, when faced with adversity,
most borrowers would rather lose their secondary home rather than the
one their family lives in.

In Texas, this means we’d then have a glut of houses on the market that may not be able to break even on a sale due to the large number of second-home purchases we’ve seen in the past two years. Of course, this would be good news for the buyers, but local homeowners who intend to sell their primary residences will suffer.

Read the story on USATODAY.com - Second homes 40% of market.

Dee Copeland, Investment Specialist
AustinHomeNews.com, Team Dee Residential
eRealtyAlliance Commercial Real Estate

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I was speaking to a client recently  and mentioned that Austin is usually  on any "best places to live" list. I came across an article Sunday on MSN real estate that summarizes the top 8 places to live in the United States. Of course, Austin was #2 on the list, which was as follows:

1. Asheville, N.C.
2. Austin, Texas
3. Boise, Idaho
4. Fayetteville, Ark.
5. Minneapolis
6. Nashua, N.H.
7. Olympia, Wash.
8. Prescott, Ariz.

There wasn’t much information in the article on why someone would want to live in Austin, but the writer did say that we have many "Ph.D waiters", which is a way of saying that we have a highly-educated population who can make more money living somewhere else, but these people would rather take less pay so they can stay in Austin. I’d say that this is a true statement. 

I have a client in town this weekend and explained to her on Friday that Austin is great place to retire, raise a family, or just relax. Most engineers, lawyers, and doctors can make better pay in Dallas or Houston, but the caveat is…they’d be in Dallas or Houston, not Austin. If I had any place to live in the U.S., it would probably be near a nice beach in California, but I would not want to completely leave Austin. That’s how great our city is.

Read more now: 8 cheap places you’d want to live - MSN Real Estate.

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Dee Copeland, Investment Specialist
AustinHomeNews.com, Team Dee Residential
eRealtyAlliance Commercial Real Estate

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Many East and Central Austin homeowners were upset when they received their property tax bills a few months ago. May 31st was the last day to protest, but many are now just checking to see if their taxes were increased. I count myself in the few who delayed. To my dismay, my property taxes had increased 97% in a single year.

For background, I purchased a 3100sqft home in the popular 78702 zip code in Central East Austin in August 2004. The tax appraised value at the time was $247,000, but I picked it up as a bank foreclosure for $150k. Since I had not paid anywhere close to $200k for the house, I was able to get the taxes lowered, but only to $170k because of a loophole where they can only lower the taxes by a certain percentage during the "late" property tax dispute rounds.

After spending about $25-30k on work on the inside of the property, the home was reassessed in 2005 for $186k. I thought this was not a fair increase, but did not have time to protest. Now, in 2006, the city is claiming that my property is valued at $305,000, a full $116k increase from just last year! I was absolutely shocked.

It has long been a complaint that Texans pay some of the highest property taxes in the country. My fellow Austinites and I pay some of the highest property taxes in the state at a 2.711 rate. Now, Central and East Austin residents are seeing our property taxes almost double in single years, mostly due to speculation from investors and out-of-town buyers.

I’ve been helping other residents try to win their protest cases, but it may be too late for me since I did not file before May 31st. I will keep you posted on some of the outcomes.

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Dee Copeland, Investment Specialist
AustinHomeNews.com, Team Dee Residential
eRealtyAlliance Commercial Real Estate

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For those of you who thought 30-year mortgages were long-term, guess again. Half-century mortgages may soon start making their debut in Texas. Talks of 40 and 50-year mortgages are said to give buyer’s options, but at what cost? This is a recent debate topic among real estate professionals and others since the mortgages first started appearing in high-appreciating states such as California.

Realty Times published an article in May regarding 40 and 50-year mortgages. The article outlined the difference in payment among the longer-term mortgages versus 15 and 30-year terms. The gist is that these mortgages allow buyers to have a lower monthly payment, which is similar to the purpose of an ARM (Adjustable Rate Mortgage), but at a fixed rate. Reports show that there are a great deal of owners now losing their homes after their ARMs reach the adjustable period.

While some may see these long-term mortgages as a solution, most agents and mortgage brokers will reiterate the following…"If you cannot afford the payment, do not buy the property". The question is whether we need these types of mortgage products in Texas.  Although property taxes are generally higher in Texas than other states, real estate is still affordable. There currently is no real need for 40 and 50-year payment periods since real estate prices are not extremely inflated and interest rates are still affordable.

Residential buyers should beware of these long-term mortgages since the time to build equity will be lengthened. These loans can be especially damaging when the real estate market declines and homeowners have not built enough equity to break even on a sale.

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Dee Copeland, Investment Specialist
AustinHomeNews.com, Team Dee Residential
eRealtyAlliance Commercial Real Estate

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BOMA, the Building Owners and Management Association, is having it’s commercial convention in Dallas starting this weekend. The association is based in Washington, DC. and is one of the largest commercial real estate organizations in the U.S.

According to the Business Wire press release, there will be two expos at once. One is the Office Building Show, which features 400 booths from leading companies in the commercial real estate industry. The second expo, Realcomm, is being held with BOMA in the Dallas Convention Center. Realcomm is one of the top technology events.

Visit BOMACONVENTION.ORG for more information. If you are in Texas at all from June 24th to the 27th, you should try to attend. Dallas’ hot office and retail markets are expected to continue to rise. It will definitely help the city to have such a prominent annual event in town.

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Dripping Springs is getting hotter every month. Central Texans love the hill country, but often want the amenities of living near other growing commercial and residential developments. They solve their dilema of wanting to live "in the country" or "outside of the big city" by moving to Dripping Springs, which is Southwest of Austin, but just on the border of the city. It would probably only take about 45 minutes to get to Downtown Austin from the outskirts of the small town.

The city’s zoning and planning departments have been busy reviewing both commercial and residential real estate project proposals. According to the Austin Statesman, "The biggest indicator of growth is a proposed 55-acre commercial development at the southeast corner of US 290 and RM 12, just across from City Hall. The retail project, by developer Barshop and Oles Co., would be anchored by an H-E-B grocery store and a Home Depot. The city’s Planning and Zoning Committee will review the proposal next month and is expected to approve it, City Administrator Michelle Fischer said. The project will be the biggest commercial development in the city’s 150-year history."

The Statesman article is pretty comprehensive, so read more about the growth in Dripping Springs.

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Dee Copeland, Investment Specialist
AustinHomeNews.com, Team Dee Residential
eRealtyAlliance Commercial Real Estate

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The Austin skyline is rapidly changing. Within the next two years, there will be at least three new downtown condo developments. The Austin American Statesman newspaper described three projects, two of which will be among the tallest buildings in Downtown Austin when they are complete.

• The 360 will be 44 floors, 432 units. Prices for one-bedroom units will be just under $200k with two-bed units under $300k. Completion is scheduled for late 2007.
• Red River Flats will be four floors, 120 units. Rents will range from $1350-2520 per month. Completion is estimated at July 2007.
• Spring will be at  Third and Bowie streets, near the old Seaholm Power Plant. Units will be $200-400k. The 36 floor, 220 unit complex is scheduled to open in 2008.

For those of you interested, you can read more about Downtown apartments, condos on the rise.

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Dee Copeland, Investment Specialist
AustinHomeNews.com, Team Dee Residential
eRealtyAlliance Commercial Real Estate

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