And again….the Austin real estate market is down from 2007’s record year, but still fairing well. Active listings are up 20%, and # of homes sold are down 20%. However, we’re still appreciating. The median sales price is up to $196,120 from last year’s $184,050. The average sales price is up 5%, $263k from $250k. The good news is that the glut of inventory looks like it’s being absorbed. Last month’s numbers indicated 5.03 months of inventory on the market, and this month’s indicate 4.91.
The market is still holding strong. The median sales price is slightly up, and the average sales price is slightly down. The # of homes sold is down roughly 14% from April 2007. Again, we’re not setting records this year, but the market is doing fine. In my opinion, the average sales price dip is due to the difficult jumbo market, and the glut of luxury homes (14 month+ inventory) currently on the market. Definitely a good time to get a steal on a luxury property.
First, we have the wonderfully ridiculous Point of Sale Energy Efficiency Requirement proposal, and now we have new Mandatory Visitability proposal. Perhaps the city of Austin would like a new nickname - “Daddy State?”
The city has always required that homes built using public funds adhere to these guidelines, but the city council passed a resolution to initiate code amendments to all new homes. The proposed amendments include ground floor or ramp entry, doors at least 32 inches wide, hallways at least 36 inches wide, and first floor bathrooms w/ walls capable of supporting grab rails.
I have real issues w/ the city’s over the top attitude regarding building code & retroactive code. Extending the visitability standards to all new homes is fixing a problem that doesn’t exist. As it stands, it’s fairly easy to retroactively modify current homes for the disabled. Requiring that all homes meet these requirements will become overly costly in comparison with the relatively few modifications to existing homes for the disabled.
Median sales price is up 5% and sales volume is down 21% for March 2007 & 2008. Average days on market is 73 days. Dollar volume sold is down 23%. All in all, not great, but not bad. 2007 was a record year (behind only 2006) so this is indicating a calming market.
A 36-story apartment community was recently announced. Altavida will feature 255 total units with an average of 1500s.f. & $3300/month. The condominium project plans to begin delivering to residents in May of 2009. Downtown Austin’s rental market has remained extremely tight, and there is an increasing demand for downtown Austin living.
I’m typically a really big fan of how green Austin is. Austin Energy offers some of the best incentives in the nation to its customers, the general public supports green projects, there’s a big awareness of green building, etc…
However, the city of Austin is discussing issuing an ordinance to mandate energy efficiency levels of all properties in Austin. This includes single family homes built in 1920, to homes built yesteryear. This is part of the Mayor’s Climate Protection Plan.
So…the Austin Board of Realtors has an advisor sitting on the committee, and he/she has reported back that it looks very strong that the committee will recommend enforcing this at point of sale. Before someone can sell their home, they will be required to pass an energy efficiency inspection. Basically, it’s similar to emission inspections - it’s an absolute requirement.
This has big implications to homeowners in Austin. Without a certificate of compliance filed prior to closing, the property can’t legally be sold. Expenses will vary from home to home, but typically, a home that doesn’t pass will require $1500 - $10k in retrofits in order to obtain it’s certificate.
The shear volume of home sales is a big problem with this plan. There are roughly 25k properties sold in Austin annually. So….expect 25k inspections. If half of the homes fail, and a reinspection is required - increase that number to 37,500 inspections. Is the city ready for this? Who will take care of it - the city, or will local contractors have to be licensed to perform the inspections?
I’m not a fan of “big brother” government in the least. Up to this point, the city of Austin has done a damn fine job rewarding those who want to go greener by offering incentives. If this new ordinance comes through in this incarnation, and passes, I see big problems. I see lawsuits.
Information originally obtained from RECON.
GEORGETOWN, FORT WORTH AMONG ‘BEST PLACES’
Georgetown (statesman.com) — Fortune Small Business magazine says this Texas community of more than 40,000 is the second best place to live in America.
The April issue ranks Georgetown behind Bellevue, Wash., and ahead of Buford, Ga.; Marina del Rey, Calif.; Bethesda, Md.; Portland, Ore.; Denver, Colo.; Charlotte, N.C.; Fort Worth; and Franklin, Mass.
Cities were scored on job and population growth, new business startups, health-care facilities and other lifestyle factors.
DELL TO LAY OFF THOUSANDS
AUSTIN (Dallas Morning News) – Dell Inc. announced Monday that it expects to save $3 billion a year by closing a computer factory in Austin and laying off thousands more workers around the globe.
The Round Rock computer maker reiterated its intention to cut at least 8,800 jobs – about 10 percent of its workforce worldwide. It has already cut about 3,200 positions in the past three quarters.
Dell will close its Topfer Manufacturing Center by Jan. 1, cutting about 900 of its 17,500 Austin-area positions in the process.
“In addition, the company will take further actions to reduce total product costs across all areas, including design, manufacturing and logistics, materials and operating expenses. Dell expects that the initial benefits from these actions will begin to be realized in the second half of this fiscal year,” company officials said.
The company will also decide by the end of the third fiscal quarter whether it should sell its Dell Financial Services unit.
TUSCANY CENTER TALLIES TWO MORE
AUSTIN (Austin American-Statesman) – McShane Corp. and TAG International will construct two more buildings for the Tuscany Center at Walnut Creek. The project will cover 52 acres overall.
Tuscany Technology Center 3 will be a five-acre build-to-suit capable of accommodating up to 65,184 sf of office-flex space.
Tuscany Technology Center 4, located at 9100 US 290 E., will have 54,865 sf of office-flex space.
Ground has broken on Center 4, and it is expected to be completed toward the end of the year.
ST. CROIX BUYS BRAKER TRIO
AUSTIN (Austin Business Journal, globest.com) – Dallas-based Westmont Realty Capital has sold Braker Centers 6, 7 and 11 to San Diego–based St. Croix Capital Corp.
Westmont’s 18-month hold before the sale included renovations, upgrades and significant increases in occupancy for the three buildings.
The 216,522-sf flex complex is 93 percent leased and located at Metric Blvd. and Braker Ln.
Holliday Fenoglio Fowler LP brokered the transaction. Bank of America Corp. provided senior debt and Alex Brown Investment Management LLC supplied the equity.
LENDING STANDARDS TIGHTEN FOR MANY
WASHINGTON (Associated Press) – Mortgage insurers have flagged nearly a quarter of the nation’s ZIP codes where they refuse to insure some home loans, making it harder for many homebuyers to borrow, even if they have good credit.
In recent weeks, mortgage insurers have flagged more than 9,600 ZIP codes in at least 34 states where they will not insure certain types of home loans — those for investment properties or second homes, those with riskier adjustable-rate or interest-only mortgages, or for buyers making down payments of less than 3 percent.
The entire states of California, Florida, Arizona, Michigan, Ohio and Nevada, which have seen the highest foreclosure rates and the worst price declines, are blackballed on some mortgage insurers’ lists.
For new homebuyers and those seeking to refinance, this can mean higher down payments and a higher bar for credit scores, among other requirements. The toughest restrictions are in markets where home prices are falling, though regions where property values are rising are not immune.
THREE TENANTS FOR TECH RIDGE
AUSTIN (Austin Business Joural) – Office Depot, Petco and Castle Dental are joining anchors H.E. Butt Grocery Co. and JCPenney at Tech Ridge Center in North Austin.
The 200-acre Tech Ridge tract at the southeast corner of I-35 and Parmer Lane is being built in phases. Developer Quentin Corp. is working on the second stage of retail that will bring total shop space to around 200,000 sf.
The three newest tenants are scheduled to open in November.
Future phases will include another 280,000 sf of retail and hotel space plus a 400,000-sf office complex to be called the Pavillion at Tech Ridge.
Durham & Bassett Realty of Austin represented Quentin Corp. on all three leases.
PARTNERSHIP’S COTTAGE TAKEOVER
AUSTIN (Mosaic Residential) – An affiliate of Harbor Group International LLC, in partnership with Mosaic Residential Inc., has purchased the 167-unit Camden Ridgeview apartment complex from Camden Property Trust.
Harbor Group and Mosaic Residential will invest $1.2 million for interior and exterior upgrades on the property, which has been renamed The Cottages at Wells Branch.
The 93 percent leased complex was built in 1984 on more than seven acres and consists of 167 garden-style apartments. The units average 859 sf.
CapMark arranged the Freddie Mac financing. Mosaic will oversee the renovation and manage the property.
AUSTIN OFFERS MOVIE MAKERS NEW INCENTIVE
AUSTIN (Austin Business Journal) – City officials hope shouts will ring out around town thanks to a new ordinance approved this week. Specifically, they want to hear “lights, camera, action” a lot more.
Austin City Council voted to waive facility use and rental fees for qualifying film, television and video productions in the area.
According to the ordinance, the city will provide as many as two peace officers for 15 days for filmmakers spending at least $1 million on local goods and services. Commercial, music video or video game crews must spend at least $100,000.
Films and television productions benefitting from the ordinance must credit the City of Austin in each episode.
City officials say film and video media production already contributes more than $35 million annually to the local economy. MovieMaker Magazine has ranked Austin the number one place to make movies.
5,500 HOMES FOR LEANDER, LIBERTY HILL
AUSTIN (Austin Business Journal) – Work has begun on the first two sections of a residential development that could bring as many as 5,500 new homes to Leander and Liberty Hill. Gunn & Whittington Development is the developer of the three subdivisions.
Rancho Sienna on Parmer Lane in east Leander is 610 acres. Middlebrook, along Hwy. 29 in Liberty Hill, is 400 acres. Santa Rita, also in Liberty Hill, is 1,200 acres.
Construction on the first 167 lots of Rancho Sienna and the first phase of Middlebrook has begun. Buildout is expected to take five years. Plans for Santa Rita call for buildout completion in nine or ten years.
Middlebrook homes will range from the $140,000s to $220,000s. In the other two subdivisions, prices will be from the $200,000s to $400,000s.
I send a compilation of Austin real estate market news out to all of my clients, and I typically put it in the “market news” section of the website. I’ve decided to start blogging it so that you guys can comment. Sorry this is posted late, but here ya’ go:
TEXAS HOUSING MARKET ISOLATED, NOT IMMUNE
WASHINGTON, D.C. (Real Estate Center) – While Texas is somewhat isolated from the storms in the national housing market, it is not completely immune, said Real Estate Center Chief Economist Dr. Mark Dotzour during a series of speaking engagements yesterday in the nation’s capital.
“The difficulties in the mortgage market are impacting buyers in all 50 states, including Texas,” said Dotzour, speaking at the Economic Policy Conference of the National Association of Business Economics. The economist was serving on a panel discussing the regional differences in the housing markets across the country.
Dotzour noted that home prices are still increasing in most Texas metro areas, foreclosure rates are much lower than the national trends, and the inventory of unsold homes in Texas is currently at 5.7 months, well below the national average of 10.1 months. However, he also noted that the most recent numbers from the Office of Federal Housing Enterprise Oversight show the rate of price increases in most Texas metros to be getting smaller.
Earlier that day, when asked by Bloomberg’s Kathleen Hays about the efficacy of further rate cuts by the Federal Reserve, Dotzour stated that he “wasn’t a big fan of government intervention, but since they are going to intervene in a big way they should do something that might actually help solve the problem.”
Dotzour said that the recent “helicopter drop” of $150 billion would not help the housing situation and would only exacerbate inflation.
“If they really want to help solve the housing problem more quickly, we need to see a tax credit for people to buy a home,” he said. “We’ve got excess inventory that needs to be soaked up.”
Dotzour also noted that the ten-year treasury rate is moving back down to the 3.5 percent range because of the continued fear of the credit markets. When the rate gets near 3.5 percent, a short window of opportunity opens for existing homeowners to refinance their homes.
“I thought that window had closed a few weeks ago as the ten-year moved back toward 4 percent,” Dotzour said. “But news of continued difficulties in the banking system has caused the rate to move lower again.”
FANNIE, FREDDIE OVERHAULING APPRAISAL PROCEDURES
NEW YORK (Bloomberg) – Fannie Mae and Freddie Mac, the biggest sources of financing for U.S. home loans, have reached an agreement with New York Attorney General Andrew Cuomo to buy mortgages only from lenders that adopt new standards intended to ensure independent home appraisals.
The new rules announced yesterday prohibit mortgage brokers from using in-house staff to do valuations for any home loans the government-chartered companies purchase. Lenders will also be barred from using appraisal management firms they own or control.
“We believe the appraisals were often fraudulent because there were conflicts of interest and pressure on the appraisers,” Cuomo said.
Mortgage lenders that own appraisal companies include Countrywide Financial Corp., the nation’s largest home-loan originator.
LAP OF LUXURY IN FAR NORTH AUSTIN
AUSTIN (bizjournals.com) — Two luxury apartment projects are underway in far north Austin. The 396-unit Broadstone Travesia is being built on Quick Hill Rd. across from La Frontera. Grand Avenue apartments will have 280 units at a site one mile south of Round Rock at the northeast corner of the intersection of Grand Avenue Pkwy. and I-35.
Alliance Communities, the Texas division of Alliance Residential Co., is the builder. Architects were the Houston office of Hensley Lamkin and Rachel for Broadstone and Steinberg Design Collaborative of Houston for Grand Avenue.
SHELTER MAKES ROOM FOR MORE
AUSTIN (Austin Business Journal) – Austin Children’s Shelter (ACS) broke ground yesterday on eight buildings that will nearly double its existing space.
ACS cares for about 300 abused and neglected children each year and has been “forced to turn away more that 350 children each year for lack of bed space in its current facilities,” a spokesperson said.
The organization has almost completed a $12.9 million capital campaign to fund the new space.
The new campus is at Rathgeber Village, just east of the former Mueller Airport.
DAVIS DEVELOPMENT SPRINGING UP
AUSTIN (Austin American-Statesman) — HPI Real Estate Services & Investments Inc. has begun a three-phase industrial/flex space development at RM 620 and Parmer Ln. West.
Davis Spring’s first phase consists of four service center buildings totaling 263,443 sf and should be completed in the next 60 days.
The second phase — beginning in 2009 — will be two- and three-story office buildings totaling 290,000 sf. The third phase will be 400,000 to 500,000 sf of Class-A office space.
The project will accommodate data centers and office, research and development technology users.
WAREHOUSE DISTRICT ADDING WESTIN
AUSTIN (Austin Business Journal) – Hixon Properties Inc. and Hines Interests LP are partnering on an 18-story hotel project on the site of the former Bitter End bar.
Located at Third and Colorado St., The Westin Hotel will consist of 300 rooms, 15,000 sf of meeting space, a restaurant, spa and a third-floor pool deck and bar.
Starwood Hotels and Resorts will manage the hotel.
Lake|Flato Architects of San Antonio is the design architect and Rabun Rasche Rector Reece of Atlanta is the project architect.
MUSEUM, OFFICE TOWER HEADED DOWNTOWN
AUSTIN (globest.com) – The Austin Museum of Art and Hines have made plans for a 40,000-sf, three-story museum and a 425,000-sf, Class-A office building.
Hines is seeking LEED certification for the 30-story Museum Tower, which would make it downtown’s first green office building.
Construction will begin at Fourth and Guadalupe Streets in 2009.
Pelli Clarke Pelli Architects of Connecticut is the development’s lead architect. Completion is scheduled for 2011.
CAPITAL CITY’S NEW INDUSTRIAL SPACE OUTPACES DEMAND
AUSTIN (Grubb & Ellis) – Positive net absorption in the Alamo City’s industrial market reached 214,289 sf during the fourth quarter, pushing the annual total to a record 3.4 million sf.
Most of the quarterly demand occurred in R&D and flex properties with 113,468 sf of positive absorption driving the yearly total to 774,026 sf.
Following closely, warehouse-distribution properties recorded 111,281 sf of positive absorption during the quarter, pushing the yearly total to 592,403 sf.
Meanwhile, standard industrial properties posted 10,460 sf of negative absorption during the survey period but still registered the highest annual absorption growth among all classes with 2.1 million sf.
Despite posting positive absorption for the sixth consecutive quarter, Austin’s overall vacancy increased by 90 basis points to 7.4 percent during the survey period, which was a result of new space deliveries outpacing demand.
During the quarter, new space deliveries totaled one million sf with the majority being warehouse-distribution product in the southeast submarket. Consequently, warehouse-distribution properties saw vacancy increase by 110 basis points to 6 percent during the quarter.
Following suit, R&D and flex properties witnessed an overall vacancy increase of 90 basis points to 14.4 percent while standard industrial type product vacancy rose by 70 basis points to 3.8 percent during the quarter, remaining the lowest vacancy recorded among all property classes.
MORE HILL COUNTRY OFFICE SPACE COMING
AUSTIN (Austin American-Statesman) – Trammell Crow Co. is constructing a $47 million office park on 26 acres at US 183 and RM 620.
The 272,000-sf Pecan Park, which will lease at $28 per sf, is expected to open by December.
Two other projects going up in the city’s northwest region are Aspen Properties’ Aspen Lake, an office building with 210,720 sf that will open in May, and Simmons Vedder Partners’ Crossings at Lakeline, with 235,000 sf to be open in June.
BEE CAVE’S CLASS-A LIVING
BEE CAVE (Austin Business Journal) – GE Real Estate and Trammell Crow Residential are partnering to bring 350 Class-A apartments to the FM 2222 corridor near Four Points.
The Alexan Ribelin will consist of 15 three-story buildings on almost 18 acres. It will be part of Ribelin Ranch, a master-planned project that will include residential, office and retail space as well as a new middle school and high school.
The first units are scheduled to be completed in November.
Trammell Crow Residential is serving as the general contractor, and Riverstone Residential Group will handle leasing and management.
LAKE TRAVIS TURNBACK BECOMES MAHOGANY
AUSTIN (Austin Business Journal) – Turnback Development LLC has purchased the 242-acre Turnback Ranch from Dallas-based Winston Capital Corp. The site, which is part of the Lake Travis development Lago Vista, has been renamed the Mahogany A Lake Resort.
Colorado-based Equilibrium Resorts will manage the development and operation of the property for Turnback.
Winston bought the property in 2006 and laid out a plan for 700 living units including condos and single-family homes.
WILLIAMSON COUNTY UNVEILS NEW HOSPITAL
ROUND ROCK (Austin American-Statesman) – Seton Medical Center Williamson celebrated its grand opening yesterday, bringing 181 hospital beds to the city and providing jobs for almost 1,400 people.
The $175 million, 365,761-sf Catholic hospital is expected to generate about 12,000 jobs over the next 15 years.
An additional building called Good Health Commons will open in April featuring acupuncture, music therapy, massage and a kitchen.
Officials expect the new area to develop into a health care and education plaza.
TWO HILL COUNTRY HYATTS
AUSTIN (Austin American-Statesman) – As part of its nationwide 200-hotel project, Global Hyatt Corp. has two Hyatt Place hotels in the works in the Hill Country.
One will be at La Frontera Blvd. and Sundance Pkwy. in Round Rock; the other will be at SH 71 and Thornberry Rd., near the Austin-Bergstrom International Airport.
INVESTMENT FUND PICKS UP NORTHPOINT
AUSTIN (Boston Business Journal) – Boston-based Intercontinental Real Estate Corp. has purchased the almost ten-acre Northpoint Centre on behalf of Intercontinental’s U.S. Real Estate Investment Fund LLC.
Northpoint Centre consists of two Class-A office buildings totaling 151,000 sf. The property is currently 92 percent leased to a variety of financial, legal, service and technology companies.
This marks the fund’s 12th purchase.
CRESTVIEW CLEANUP
AUSTIN (Austin American-Statesman) – A 73-acre, previously contaminated site has been cleared for a mixed-use development just south of US 183 on the Capital Metro rail line. Phase-one work begins today.
The $100 million Crestview Station will include 32,000 sf of retail, 32,000 sf of office space and the 340-unit Midtown Commons at Crestview apartment complex. The developers are Stratus Properties Inc. and Trammell Crow Co.
The apartments, developed by High Street Residential, will range from 550 to 900 sf and cost an average of about $1.50 per sf.
Additional phases of the project could include up to 900 more residential units. The entire development will take five to seven years to complete.
MORE METCENTER ROOMS
AUSTIN (Austin Business Journal) – With a little help from a local development partnership, the MetCenter business park will soon have more than 700 hotel rooms available for rent.
MetCenter developer Zydeco Development has sold a little over one acre within the park to BDS Gatekeeper LLC for the construction of a roughly 70-room hotel — the park’s seventh. The new hotel will likely be a Microtel property, which is part of the Hyatt brand.
MetCenter is just off US 71 near Austin-Bergstrom International Airport.
The Kucera Co. represented BDS Gatekeeper.
I saw this on a thread at REW and was pretty amazed/shocked. A local Austin real estate agent, Mohammed “Mike” Gharbi just had his license renewed by TREC (last month) with the following record:
*Arrested by the FBI
*Convicted of 5 counts in a $15m loan fraud scheme
*Sentenced to one year in prison
*Ordered to pay $84,914 restitution
He was convicted of purchasing cheap houses, getting fraudulent appraisals to justify loan amounts much higher, and then selling the houses to co-conspirators at much higher prices.
Apparently, he is in the process of appealing his case, and has 2 more months to appeal his case to the Supreme Court. TREC claims that they can’t yank his license until/unless he loses his final appeal.
I typed this to an investor client today, and thought it would be good to go ahead & post it here as a “quick & dirty market update.”
The market here has somewhat stagnated. Properties are still moving, but they’re taking longer than previously. Prices aren’t going down, but we’re not seeing the rapid appreciation we saw last year. This spring will be telling to see what kind of appreciation we’ll see until 2009. The California market has affected us because not as many Californians can sell their homes, so we’ve seen a slight decrease in migration. The mortgage market has had the biggest effect on our market - it took ~25% of the buyers out of the market. Everything I’ve read indicates that the mortgage market will have worked itself out by the first of 2009, so I expect our market to be gunning full bore ahead at that time.
I honestly believe that this is the best time to buy real estate in Austin for the foreseeable future. We’re able to come in ~5-10% below asking and be taken seriously. I’m seeing my clients successfully negotiate the prices to ~95% of asking price.