The Early Bird

The ABJ reported that Austin had the second strongest job market in Texas for the year 2009.  McAllen which is considerably smaller, was number one.  Since job growth is the number one driver for real estate values, Austin’s ability to keep its workforce employed through the recession has allowed its real estate market to hold its value relatively well compared with the largest 50 metro areas in the US.

Orthopedics manufacturer Hanger recently announced it is planning to sign a 75,000 SF lease and grow it’s Austin area office.  LegalZoom.com also just confirmed they are finalizing state and local tax incentives in exchange for opening an Austin office and bringing 600 jobs to our area over the next several years.  These corporate relocations and expansions should serve the local real estate market well in the years ahead.

We knew the time was coming, and the experts said it would happen most likely in the first quarter of 2010, and it looks like they were right.  The good news is that this is another signal that the economy is improving. 

During the first quarter of 2010 will be an optimal time for first-time buyers and move ups, with first timers cashing in $8000 per transaction and move ups getting $6500 – all while the interest rates are still relatively low.

Austin Business Journal – by Jeff Clabaugh Staff Reporter

Mortgage rates moved higher for the second week in a row, financial experts reported today.

“Mortgage rates followed bond yields higher once again this week amid signs of an improving economy,” says Freddie Mac (NYSE: FRE) chief economist Frank Nothaft.

Freddie Mac said a 30-year, fixed-rate mortgage averaged 4.94 percent for the week ending today, up from 4.81 percent. A year ago, 30-year mortgages averaged 5.19 percent.

A one-year, adjustable-rate mortgage averaged 4.34 percent this week, up from 4.24 percent last week.

Despite moving higher, long-term mortgage rates continued below five percent for seven consecutive weeks, contributing to a wave of refinance activity. Three out of every four mortgage applications were for refinancing an existing mortgage during the first two weeks of December, according to the Mortgage Bankers Association.

November housing starts were up 8.9 percent from October, with building permits issued in November up 6 percent.

The Federal Tax Credit for homebuyers was officially extended on Friday. Changes have been made to expand the credit to higher income brackets as well as repeat buyers. Here are the quick facts:

• First time buyers who have not owned a home for at least 3 years remain eligible for the $8,000 credit
• Income limits have been increased to $125,000 for a single person or $225,000 for a couple (previously $75K and $150K, respectively)
• Repeat (“move up”) buyers who have owned their home for a minimum of 5 years (must have owned their home 5 out of the last 8 years) can receive up to $6,500
• The credit is not a loan and is not a deduction but a direct income tax credit
• The credit does not have to be paid back
• For more details email us or visit: www.federalhousingtaxcredit.com

The home buyer tax credit is likely going to be extended to higher income individuals as well as existing home owners through April 30, 2010.  The extension which should be finalized this week, will extend the existing $8,000 tax credit for first time buyers until the end of April and will increase the income limits to $125,000 as an individual or $225,000 as a couple.

Additionally, a credit of up to $6,500 will be extended to repeat home buyers who have owned their current home 5 years or more.

The Senate is scheduled to vote on the final bill this week and it is expected to be passed in the House soon after.  We will update our page with more details as they become available.

The Statesman ran an article profiling recent buyers who utilized the first time homebuyer tax credit.  The credit is available to US citizens purchasing a primary residence who have not owned a home within the last three years.  To qualify buyers must meet certain income requirements and must close on the purchase by December 1, 2009.  Contact Lindsay for more details.

Downtown Austin will see the arrival of another condo tower this September.  Spring will begin moving residents into the building in late August or September.  The 42 story tower is located at 3rd and Bowie and has one of the best locations downtown.  The project is located next door to Whole Foods and is within walking distance of dozens of shops, restaurants and nightlife spots.  The hike and bike trail along Shoal Creek is also just a few steps from the property, which leads to Lady Bird Lake 3 blocks to the south. 

The 220 unit project has about 55% of the units under hard money earnest contracts.  Asking prices are averaging in the $500/SF range and include marble baths, stainless appliances, hardwoods in the living spaces and carpet in the bedrooms with an option to upgrade to wood at an additional cost.

While the project is in a great location and has a nice finish package, it will be interesting to see what final sales prices look like.  Spring is priced significantly higher than other recent projects downtown.  Also, many of the current buyers went under contract prior to the financial crisis, so there’s no telling how many of the current contracts will actuall push through to closing.  If you’ve toured Spring, let us know your thoughts by commenting below!

Ask any Realtor or lender, and they’ll most likely complain about the new regulations surrounding appraisals.  Ask any appraiser, and they’ll likely complain as well.  This NY Times article does a great job of explaining how legislation whose goal was to eliminate collusion between appraisers, lenders and brokers, has instead significantly complicated the appraisal process by bringing management companies into the mix, while in turn charging consumers more for what is often an appraiser who is less qualified or experienced than what they would have had in the past. 

I’m all for appraisals being performed at arm’s length from lenders, but it seems the addition of management companies has been a lose – lose situation for consumers, brokers and lenders.  I believe there should be some sort of qualification process for a pool of appraisers, certifying that they are knowledgeable of a particular market and product type.  Under the new rules, consumers are paying about 40% more for an appraisal which is often sourced out to an appraiser with little experience or knowledge of the submarket in which the property is located.

http://www.nytimes.com/2009/08/19/business/19appraise.html?pagewanted=1&_r=1&th&emc=th

W Residence Kitchen Model

It’s been known for some time that the W Hotel and Residences’ construction lender was in financial trouble.  What was uncertain was how it would impact the project.  The ABJ recently reported that the W is now actively a replacement lender for the $170MM that bankrupt Corus bank will be unable to fund.  Stratus was in a development agreement with Magic Johnson’s “Canyon Johnson Urban Fund” to develop the $300MM hotel and condos which was to include numerous restaurants, such as a new concept by local chef Tyson Cole of Uchi, as well as the new ampitheatre venue for Austin City Limits which has been housed in the Communications building at UT for the past 40 years.

Read the ABJ article here.

904 West conceptual rendering

904 West promises to be an eco-friendly, affordable project in the Market District near Whole Foods.  Here are the quick details:

Overview:

• Located at 9th and West Avenue.  For reference, Hut’s Hamburgers is at 6th & West
• Approximately 30 units which will consist of residential, live/work and office spaces
• Building will contain a swimming pool
• Duncan Park access
• Solar panels will supplement electric power
• 1 parking space per unit
• 2% earnest money contracts
• Delivery will likely be spring / summer of 2010 (developer claims fall 2009)

Pricing:

• 1500SF office space fronting West Avenue: $480,000
• 1250SF office space fronting West Avenue: $380,000
• 900SF or smaller 1 bedroom units: $190′s to $300,000
• 500SF – 740SF live/work units: $160,000 – $190,000

Office units will be delivered as shell space, but all residential units and live/work units will be fully finished out with a number of upgrade options buyers may select.  From first appearance, it’s a great location and has huge potential, but pricing appears to be in the $300 – $320/SF range which we believe is unreasonable for a project of this nature.  While the price point is relatively low, I don’t know that they will be able to sell 500SF units for nearly $200,000.  Stay tuned to find out or email Blake at btaylor@taylorrealestateaustin.com for more details.

Rendering Atrium

Rendering Building #2