SFR Investor · South Bend, IN · Member since 2013 · 342 posts · 56 votes
More and more reports come out of the price increases, low supply and so on in the real estate market of large cities across the nation.
In your experience (or opinion), do the smaller cities outside of the larger metro areas tend to follow suit in time? Or does it just depend?
In the few I've looked at, price increases have started but not to the extent of the larger metros. Or could that be just because smaller markets don't tend to fluctuate as much to begin with?
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
13y
If you are buying in small towns on the edge of the city, pick cities that are growing and study the growth patterns. It often follows the highways. Pick an edge town that is next in line for fast growth ad development. Simply buy in the way of growth. Austin? Look at San Marcos or Cedar Park, for example.
I'm seeing some firming up outside of Dallas/Ft Worth, but not like the cities themselves or close in suburbs, yet. I'd want to be close enough in, so that the commute to DFW is reasonable. 45 minutes, max.
Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
13y
There is a "ripple effect" happening in my area of Austin, TX. More investors are rehabbing in the outlying areas. However, the secondary market, cities that have a good reason for being there and stable are still good markets for rehabbing.
Contractor · Round Rock, TX · Member since 2013 · 767 posts · 389 votes
13y
Originally posted by Jean Norton:
There is a "ripple effect" happening in my area of Austin, TX. More investors are rehabbing in the outlying areas. However, the secondary market, cities that have a good reason for being there and stable are still good markets for rehabbing.
I'm with you Jean. I'm in Round Rock and there are some good deals around if you look hard enough. Some of them are good deals for a reason such as Manor. The nice thing about working outside Austin is not having to deal with red tape and beauracratic crap that comes with Austin. You can easily add several hundred to several thousand dollars in permitting and extra work involved by the trades just being in Austin and depending on what you do.
Austin, TX · Member since 2011 · 119 posts · 46 votes
13y
Yes, the smaller cities usually follow suit to price increases surrounding the major metros. We are seeing it here in the Austin area with price increases in almost all of the outlying communities. However, these are usually the areas that also crash First when the market weakens. Be sure to stick to solid fundamentals and invest in established neighborhoods and good school districts to minimize your risk.
Contractor · Denver, CO · Member since 2009 · 399 posts · 166 votes
13y
The national headlines are misleading. As it has been stated on here many times, RE is a local market. Many of the areas that appear to have this growth are also the ones that got hit the hardest. With the exception of North Dakota and Texas. Texas is a monster. Did the recession even come to texas?
Professional Builder just put out a nationwide map based on new construction closings last year and all these areas saw the best growth in new construction since 2006. California, Colorado, Nevada, Arizona, Florida and the Carolinas seem to be leading the pack. And then there is texas. Texas led the nation last year with over 44,000 closings on new construction where as Vermont trailed the pack with 5 closings. The next closest was florida with 24000 and California with 15000.
Washington appears to be doing better than most, but that is lead by Seattle and Tacoma.
Without typing forever, I can only rationalize that Texas is what it is because of the oil and gas industry. Create jobs and you have a healthy economy.
Contractor · Round Rock, TX · Member since 2013 · 767 posts · 389 votes
13y
Originally posted by Emilio R:
The national headlines are misleading. As it has been stated on here many times, RE is a local market. Many of the areas that appear to have this growth are also the ones that got hit the hardest. With the exception of North Dakota and Texas. Texas is a monster. Did the recession even come to texas?
Professional Builder just put out a nationwide map based on new construction closings last year and all these areas saw the best growth in new construction since 2006. California, Colorado, Nevada, Arizona, Florida and the Carolinas seem to be leading the pack. And then there is texas. Texas led the nation last year with over 44,000 closings on new construction where as Vermont trailed the pack with 5 closings. The next closest was florida with 24000 and California with 15000.
Washington appears to be doing better than most, but that is lead by Seattle and Tacoma.
Without typing forever, I can only rationalize that Texas is what it is because of the oil and gas industry. Create jobs and you have a healthy economy.
Austin got hit some, but not as hard as other areas. The tract builders definitely ground to a halt. Custom building cut in half, high end stuff not as much. At least in my little world that I work in. Oil and gas definitely helping other areas of Texas, Austin not so much. We don't have much to drill at around here and Houston has the refinery's.
SFR Investor · South Bend, IN · Member since 2013 · 342 posts · 56 votes
13y
Interesting. I agree the housing market is tending to follow the jobs market, where the job market has been picking up, the housing market has really followed suit. Seattle, Denver have had a lot of growth in the tech sectors and the housing markets there have become very competitive, office space vacancy is down, multifamily construction is growing and rents are up.
Some of the smaller college towns that I've looked at didn't have as large a drop as some of the major cities so have been more stable probably due to the economies and types of jobs there. But the job opportunities in other smaller cities will naturally be fewer, so probably a ripple effect will happen but not as large as what a bigger city's economy could support.
I think I am just going to buy in smaller areas, they are more affordable now and still have decent inventory without getting into high competition over properties that many of the larger cities are seeing now. They also have the potential to follow suit to eventually grow in value as many of the larger cities seem to be albeit at perhaps a smaller rate. Some of them are starting to see growth as the larger cities were 12-18 mos ago.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
13y
If you are buying in small towns on the edge of the city, pick cities that are growing and study the growth patterns. It often follows the highways. Pick an edge town that is next in line for fast growth ad development. Simply buy in the way of growth. Austin? Look at San Marcos or Cedar Park, for example.
I'm seeing some firming up outside of Dallas/Ft Worth, but not like the cities themselves or close in suburbs, yet. I'd want to be close enough in, so that the commute to DFW is reasonable. 45 minutes, max.
Developer · Austin, TX · Member since 2011 · 286 posts · 88 votes
13y
Jon Klaus, I have heard that the growth is being pushed out West in the Austin area. With the completion of Hwy 290, Dripping Springs is going to be getting a lot of attention. Buda & Kyle are worthy of attention, but San Marcos is not a good market and probably won't be for years. It is a city that is in it's own universe. It doesn't follow normal market trends and really doesn't follow any pattern at all. This is probably because of the large university there. I would be interested to hear if anyone else has thoughts on the outlying Austin areas?
SFR Investor · South Bend, IN · Member since 2013 · 342 posts · 56 votes
13y
Great advice, Jon Klaus, thanks! I'm looking at areas near any larger tech developments being built, as well as areas of larger redevelopment projects located next to established areas that show the potential for growth as well. I've also had luck in the past with college towns being pretty solid/stable and am trying to stay with areas with which I am familiar rather than trying to learn an entirely new marketplace.
The commuting factor is a good point as well, so I'll take that into consideration especially trains or other well-run commuting systems that serve the cities that bring people to and fro.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
13y
Readers, Jason knows Austin better than I do, so listen to him. Jason, I said San Marcos because it had the fastest population growth of any US city over 50,000 last year. 4.9% growth. Now, I know a lot of that was rhe student population, but that creates opportunity, too.
Contractor · Round Rock, TX · Member since 2013 · 767 posts · 389 votes
13y
Originally posted by Jason Grote:
Jon Klaus, I have heard that the growth is being pushed out West in the Austin area. With the completion of Hwy 290, Dripping Springs is going to be getting a lot of attention. Buda & Kyle are worthy of attention, but San Marcos is not a good market and probably won't be for years. It is a city that is in it's own universe. It doesn't follow normal market trends and really doesn't follow any pattern at all. This is probably because of the large university there. I would be interested to hear if anyone else has thoughts on the outlying Austin areas?
I agree that San Marcos is its own world. I lived there many years ago and it's a college/recreational town. Kyle/Buda growing rapidly, will be a Round Rock sort of market. But still a little far out to downtown Austin. Dripping Springs will depend on how the highway goes. Austin isn't very good about highway planning as we all know. Same with Lakeway, lots of new lots and roads, but still only 620, Bee Caves Rd and 71 running into 290 to get out, which affect Dripping Springs growth. Traffic is horrible out there. Cedar Park is good, but only so much room for growth, Leander/Liberty Hill lots of room, but no infrastructure to support growth in water/sewage. The toll road that way will help a lot and will be poised for middle class growth in next few years. Georgetown primarily old school and Sun City there, they don't put up with a lot of crap there and never have, so I don't see huge growth. Jarrell kinda far out. Round Rock landlocked except in northeast side where growth is happening right now. Lots of large apartment complexes in last 5 years, getting more run down. I know cause I live in Round Rock, the quality of people has gone down. Hutto no infrastructure like Liberty Hill area, but poised for growth, just run poorly. It was a very small town and has experienced great growth, just gotta see how they handle it. Lots of room to grow. Taylor/Elgin/Manor dumpy towns. Pflugerville in growth state, but they seem lost. Landlocked to apoint, they can go across toll 130. Just doesn't seem to have good leadership, lots of squabbles about water.
I guess it really depends on what your goals are. Who are you marketing to or what do you want to accomplish. The markets are different. Its my opinion from what I see driving around everyday.
San Diego, CA · Member since 2008 · 59 posts · 46 votes
13y
Sorry, long day. :) I've been very impressed with New Braunfels, especially the closer one gets to the new hospital being built. This town appears to be a job magnet. Much of the inventory is relatively older, so newly built product isn't really replacing anything. Not a bad situation for folks wanting to have skin in the game.
Plano, TX · Member since 2013 · 22 posts · 4 votes
13y
What about Waco? I know the surrounding areas are flourishing eg., China Spring, Hewitt and beyond--and around the University. The Baylor U. bubble is tight and expensive IMO.
There are a lot of SFH that are inexpensive (rents are lower too). There are some good old homes that need rehabbing--think Craftman style in the 1920's and 30's. There are some smaller homes in the 1940-50's too. They are in the aesthetically-challenged areas with mostly good people...but lower income... some immigrant populations, from Mexico. I am not saying to bring the SFH to the full historic potential (mucho $), but to clean min/moderate changes, eg., cosmetic reno--paint, flooring, maybe kitchen redo's--scared of electrical, plumbing.
But I worry about is it worth it? For what I can buy for a decent home in Collin County, I could buy 2 or maybe 3 in Waco--but would need to do DTI to see if it is worth it.
Do you dabble in areas described?
Developer · Austin, TX · Member since 2011 · 286 posts · 88 votes
13y
Forgive me, I am always in "flipping" mode, so San Marcos does have the buy-n-hold potential, but the growth is definitely the university. It is just not a good town for family. It has some of the worst schools in Texas. My wife and I met there, each had our own businesses there and couldn't escape from that town fast enough when we grew up and wanted to settle down. I personally wouldn't do buy-n-hold there because your potential renters will be college students and Texas State college students are extra hard on properties I hear.
Developer · Austin, TX · Member since 2011 · 286 posts · 88 votes
13y
Brian Mathews, thanks for your thoughts on the outlying areas. Supposedly they are getting ready to completely re-work the Y in Oak Hill and make 290/71 a fly over. That would make anything out that direction more appealing.
Developer · Austin, TX · Member since 2011 · 286 posts · 88 votes
13y
Amie D. I think it is a negative in that specific town because it dominates the town. It is a very transient town. Few people "settle down" there. Also, San Marcos is not really close enough to Austin to be an "Austin" suburb and too far from San Antonio to be connected there. If it wasn't for the university, it would have very little appeal.
Contractor · Round Rock, TX · Member since 2013 · 767 posts · 389 votes
13y
Originally posted by Jason Grote:
Brian Mathews, thanks for your thoughts on the outlying areas. Supposedly they are getting ready to completely re-work the Y in Oak Hill and make 290/71 a fly over. That would make anything out that direction more appealing.
I hope so. I drove through there last week. What a friggin' disaster. No major construction there yet. It's all west of there. So I'm not holding my breath, you figure the disaster that is there coupled with the construction mess will be horrible. Once they start, you have 1-2 years of mess depending on the magnitude of the project. We'll have another recession and come out of it before anything gets done with the way Austin moves. They'll find a cricket or lizard and have to do 5 year environmental study first.
Austin, TX · Member since 2011 · 119 posts · 46 votes
13y
Regarding San Marcos, it may not be a good market for flips, but the large student population supports a very healthy rental market. I think San Marcos is a good place for an investor looking for long term cash flow.
SFR Investor · South Bend, IN · Member since 2013 · 342 posts · 56 votes
13y
I have found Universities can be a + or a -. If it is an area where a lot of graduate students or professors live, that is OK, and their funding is guaranteed by the University, and they tend to be long term renters. I've found undergraduate areas have a constant supply of renters but a high turnover rate, more propensity to break leases and can cause a lot of damages.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Originally posted by Jeff Clawson:
Regarding San Marcos, it may not be a good market for flips, but the large student population supports a very healthy rental market. I think San Marcos is a good place for an investor looking for long term cash flow.
Please Jeff, keep San Marcos a secret! There is no reason to mention the area and mess it up by adding more competition by investors! Besides it being the greatest tubbing site in the country, there is a nice little lake near by for water sports and fishing, so let's not give it all away. BTW, they still running that glass bottom boat near the college?
Undergrad tenants, jr, sr, are fine as you put mom and dad on the lease as guarantors. They also finf thier own roomies that you qualify, then the rotation begins, one leaves, the roomie steps up, they find a new roomie and it continues. The problem I had was not vacancy, it was a decimal %, the problem is getting in for maintenance with it being occupied.
RE is local, a better, well based economy that is diversified will always be a good bet. :)
Dallas, TX · Member since 2011 · 308 posts · 59 votes
13y
Originally posted by Jon Klaus:
I'm seeing some firming up outside of Dallas/Ft Worth, but not like the cities themselves or close in suburbs, yet. I'd want to be close enough in, so that the commute to DFW is reasonable. 45 minutes, max.