All Forum Posts by: Bryan Noth

December 2021 Market Update for Austin, TX MSA

December 2021 statistics have been released for the Central Texas Housing market. There was an increase from the preceding month and a 30% increase from the preceding year for the MSA.

The City of Austin saw a change in median home price from $540,000 to $555,000, a month to month increase of $15,000 and a 19% increase from the previous year. The Austin-Round Rock Metropolitan Statistical Area saw a change in median home price from $470,000 to $476,700, for a month to month increase of $6,700 and a 30% increase from the previous year.

The following infographics and data is courtesy of the Austin Board of Realtors:

Housing inventory decreased from 0.8 months to 0.6 months for the entire MSA. The City of Austin saw a slightly stronger drop down to 0.5 months. That equates to only 15 days of housing inventory. The five county region saw a 10% decrease in new listings compared to December of the preceding year and a 26% decrease from the preceding month.

This is exactly what housing inventory was a year ago for the MSA. However, the amount of new listings coming to the market is less. This data comes just after the jobs report for the Austin MSA was released which saw a record breaking announcement of jobs created, jobs pledged, and not to mention a record number of business relocations. Both Apple and Tesla had indicated massive hiring plans for the beginning of 2022 and Tesla’s Gigafactory is slated to begin production any day now. Samsung, Meta, and Amazon have also made statements indicating additional hiring sprees for the area. Quite recently Meta secured largest commercial office space lease in Austin’s history in the CBD and Amazon grabbed another entire tower in the Domain for office space.

Growth has never been stronger for Austin, and demand has never been greater. It is worth noting the market is already playing out from critically low levels. From a statistical perspective, housing inventory would have to make a 1100% overall increase to become a balanced market. That is a correction of colossal proportions. The shear enormity of the disparity there essentially dictates current market trends enduring.

Disclaimer: The information provided here is for educational purposes only, past performance is never a guarantee of future performance.

Recent news on this project citing that North Carolina is now out of the running for the potential development from Micron, strengthening Central Texas' potential to snag this plant.  

The article cites that the company is strongly considering the Austin area.  Stay tuned everyone

Article link:

https://www.bizjournals.com/au...

With the dust settling from 2021 the composite data from the year is beginning to emerge.  The Austin Business Journal did a recent article on the extent of job growth for the MSA.  

Some highlights from the data sets below:

• 26,697 new jobs were pledged in 2021.  This is not reflective of Musk's recent tweets announcing 20,000 jobs for the Gigafactory alone.  The original pledge from Tesla was 5,000 direct jobs.  
• 90 companies announced corporate relocations to Austin with only 36 to have completed the relocation so far
• 138 companies announced they would be expanding their presence in the MSA
• 275 additional companies have expressed a sincere interest in relocating to Central Texas

These numbers strongly indicate another year of impressive growth ahead.  

Article link:

https://www.bizjournals.com/au...

@Cham Vee you can combine properties for a single loan but it will fall into either a portfolio loan or a commercial loan, which typically have higher interest rates, adjustable rates, or a balloon payment.  

Currently, conforming conventional loans (usually the best rate and terms with these) do not cover multiple properties at once.  

@Michael A. a loan officer will have the best answer but I believe you may run into an issue getting two simultaneous federal loan products (VA and FHA) for a primary residence in the same area.

FHA is powerful tool for the multifamily route because it allows a significantly lower down payment. However, there are FHA loan limits and if you are looking in Austin that can restrict your options, especially in the duplex arena. Also worth considering the MIP and PMI when running your numbers.

As for the competitiveness of the FHA offer (In Texas, and specifically Austin) there are some weaker points:

• You cannot put any kind of an appraisal waiver, which means over asking or even asking price offers grant low confidence
• The federal loan products have stricter property condition requirements
• Conventional usually means they have more cash to bring and sellers may find that more reassuring

These are not deal killers, but it is certainly a disadvantage. 

Thanks @Lucia Rushton!

@Ravi S. To answer in reverse order, over supply is not on the horizon.  The Austin MSA has a severe housing shortage and the rate of people and business relocating here is keeping the inventory critically low.  Even if the rate of construction doubled overnight it would take years to stabilize.  

The rent to purchase price ratio is typically not as appealing in year one.  I would highly encourage running analysis out for at least 10 years (BP calculator is great for this) and the vast majority of the time by year 3 the returns are solid.  This is expected in a growing market.  Austin is not often identified as a strong cash flow market play.  It's a growing market and many folks believe it will continue to grow so the long term play (3+ years) is typically the most appealing.  

I would be curious to see your numbers on your property analysis on cash flow.  The $1600 : $2500 cost ratio sounds off for those areas.  I would expect it to be closer to $1900 : $2100 but it is very dependent on what numbers you plug in.  Do you have a cash flow vs cost analysis to review?

@Beth Zetzman I recommend asking your agent first to get a general idea.  I mentioned a few above that I point out to folks when considering a highly distressed property.  After that it honestly comes down to the lender and the appraiser.  If the appraiser is diligent they can catch more, such as an addition with permits (happens frequently).  If they do a drive by appraisal or miss a deficiency the lender unfortunately lives in true ignorance.  

This is much more stringent with FHA and VA loans with the property appraisal and condition report, they will require the deficiency to be remediated prior to closing.

@Kayde C. it may bother some folks but likely won't be a major career obstacle.  In the end, if you bring professionalism and excellence to your craft people won't care about the tattoos which is how it should always be.  

@Beth Zetzman

Just to clarify, when you say:

Is the house insurable in its current state?  A lender has specific requirements for being able to give a loan and a general guideline is that the home has to be insurable.  Common requirements are that there home has to have functioning roof and walls, utilities, toilets, etc.  

@Patrick Thomas Dickinson thank you for sharing!

 $718 a year for insurance is amazing