On 21 Aug 2011
Austin Housing market,
When I first arrived in Austin in 1997 it was a boom year -- home of the Dellionaires. If you could say the word 'computer' or knew a friend who could, you were making pretty good scratch. Lot's of people I knew were doing very well -- even the unabashed phonies -- many of whom have never done as well since the Dot Com bust. Despite all this easy money going around, however, residential real estate was NOT the hot commodity in Austin then like it is now.
The non-disclosure laws in Texas makes tracking sales histories tricky, but I've kept close tabs on certain areas for several years now. FWIW, a friend sold the small SFH I rented from him for not even100K back in '98. It sold again in 2004 for over 200K. It's on the market today, after some paint, a modest add-on and new tile, for over 400K. It recently fell out of pending - an increasing trend this summer. It's an ugly house, but it's in Zilker Park; it was in Zilker Park in 1998, too.
The local COC is very aggressive at hyping Austin as the epicenter of the TX Miracle...er, myth. I mean miracle...
People *want* to believe, though -- especially Californians seeking a simulacrum of SF/LA. There's butt-loads of inventory for sale as savvy Austinites have been unloading in the last few years. Sellers comments on various message boards are tinged with either incredulity or smug satisfaction.
As for the bubble, Austin was not immune - it just lagged the initial run-up in prices as seen in the sand states. There were weekly caravan tours being organized at one point by a local real estate team for out of town speculators, citing Austin as "the next hot market!" It was also around this time that the condo towers downtown started sprouting, and an increasing number of granny shacks were being leveled in order to build big Tuscan Garage Mahals and boxy neo-modern duplexes with lots of up-lit agave and corrugated metal fences (incidentally, the textile du jour in Apartheid-era South African slums).
Austin is also lagging the subsequent crash. All of the incentives designed to put a floor under the collapsing housing market in the hard-hit cities provided Austin with something of a contact high it didn't need. Now that the buzz is starting to wear off, you're starting to see homes languish on the market, in some instances for over 200 days, falling in and out of contract with several price cuts each time. Helping to keep things propped-up here for now is the good old eight-grad-students-to-one-lease/Homeaway rentals, and, of course, the aforementioned waves of innumerate Californians.
I like Austin, but I do worry for it. I was frequently on contract in Central Florida during the peak housing bubble years, and I've witnessed so many of the same dynamics playing out here the last few years as there that it's alarming. On 27 May 2011
Should we stay in the Bay Area or move somewhere cheaper?,
Hi Edvard: Prices for "non-cookie cutter" SFHs in decent areas of Central Austin (good school district/close to downtown/not in a flood zone) are NOT going to be $150-200k. You could probably find a little granny shack far North that someone's tarted up with some bamboo flooring/Ikea cabinets, but even for that you're easily looking at 250-300 for about ~ 1000 sq ft and about 6K in property taxes. It depends on what your expectations are, to be sure, but in the above price range, you're looking at a glorified bro squat.
Also, keep in mind that property taxes in Austin are notoriously steep, thanks to TCAD's 10% maximum annual increase rule -- that's even if your property didn't actually rise in value. You can battle TCAD, of course, but it's a hoop you'll jump through ever year.
Finally, just about one out of every three Californians has had the same exact idea as you are presently entertaining; 'I could feel rich in Texas' - which has had a very perceptible impact on the market the past several years.
Oddly, I know a guy who just sold his place to a Californian and moved back to Asheville after twenty-five years in Austin, due in part to 120 days straight of 100+ degree weather the last couple of years.