patrick.net

Austin has been expensive for years. Even in the late 90s Austin was expensive because it was Silicon Valley II with all of the tech companies. They called the Southwest flights from SJC to Austin the nerd bird because of the tech people going back and forth on a regular basis and even today it's mostly full flights. SWA still flys from San Jose to Austin every few hours every day even after the tech bubble of a decade ago.

I'm down here in San Antonio. Yes, Austin is a bit different from the rest of the state regarding RE. I think most of it is driven by Realtor-Speak. And we know what scumbags they are.

BTW, a good place for BBQ in your area:

http://www.southsidemarket.com/

I hate all the strip malls in Texas. It really makes areas look tacky.

My wife and I have been sort of thinking of relocating there and we actually took a trip there to check it out 2 years ago. I also tried to get a job there when I lost my job. So here's my limited impressions. Hopefully people from there will answer your post since mine is very limited since I don't live there and have only visited. So take my opinion with a grain of salt.

1: We were sort of surprised at how expensive a lot of the central neighborhoods were. This was 2 years ago and we were seeing 400k-600k houses in some of the cuter, older neighborhoods. That took me aback because property taxes are like 3%, which means you'd have this 12k-15k tax bill due every year. We did run into some people from South Austin who claimed they bought a house for 120k 2 years before. I'm not sure where, but they said they didn't have kids and didn't care about schools so I'm guessing it was in an area that wasn't as desireab;e school-wise or something.

The general impression I got was that most of the areas I'd want to live in are expensive and definitely very pricey for Austin standards. On the other hand the suburbs like Round Rock and so on were a LOT cheaper. As in we saw large 2 story homes for 150k or less. I didn't care for most of the suburbs we saw. Sort of bland and generic.

2: I had no luck finding a job there. Granted I was doing it from California but still- the response rate was abysmal. Most were paying 50% or more less than what I make. I work in tech and am well-qualified. Since Austin is renown for being a tech city I thought I'd have better luck. People I've talked to online say the job market there is very competitive and difficult. If I move there it would only be with job in hand. Lesson learned.

3: The summers.... They get HOT. Or at least that's what people from there told me. I am from NC originally so I can deal with hot summers. But they were talking about 100+ degree temps for weeks on end. That sounds a bit miserable but I guess I could get used to it.

I'm starting to have slight second thoughts about Austin. It seems like it very much wants to be a cool, hip city. A lot of people apparently believe it because a lot of people are moving there.

We love living in Austin. We are just surprised at the cost of RE. Lots of people who move here and are making full price offers. It is somewhat annoying and we are always shocked that houses go for the overpriced asking price.

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...

http://www.ritholtz.com/blog/2011/08/the-texas-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.

Thanks AHB for the insightful information and time line. So, I guess we should wait it out and see what happens here. I really hope prices drop because they do seem inflated right now.

We've been here 31 years. The Austin market has it's own unique cycle patterns - usually delayed from national trends. A problem for those of us who liked the older, smaller Austin is that Universities keep cranking out grads who prefer to stay here rather than move "back home" to DFW or Houston. The music scene is also another growth segment. Housing has remained strong in part due to the rent costs relative to buying. Influx of people = increased demand = irrational long term decisions. As someone else mentioned, property taxes are where the state raises most of its funds (2 - 3% annually of a homes actual value). Real estate development costs are high in some parts of town due to environmental restrictions and the fact that utility companies must trench through rock. Lake Travis and Westlake schools are a safer bet. Patrick's readers are aware of the bigger picture and the huge overhang of international debt that will avalanche in due time. We just sold our big house and are now renting as a defensive measure - despite the fact that our rent costs are relatively high. FYI, 0% down loans are still booming is the suburbs here.

The Austin situation has me just a tad nervous to be honest. The only reason we would ever move there is:

A: affordable housing
B: Job opportunities.

The more I read about it and after having visited there and spent months trying to land a job there when I was unemployed with no success I am not so sure its such a great place as of now. The biggest issue is the property tax situation. As I see it anything over 200k would mean you would be on the hook for some serious taxes every year. It would appear that almost all of the areas we would want to live in are now well above that price level. If you throw in the taxes a 300-400k house might as well be a 500-600k house in California.

Secondly, I can't put my finger on it but there seemed to be this sort of manufactured vibe there when we visited. It was like all the hip and cool people from wherever were really, really trying to make it into whatever hip-n-cool place they just moved from... Brooklyn, Chicago, SF, LA... etc.

Anyhow... I'm just not sure. If Austin simply turns into San Francisco Texas then forget it. We'll head somewhere else.

If the salary for jobs is only about 1/2 that of California, how can they maintain 500-600k housing prices (especially with a 3% property tax rate)? (1) Do all industries pay half or only the one you were looking for a job in? and (2) Was the neighborhood mentioned like the "Beverly Hills of Austin".

We spent 5-6 days driving around Austin. Keep in mind that's not long enough to give an accurate description but from little I saw it seemed that about 90% of Austin was made out of gigantic subdivisions and tract housing. These were anywhere from 5-10 miles from the city. Those were usually pretty cheap. We saw an awful lot of decent houses- some with pools and 2 stories- for under 150k.

On the other hand if you wanted to live in a cool old historic neighborhood or one that was closer to town you had to pay a lot more. There were definitely some neighborhoods that smelled and looked like Palo Alto or any number of other Silicon Valley areas and had the high prices to boot.

Someone else mentioned the connection between San Francisco and Austin. I would agree with their assessment: A lot of California "refugees" cast Austin as this sort of Bay Area of Texas. That's a bit of a stretch after having seen it myself- again because most of the area looked to me like anywhere USA, strip malls and housing developments galore. Its just that the core of the city appears to be getting gentrified. So what it seems to me is that if you're trying to get a "poor man's version of California" -as in you can't afford the Bay Area and think you can replicate it in Austin, well too bad because many others had the same thought and now its for all practical purposes just as costly.

The money has to come from somewhere and since Texas has no state taxes, the property taxes are higher. In CA you pay 10% state income plus property taxes.
Although the prices in Central Austin are high, it is still not as pricey as central Bay area.

You just moved to Austin and are feeling a bit gypped because the housing market is booming. Austin wasn't listed in any of the online real estate sites before you moved so you could check the prices?

I will say that I have noticed that there seems to be an awful lot of people who seemingly move to Austin- site unseen- mainly for what they perceive as cheaper housing. Some without a job. I'm not saying the OP is such a person but from the various blogs I read I can't tell you how many people have written posts explaining some crazy plan of moving to Austin- without a job and the intention of immediately buying a house- site unseen. Perhaps its just where I'm reading, but if this is widespread I'd wonder what kind of impact this would have on the situation there: Tons and tons of people looking for the same jobs they failed to get prior to the move. That would mean lots of competition for fewer positions.

Lookin: I wouldn't feel "jipped" about the housing market in Austin relative to other places. If you feel like you might not be in Austin for very long, or sense that the market is too pricey and ready to crash, why not rent for a while? Austin does seem to be wickedly expensive (by TX standards), and I've heard people talk about a bubble there... still, it's held up over the years that I've been watching it. At the end of the day, it's always going to be anchored by UT, the State Capitol, and people who love the pot-smoking country singer vibe. With it's parks, trees and lakes, it does seem to me to be one of the more liveable places in TX, and people who live there are fiercely proud of their city. FWIW: When we moved to TX, we chose to buy because the rental costs in our area are higher than costs to purchase. We bought the smallest, cheapest house in a decent neighborhood. We live 50% beneath our means, and sock the difference away into saving. I just got back from a trip to the Bay Area, and based on my experience, just about everything is cheaper in TX (gas, groceries, eating out, etc), making it easier to save. Don't feel jipped! We see ourselves as lucky... just buying time in the slow lane, until the housing market on the west coast becomes more sensible. Good Luck!

edvard2 says

Secondly, I can't put my finger on it but there seemed to be this sort of manufactured vibe there when we visited. It was like all the hip and cool people from wherever were really, really trying to make it into whatever hip-n-cool place they just moved from... Brooklyn, Chicago, SF, LA... etc.

You could say the same about SFBA, you have migrants who moved from NT, NJ, Boston, Philly and Connecticut making the same comparision. Strip malls are common in CA, Places like 5th Ave in NYC, isnt and shouldnt be.

thomas.wong1986 says

You could say the same about SFBA, you have migrants who moved from NT, NJ, Boston, Philly and Connecticut making the same comparision. Strip malls are common in CA, Places like 5th Ave in NYC, isnt and shouldnt be.

I would agree with a lot of this assessment. I would say that at least 50-60% of the people I meet in the Bay Area are from the East Coast- in particular NJ, MA, and NY. Most of the native Californians I've met live far out in the burbs or in rural areas and remind me an awful lot of people from back where I'm from in NC.

edvard2 says

Secondly, I can't put my finger on it but there seemed to be this sort of manufactured vibe there when we visited. It was like all the hip and cool people from wherever were really, really trying to make it into whatever hip-n-cool place they just moved from

I feel like this about SF, only, that they are trying to make it the opposite of the backwater they moved from. A lot of it seems manufactured sometimes, and it's reflected in city politics too which seem artificially activist over nonsense items. It's a "zeal of the converted" sort of thing sometimes. If you're rich in SF and want to engage in NIMBYism, it's quite easy because the activist legions are easily fooled.

edvard2 says

I would say that at least 50-60% of the people I meet in the Bay Area are from the East Coast- in particular NJ, MA, and NY. Most of the native Californians I've met live far out in the burbs or in rural areas and remind me an awful lot of people from back where I'm from in NC.

I would have limited this belief to outside of SF and perhaps some trendy areas. More often people outside of SF seem more cosmopolitan/sophisticated than people from inside SF. It's far more likely for someone within SF to say "I've never had [some ethnicity] food" or "I don't like [some ethnicity] food" or "oh really, people of [ethnicity or religion] do that?" vs. outside of SF, even though SF has tons of ethnic food and a decent foreign-born population. The people who are from more metropolitan areas just want to find a bar that supports their favorite sports team, but don't feel as strongly the need to be so activist and tend to be more cultured anyway.

I remember years ago I was reading a post along these lines on the housing bubble blog and someone from Austin basically came out and said that Austin had already been "ruined".

I think this sort of brings up a bigger topic in general which is what has happened to most major US cities, which is that they've more or less become gentrified- aka- the playgrounds of the rich and wealthy. SF, NY, Boston, and to some extent LA and others have all turned into these sort of cities. I've personally never liked gentrification and the phony feeling it gives to a place ( even though I will say I do like my good food and microwbeers) but now that we're talking Austin I think it along with other 2nd-tier cities like Raleigh, Nashville, and a few others are now starting to become overflow cities for this very same kind of encroaching gentrification. I'd argue that gentrification has a way of mimicking whatever charm developed naturally in any given place by sucking the soul out of it. SF had that happen a long time ago. Austin- from what I could see- very much seemed like it was heading that way.

Well, I've lived in Vancouver BC, Seattle, Montreal, Toronto, Marin, San Francisco, L.A., San Diego, Encinitas, Hawaii and probably a few other places. I've been in Austin for over 10 years. My take --

First of all, there are many different areas of 'Austin'. Round Rock, Lakeway, Central, South Austin, Eastside, Northern 'burbs, etc etc. The market will be quite different depending on where you look. And where you look will typically depend on jobs and possibly school districts. School districts are a BIG thing in Texas for those with kids. And taxes and prices are part of the territory in the better districts. However, if you are savvy there are deals and up-and-coming areas. You just need to know the area.

Central Austin is charming, gentrified, and hopelessly expensive for most. I bet a lot of it is due to California-cash-and-run. But you are 'close-in' -- to the University, Capitol, downtown, Whole Foods, Central Market. Hardly worth the prices there though. It's not like professors can afford to live there anymore.

Up north there is more tech-stuff happening, and all sorts of dull and functional 'burbs. Depends what's important to you. It's functional. The Indian's love it. So much nicer than B'lore. It 'just works'.

The towers downtown are close to 'the action' and the beer & pot & fun -- and the University to some extent. And Town Lake. Not bad.

Further out you can find some real deals in the low-end of the Eanes School District. Lake Hills is just starting to be discovered and neo-Moderne box houses are being built on vacant lots. Bee Caves has gone from Jim-Bob's Bar-B-Que and nothing else, to a huge Galleria and all the Big Box stores -- and it is further out from Austin than Lake Hills. Then there's Lakeway. A funny mix of plaid golf pants republicans and grizzled biker hippie hollow crowd. Generally pretty conservative though.

The eastside is becoming gentrified, at least near I-35. If you're not afraid of Spanish speakers it might be your thing. Not as bad as East Palo Alto. Some nice restaurants are moving in. Neo-moderne is all over.

South Austin is hipsters and tattoos. You can probably get high just going for a walk around some tucked-away neighborhood on a Saturday night and breathing deeply. Austin school district is not as well liked, however.

Round Rock is Dell-burbs. McMansions and boredom. Stepford wives. Not for me.

In general, aside from Dell-Ikea-Round Rock, the city is growing west, towards the lake. Soon it will reach Llano, no doubt. So I would put my bets on that side of town.
Especially since the best school district is out that way.

Yes, property taxes are high, but there are no state taxes to speak of. Not 10% like California. On the other hand there are a few gotchas you will never hear about until you've been here awhile.

1. The weather is really god-awful hot in the summer. And getting worse. Really. Weeks on end of 104+ cooling to 85 at night. Never cool. A/C on all the time. Don't buy a large west- or south-facing exposure. They are California sucker-houses.

2. There are many more nasty critters. It might look like the California hills, but if you are outside of town, teach your kid not to mess with snakes. Scorpions, cactus, oh well. But nothing is worse than cedar fever if you or yours gets it bad.... and you don't usually know if you're going to get it until you've been here for typically 5 years. Then your immunes system goes nuts and you can be a basket case. I know people who leave town in January-February-March. Other people who have checked into the emergency room at 2:00am because they can't breath. Not pretty.

3. There is nowhere to 'go'. Dallas/Houston are 3 hours away. And are they 'fun'? Big Bend is 10-hours. One way. That's a 4-day weekend and a long-assed haul both ways. The gulf is muddy. Nothing here like California where you have cities, mountains, Mexico, desert, ocean, forests, usually not too far for a good time. There is nothing like that in Texas. A few swimming holes a long ways out there somewhere.

I am here because the high-tech is real and solid. But as some have mentioned hard to break into. The secret there is to use the local contract houses to get your foot in the door if high tech is your thing. Don't expect to get hired from a resume online. Get in the door with 6-month contracts that might/might not lead to a f/t job. Eventually you will become a local.

All in all, even though I am still here, I would have preferred to downsize and stay in California. There is much more 'todo' there within a few hours drive. You can drive on a freeway all day and not leave Texas. And not see any place you would like to stop. There's really not much to do in Texas except work, eat Bar-B-Q, drink beer, and listen-to or play music. Maybe that's enough for some.

It is however fairly prosperous. The music scene has softened and largely eliminated overt racial nonsense, especially among the young. But it's still there if you go to the high-end west-side developments. If you're black, you better be Tiger Woods -- or his brother. And they butcher Spanish. On purpose. They have the Alamo and they remember it. 'Guadalupe' is pronounced GWODDALOOP. So -- cheaper than California, but definitely not as much to do. Unless you're a musician. Weigh it up.

Whatever you do, do what you love to do. Then find the place.

Rexall says

So -- cheaper than California, but definitely not as much to do. Unless you're a musician. Weigh it up.

You hit the nail on the head with your closing paragraph.

Lived in Austin for 2 years. If you like architecture it is a joke. A couple teeny tiny sections of town are cool - Hyde Park for example - everything else clearly built in the 50s, 60s, 70s, 80s.

The most important thing: There is. nothing. to. do.

I found myself going to the same 5 restaurants and bars over and over again. It is just an overgrown college town.

The one thing that was great about it was the outdoors: great mountain biking and hiking right in the middle of the city. Great parks nearby. Loved the boating/swimming. Of course since all the water is gone I suppose that is not available anymore. Saw a video recently - Lake Travis is all but dried up.

Boring place. And, yes, the very few few cool places to live a priced sky-high. (I rented an apt at 6th and Lamar when I was there).

I'd never move back to Austin. (sorry, didn't mean to make this an Austin-bashing post).

Rexall says

All in all, even though I am still here, I would have preferred to downsize and stay in California. There is much more 'todo' there within a few hours drive

What is it you are looking todo? I don't know anything about Austin, but I found plenty todo when I lived in the Rio Grande valley (aka north mexico) and Oklahoma city (aka north texas, don't say that while actually in OK). Just not the same things todo as when I lived in places like Portland Or, NY, or the south of France. Life is what you make of it.

I'm also curious about the gulf being muddy. I lived 15 minutes from the gulf, surfed or windsurfed several times a week and never saw any mud.

bob2356 says

What is it you are looking todo?

I agree with that as well. When people say "There's nothing to do" Well what exactly do you want to do?

Needs are basic just a supermarket/hardware store. Wants get more specific. Obviously if someone wants sea air they should live by the coast. If someone wants a quiet area it might not be a good idea to live in a city.

Not everything is really advertised. There's plenty of preserved forests where I live but there's no ads whatsoever for them and the parking for some of them is behind banks (who parks there but employees?) and a sliver of a opening by a road that is 45mph..few see it.

The way I see it people can do a number of different things on a locality.
Shopping - not that hard to offer..if something is unique certainly that can be worth a drive
seasonal - this goes both ways. snowbirds go down south for the winter but up north we get people to see the leaves
activity - this varies all over the place. Can't go gambling where there isn't any, can't go skiing where there is just flat land, can't go apple picking where it is a desert etc

Places that tend to change I think fare better than others. A series of small clubs where the venue changes at least once a week will do well. But museums that pretty much don't change at all lose the value after one trip.

I know of places that are filled with high end shops but they are pretty damn boring. What might be considered beautiful to others I just think is a bore as well. Some are attracted to water and beaches but I take the whole Bill Hicks routine "it's where sand meets water"

Ahh... this topic has come back into the light. I was sort of thinking about Austin today. Why? Because today in the east Bay it was in the mid 80's. In other words, scorching for us. If you're not used to it like us- absolutely miserable. Then I thought about the fact that its been 100+ in Austin for months now. Plus there are lots of wildfires.

I remember I used to go on a few relocation sites and the Austin site was very popular. Lots and lots of Midwesterners and east coasters just chompin' at the bit to move to Austin. Their attitude was that surely the scorching weather was better than frigid winter weather.

I wonder if some of them are having second thoughts...

Rexall -- great informative post. Some points I'd like to add here:

Property taxes: very high, and are set to increase next year. All properties are assessed annually at a minimum of 10%.

Now, it is never not uttered in the same breath that there are no state taxes, but there aren't any state income taxes in Florida, Washington, Nevada or Tennessee either -- and none of these states have such exorbitant property tax rates. As well, they don't have an 8.5% sales tax like we have. Come to think of it, if you're situated right in Washington, you can live without any income tax and shop in Oregon to avoid sales taxes. Nifty.

Racism/intolerance: I have to say, this kinda shit really does not fly here -- at least not the corners I frequent. Black dudes wear cowboy hats and Tejano music can be heard pouring of out cars in even primarily white neighborhoods. Hell, man, Bill Picket was from Taylor! When Obama visited for the first time, he expressed surprise at how much he enjoyed it. It's my understanding that most of the white flight was concentrated to the West Lake Hills area, leaving behind a pretty vibrant urban core.

School districts: While UT is an excellent University, comparing one public school to another in a state like Texas just seems silly. It's Texas, folks...private school or home school.

http://wwrn.org/articles/35991/?&section=miscellaneous

Weather: It is definitely getting hotter and drier. I almost wonder if we aren't witnessing the beginnings of a total ecological tide change here toward even more of a desert climate. We're also the most flash flood prone city in America and are overdue for our ten year flood, which I don't see mentioned much.

Things to do: This I don't get. There's buttloads of things to do and places to go where you can stuff your face with food and fancy liquor. Not to get into a turf war, but I find SF much, much more dull in this regard.

Architecture: Yeah, nothing good happened architecturally in the 50's or 60's. Come on!

I will concur, however, that Austin is not terribly photogenic in this department. Even the bungalows are of the more modest Sears Roebuck DIY Kit variety. Nothing like Palm Haven here. Worse, a lot of the Neo-Modern crap thrown up everywhere the last five years looks to be contrived by a bored kid playing around in Google Sketchup.

Lots and lots of Midwesterners and east coasters just chompin' at the bit to move to Austin.

In my experience, most of that chompin' comes by way of Californians and New Yorkers who're scrambling for a plan B after having moved to SF/LA from the Midwest/east coast and realize they can't really afford it.

I guess in the end, everyone's looking for that perfect bowl of porridge. If you don't like yours fiery fucking hot, then don't move to Austin.

That's because many have no understand of how markets work, so they view permanent appreciation as entitlement, since that's how RE brokers sold it to them.

FortWayne says

That's because many have no understand of how markets work, so they view permanent appreciation as entitlement, since that's how RE brokers sold it to them.

Quality Auto Repair Since 1979

Yep,believing crooks that are screwing one in first place is not a sound financial decision.