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Buying vs. Renting, August 14, 2014

buying or renting 1

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August 1, 2014, Texas Assoc. of Realtors

Why a higher offer is not always better

If you received two offers on your house that were $5,000 apart, you should take the higher one, right? Not so fast.

Sure, money plays a huge role in your decision to accept an offer, but it shouldn’t be the only one. Here are some other questions to ask:

Does the buyer have the money?
Without cash or a letter from a lender, your buyer may not be able to afford the price he’s proposing. Your Texas REALTOR® can help you tremendously by making sure that anyone who places an offer on your home is qualified.

How much earnest money is included?
Earnest money is an amount a potential buyer will put towards the sale in advance of the closing to show he’s entering into this transaction in good faith. A high amount of earnest money usually indicates a serious buyer. If the transaction closes, the money counts toward the downpayment; if it doesn’t close, the seller in some circumstances gets to keep the earnest money.

When’s the closing date?
Determine if the timeline for the transaction matches your schedule—you and the buyer may have deadlines that don’t mesh well.

Is the buyer asking for anything unusual?
Buyers can put all kinds of things in an offer. They can request an option to terminate, ask for repairs, see if you’ll leave the appliances, and make the offer contingent upon the sale of their current home. Your Texas REALTOR® can help you decide what is reasonable.

It’s a wonderful feeling when someone presents you with an acceptable offer for your home. Just make sure you understand all parts of an offer, not just the dollar signs.

Legal Disclaimer: The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on TexasRealEstate.com. Any legal or other information found here, on TexasRealEstate.com, or at other sites to which we link, should be verified before it is relied upon.

 

January 30, 2014:     Interesting Austin Area Facts (Facts provided by Austin Title & the briefing by Metrostudy)

Population & jobs:  There are 150 people moving to Austin every day.  We double our population every 20 years. Austin will add 30, 000 jobs this year and 30,000 jobs next year.

2013 resale market:  In 2013; 30,ooo closed homes & 7,000 listings. That is a 2.8 mo supply (anything under a 6 mo. supply means we are in a seller’s market).  Home price appreciation is 10%.

New home market:  annual starts 9,400 up 17%, annual closings 8,886 up 27%, Kyle/Buda had the most starts, 2nd Cedar Park/Leander east, 3rd Pflugerville & Georgetown, 4th Cedar Park/Leander west.  Most new homes sales in the $200K-300k price range.

Vacant Lots: There were 13,670 vacant developed lots as of Dec 31st 2013. This is a 17.5 month inventory. There were 8200 new lots delivered in 2013.

There are 6700 lots under construction; most in Pflugerville, S Travis county, Georgetown west, Georgetown east, Kyle Buda, Cedar Park/Leander west. Forecasted annual starts 2014: 10,771 -15% increase -demand is there but limited supply makes that forecast the best case scenario.


 DECEMBER 28, 2013:     YEAR END ANALYSIS EXISTING HOME PRICES

Robust November Existing Home Sales With Less Than 5 Months of Inventory Setting Foundation for Continued Price Recovery          (courtesy of Ted Jones, Gracy Title, a Stewart Company)

As inventory continues to decline and the number of home sales accelerates, home values will continue to rise, just as they have for the past nine consecutive months.  The November 2012 12-month moving average national median home value was $174,000, up 5.4 percent from one-year earlier.  At the bottom of the housing bubble implosion, home values had dropped 29 percent from the peak seen in July 2006.  The market has clawed back 6.6 percent of that decline and is now off 22.4 percent from that peak level.

Here are the summary numbers from the National Association of Realtors® (NAR) press release:

  • Foreclosures and short sales (distressed properties) made up just 22 percent of November 2012 home sales numbers with 12 percent being foreclosures and 10 percent short sales
  • Short sales prices were 16 percent less than non-distressed properties while foreclosures sold at an average 20 percent discount
  • All-cash transactions made up 30 percent of all home sales in November 2012
  • 30 percent of November home purchases were first-time buyers
  • Investors made up 19 percent of all closings in November
  • One-third (32 percent) of November homes sold were on the market less than one month, while 1/5th (20 percent) were on the market for six months or longer

Given rising rents, still record-low interest rates and minimal inventory, home prices will continue to rise into 2013, forgoing a leap off the fiscal cliff into another instantaneous recession.  In normal times, housing value appreciation has outperformed inflation.  From 1992 to 2002 (before the housing bubble), median home prices rose 4.72 percent per year, compounded annually, from $104,000 to $165,000.  In that same period, inflation, proxied by the GDP price deflator, rose a compound annual rate of 1.88 percent and the CPI increased at 2.51 percent compound annually.

Robust November Existing Home Sales With Less Than 5 Months of Inventory Setting Foundation for Continued Price Recovery          (courtesy of Ted Jones, Gracy Title, a Stewart Company)

The story behind the November 2012 existing home sales data is that the number of months of inventory was less than five months – the lowest since the market peaked in September 2005.  Real estate economists generally contend that six months of inventory of existing homes is normal, and that at  less than that level, we see home prices rise at a rate greater than inflation.   The declining inventory story is well illustrated in the following graph.  The number of months inventory is calculated by dividing the number of active listings by the number of homes sold in the prior 12 months, and then multiplying that times 12.

The Seasonally Adjusted Annualized Rate (SAAR) of existing home sales, on a 12-month moving average basis, now rests at 4.62 million dwelling units.  This is up 15.3 percent from the low pegged in May 2009 — 4.01 million on a 12-month moving average.   The 12-month moving average has risen 17 consecutive months.  While still far less than the 7.08 million existing home sales 12-month moving average posted in November 2005, it shows significant and ongoing improvement.  Given the now more stringent loan qualifying and underwriting requirements and increased down payments, the 7 million home sales pace seen at the peak in the housing bubble will not be the new norm.  I believe that a 5.5 to 5.7 million annual sales rate is more realistic in today’s lending environment.  Under that assumption, there remains a 20 to 22 percent upside in the coming 12 to 18 months in the number of home sales.


OCTOBER 21, 2013: Austin Business Journal by Jan Buchholz, Staff Writer

Austin has been ranked as one of the top five markets to watch across the country by the Urban Land Institute’s Emerging Trends in Real Estate Forecast, which was released Wednesday.

Austin comes in at No. 4 behind major megalopolises such as San Francisco, New York City and San Jose, Calif. Houston logged in at No. 5.

“In 2013, Austin looks set to continue to impress individuals and attract institutional investors,” the report states. “Expansion of commercial real estate in Austin looks likely with a population increase of 2.3 percent anticipated next year, pushed by the echo boomer demographic that makes up 17.3 percent of the total population and has increased in number by over 25 percent during the past 10 years.”

Austin is considered a “leading” secondary market, according to the report, along with Charlotte and Raleigh-Durham, N.C., Nashville, Tenn. and San Jose.

The Capital City ranks No. 1 for Gross Metro Product per capita, which measures productivity based on size. Economic production, the report states, “is a driver of real estate.”

Austin ranks fifth for migration behind Raleigh, Phoenix, Tucson, Ariz., and Las Vegas.

Despite the lofty rankings, the Emerging Trends report suggests that Austin is still a volatile market and points to the city’s mediocre industrial rating.

“Great opportunities exist in Austin, but reviews are much more mixed than they were last year,” the report states.

San Francisco takes top honors for reasons that include walkability, a strong transit system and a skilled workforce.

Follow the latest commercial real estate news with the Breaking Ground email.


 

 

 

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