While sales in many areas of the country are slow and prices have dropped significantly, the Austin real estate market continues to be a relatively balanced market with an average of 5 months of inventory in price ranges below $400,000. This segment of the market represented 87% of the home sales last month. Homes priced over $400,000 saw a significant increase in the absorption rate.
Several key factors are contributing to these numbers. The up to $8000 tax credit that the government is giving to first time homebuyers (or buyers that have not owned a home for the past 3 years) has driven sales in the $100,000-300,000 price range significantly. This buyer credit ends November 31, 2009, so buyers have been racing to get these homes contracted and closed before that deadline.
Also, interest rates still remain at a very appealing rate between 5 and 6% for buyers with good credit. In many cases, Austin tenants are finding that they can own a home and pay at or below what they were paying in rent, and receive a deduction for mortgage interest as an added bonus. Why pay rent when you can buy? With sellers contributing to closing costs, a buyer can still purchase a home with very little downpayment and enjoy all of the privileges of home ownership.
Homes priced above $400,000 may require borrowers to find a non-conforming loan for financing. Loan amounts that exceed $417,000 require borrowers to meet different underwriting standards and buyers usually pay higher interest rates. New appraisal guidelines are increasing the challenge to get these homes sold. Appraisers must substantiate value with three comparable sales in the area in the last 90 days. Unique properties or those that have unique intangible features, such as a killer view, are finding the process difficult and sometimes unsatisfactory when the appraiser can't find comparables and then loans are denied due to their inability to meet underwriting guidelines with the lender.
If you are selling a home in the price range above $400,000, you may need to consider offering to finance the property or carry a 2nd mortgage to get your home sold.
The next few months should remain a great time to purchase a home in Austin, Texas. If you know someone who is renting, and could own a home, please refer them to us. There has never been a better time to buy real estate.
Laura Duggan, West Austin Properties, 512-345-1252, Laura@WestAustin.com
looking forward to webinar. been in business as appraiser for 30 years. just getting started with internet and social networking, blogging, etc... former newspaper columnist, teacher and elected official. FYI your bio has typo with "purse" instead of pursue education.
Posted by: john newberry | February 10, 2010 at 10:11 AM