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Bill Morris
RE/MAX Capital City
13018 Research Blvd
Austin, TX 78750

Direct or Text: 512-785-3345
Email:              bmorris@remax.net

Texas Broker License # 505218

We take pride in our homes.  For most of us, our home is our largest physical and financial asset.  It's where we spend time with friends and family, where we may go for peace and quiet, and where we spend a lot of our hard-earned money.  It is much more than shelter, more than a residence.  It is "our place," with all the physical, mental, and emotional ties that implies.

Investment real estate shouldn't carry the emotional attachments of a home, but it can be a critical source of income and financial growth.  Financial assets -- stocks, bonds, etc. -- are an important foundation for many investors.  Real estate can provide more stability, current income, and predictable long-term growth.

I represent both buyers and sellers of residential and investment real estate throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs:

  • My relationship with a home seller begins with a thorough understanding of the client's objectives, needs, and timing. My ongoing analysis of properties and market areas throughout Central Texas provides the basis for a comprehensive analysis of each client's home.  Price consultation, property preparation and staging, and broad promotion of each property follow, and frequent communication -- showing feedback, market updates, and ongoing advice and counsel -- round out a successful listing engagement.  As a starting point, just ask me for a FREE Market Analysis. That may answer your immediate questions, or it could become the basis of a more comprehensive discussion.  That choice is yours.
  • My approach to buyer representation is also full service – shopping, previewing, price and market consultation, contracting, negotiating, coordination of inspections, appraisals, repairs, and closing details, and follow-up beyond the closing of your purchase to ensure your lasting satisfaction.  Looking for a new home?  Use Quick Search or Map Search to browse an up-to-date database of all available properties in the area, or use my Dream Home Finder form and I'll conduct a personalized search for you.

In both roles, honest advice and clear communication are what my clients expect.  The fact that more than 90% of my business is with repeat clients and their referred friends and family is a sign of success in meeting those expectations.  Client ratings that earned my selection for 6 consecutive years as a Five Star Professional -- representing less than 7% of Central Texas agents -- are also very gratifying, and humbling.

As you consider selling or buying Central Texas real estate, you'll find a lot of information on this website that can help.  Much of it is updated regularly, so come back often:

  • National and regional Market Trends is a thorough monthly e-newsletter you'll enjoy.
  • Average Mortgage Rates are up-to-date weekly.
  • As often as time allows, I update My Thoughts ...  on topics that I find important and interesting.
  • You'll also find regular market news on my Facebook and Twitter pages.

You'll find a details About Me and my approach to the practice of the real estate profession, and about why I am proud to be affiliated with RE/MAX and RE/MAX Capital City.

My business and personal experience tell me that service is the key to success and I look forward to serving you.

 

My Thoughts on Central Texas Real Estate

Outlook for the Texas Economy

General optimism from the Real Estate Center at Texas A&M University:

https://www.recenter.tamu.edu/articles/technical-report/outlook-for-the-texas-economy

That’s all a good read, but most relevant to this site:

Texas housing sales expanded across the state despite shortages of homes priced under $300,000. Current residential construction activity, measured by the Residential Construction Cycle (Coincident) Index, held steady as falling residential construction values offset industry employment growth. Increased weighted building permits and housing starts accelerated the Texas Residential Construction Leading Index (RCLI) to its highest level since April, signaling improvements in residential construction activity through year end. (For additional housing commentary and statistics, see Texas Housing Insight at recenter.tamu.edu.)

I’ll keep you informed.

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Housing supply in Austin?

Calendar year 2017 was unusual — mostly for its similarity to the previous few years in limited residential real estate inventories.  It was the fifth year in a row with housing supply at or below half of what most market economists consider “normal” or “balanced.”  Austinites have come to understand “seller’s market” in a very personal way in this market cycle that has lasted longer than any other, at least over the past 28 years.

To illustrate that, here is a look at market activity since January 1990:

I’ll update that chart and other parts of my “market dashboard” when final December data is available in a few weeks.  For now, I just want to point out the green dotted line — “Months’ Supply.”  Most analysts consider 6 to 6 1/2 months of inventory normal.  Since 2013, the supply in the Austin area has been 3 months or lower — with the exception of June, July, and August 2017, when the supply was 3.1 months.

I began commenting to clients several months ago that the market cycle was showing some signs of maturing, also emphasizing that that did not mean turning to a slow market.  I have seen no indication of any generalized slowing of our residential market, although time on market has gotten a little longer in some market segments over the past year.  There are some issues, though, including a sort of gridlock in resales with sellers wanting to move but frustrated with the difficulty of coordinating a sale and a purchase in an astoundingly fast-paced market.  That undoubtedly has affected how many resale homes are for sale in some areas and price ranges.  I’ll say more about that another time.

Another important factor that has limited housing supply has been access to new construction, and the rising prices of the new homes that have been available.  Using data through November 2017, this chart summarizes building permits issued for single family homes over the past couple of market cycles:

The impact of the 2007-2008 mortgage crisis and the resulting national housing industry issues are apparent, as is the return of growth to the Austin-area in 2012.  Note, however, that even as builders dramatically reduced their activity in 2007 – 2011, the value per unit did not decline very much or for long.  Also note that since 2012 the per-unit value of a permit accelerated, albeit with some moderation over the past couple of years.  The average value of a single family building permit in 2017 was about 34% higher than the 2008 pre-meltdown peak, and about 45% above the 2009 valley.

There have been debates for years about whether rising home prices represent a “bubble” economy in the Austin area.  With rare exception, local market watchers have opined that our growth is based on job creation and genuine demand, not speculation.  Another look at permitting activity appears to support that argument:

The Austin metro population data shown by the orange line is confirmed through 2016.  I extrapolated 2017 growth at the same pace as the previous two years.  There are two important points to make about that chart:

  • The number of permits issued for new home construction in 2017 was still lower than 2004, and about 20% behind peak production in 2006.
  • At the same time, metro area population has increased by almost 40% (2006 – 2017) since that market peak.  The pace of growth is projected to continue in future years.

Only in 2016 and 2017 did the growth in permitting activity closely match the slope of population growth.  Permitting is still far behind, though, in catching up with unserved population growth over the past ten years.

Robust home construction making a real contribution to housing supply is an important part of restoring balance to the Austin metro market, and to helping to break the resale gridlock I mentioned earlier.  In the meantime, housing prices and urban sprawl continue to complicate our growth picture.

I am optimistic that progress will continue in 2018, but I remain concerned that there is a limit to what employers and their employees will accept in terms of the total cost of living — housing, commuting, and other infrastructure costs that are all strained by the housing supply imbalance we have experienced for many years.  I’ll keep an eye on additional market signals and offer my thoughts in the coming months and years.

Market Dashboard – Austin area update

It has been another very busy year in Austin-area real estate, and I haven’t made time for months to write about the market environment and outlook.  This is the first of a few posts I hope to add over the next couple of weeks.

If you have followed my blog over the past several years, you know that I maintain a high-level “market dashboard,” to keep me in touch with broad market trends and to provide a larger context as I discuss with my clients the specific dynamics of the neighborhoods where they wish to sell or buy homes.  With that background, I am pleased to report that our residential market continues to move quickly.

One metric that will help to differentiate the current market cycle from those of the past is the “odds of selling” – i.e., the percentage of active listings that sell each month.  Here’s a look at that measure over the past 28 years:

Note that the long-term average since January 1990 has been 25% of active listings selling each month.  Notice, too, that that average has been affected dramatically by activity over the past six years.  For most of the other 22 years shown on that chart, the “odds of selling” were significantly lower – frequently below 20%!  I find this metric interesting, but a more complete look at supply and demand is important.

One of the best views of market vitality is shown in this Market Activity chart:

Market economists generally consider  6 to 6 ½ months of listing inventory to represent a “balanced” market, in which neither sellers nor buyers are generally favored by market conditions.  There are enough homes on the market that buyers have alternatives, and enough buyers in the market that sellers can be choosy.  Lower inventory levels tend to favor sellers and limit buyers’ choices, and the lower the inventory the more noticeable that market bias becomes.

Follow the dotted green line on the chart:  We were down to about 2 months’ supply during the early part of 2000 (and, referring back to the first chart above, 50% or more of active listings sold in a few months during that same time).  Inventory then climbed to near 7 ½ months’ supply in mid-2003 as we worked out of the market downturn resulting from the dot-com bust in 2001, then the 9/11 attack and the accounting scandals at Enron, Worldcom, Tyco, and others.  (And the odds of selling dropped to below 20%.)

That market cycle was near its low from mid-2002 to early 2003, and the subsequent, fairly normal cycle lasted until the mortgage meltdown in 2007-2008.  The Austin-area market weathered that storm much better than many other metro areas, and our recovery became noticeable in 2011, and very obvious in 2012.  Note that that market bottom was longer and more chaotic than those before – discussion for another day.  The most important feature of the current market cycle is that listing inventory has been at or below 3 months’ supply for virtually all of the past 5 years (and that the “odds of selling” have averaged about 40% for that period).  This has been the longest-lasting “seller’s market” on record, at least for this area.

Throughout this long-term view, residential sale prices have fared well:

You can see that with a few months’ lag behind market lows, prices sagged below the long-term trend.  You can also see that strong market times have lifted prices above that trend line – most noticeably since the beginning of 2015.

Demographic estimates still project strong job creation and population growth in and around the Austin metropolitan area in coming years.  Home builders have gained some ground in new starts, but resale inventory remains constrained.  That complicates moves for prospective home sellers who want to stay in the Austin area and keeps some from even entering the market, further limiting the availability of housing to support in-migration.  It seems clear that that market environment will continue into 2018 (and longer?).

Obsolete land use policy, high permitting costs, and complicated processes in the city of Austin continue to exacerbate the housing supply vs. demand problem and to make housing in the city less affordable for many newcomers.  At some point that issue itself may slow growth but in the meantime many (most?) new Austinites will be forced to the suburbs and beyond, so we can expect more sprawl for the foreseeable future, along with continued price appreciation throughout the area.

We may be seeing signs of this market cycle maturing, but short of a very significant economic event population growth and demand for housing show no signs of a real downturn.  I’ll write more on that separately.  For now, I’ll close by saying we can expect “more of the same” at least over the next six to twelve months, and probably longer.

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