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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

What’s the real impact of low lake levels?

Lake Travis is now about 20 feet below full, and is falling slowly despite periodic rains.  I don’t know anyone who believes we’re headed for conditions anything like we experienced in 2011 and 2012, but it’s a fact that climatic conditions have changed for the worse again since 2015:

Drought Graphics 2011 and 2015Drought Graphics 2018

 

 

 

 

 

For details, feel free to visit http://droughtmonitor.unl.edu/CurrentMap/StateDroughtMonitor.aspx?TX.  Just the images are enough for this post.  The dark red picture of Texas at the left shows that almost the entire state was in Exceptional Drought as of October 4, 2011.  The second image, just down and right, shows the state of recovery on June 30, 2015.  The third picture shows conditions today.  These are essentially a timelapse view of the climatological history of Texas — flood and drought.  The state has managed well … and continues to do so … most of the time.

Although the entire state didn’t officially experience a new “drought of record” in 2011, there are certainly observers who believe that that was the worst to ever impact Central Texas.

Economically, Central Texas was severely impacted that year by another event — a very large release of water from the Highland Lakes to support agricultural users near the Texas Gulf coast.

As an active volunteer and Board-member of the Austin Board of REALTORS®, and more recently as a member of the Board of the Central Texas Water Coalition, I have worked on this issue for years.  Whether that 2011 release should have happened has been the subject of very considerable discussion and political debate since then.  Note that the price LCRA customers in the upper Colorado River basin paid per acre-foot of water was (and still is) more than twenty times the price paid by the downstream agricultural customers ($150.00 vs. $6.50 at that time) — contractually categorized as “firm” and “interruptible” customers, respectively.  Assuring that “firm” supply has been a continuing battle.

That said, the purpose of this post is to comment on the economic impact of drought and water management in the upper Colorado River basin and the Highland Lakes.  The water release is a prominent feature of this graph — the lake level change in 2011:

Lake Travis Level

Obviously, Lake Travis has rarely been “full” during that 15-year period, but operating at or above 670 was pretty common until 2011.  After the large water release and amid continuing drought, the lake was 50-plus feet below full for most of three years.

Now, let’s look at what happened to sale prices of single-family homes in the Austin-area during that time:

Metro Prices vs. Lake LevelTravis County Prices vs. Lake LevelLake Travis Area Prices vs. Lake LevelLake Travis View Prices vs. Lake LevelLake Travis Frontage Prices vs. Lake Level

Yes, the first four of those charts are small, but for now this overview will suffice.  The top two charts show average (orange) and median (gray) sale prices in the Austin metropolitan area and in Travis County, and there is no obvious impact of lake levels on prices.  The third chart shows prices of homes in the Lake Travis area but without lake views or frontage, and there was little or no pricing effect of the low lake levels.  The next chart shows homes with Lake Travis views but without frontage.  There was some flattening of sale prices in that market segment, but recovery began very quickly when the water level came back up.

The last chart shows sale prices of homes with Lake Travis frontage, and the relationship between lake levels and home values is obvious.  Average sale prices were down about 25% from 2008 and 2010 peaks for virtually all of 2011 through 2015, and remained more than 10% down long after the lake recovered, almost reaching the previous peak by mid-2018 — three years after Lake Travis returned to normal operating levels!

I have not invested time to duplicate that work for properties on Lake Buchanan, but anecdotal evidence suggests the impact was at least as severe there.  (For those who don’t know, Inks Lake, Lake LBJ, Lake Marble Falls, Lake Austin, and Lady Bird Lake are managed to maintain more constant levels, using Lake Buchanan and Lake Travis for storage.)

The impact on the net proceeds to home sellers during those years is obvious.  Consider a larger view, though.  All Texas real property is appraised annually for the purpose of assessing property taxes.  Those appraisals are intended to represent actual market values as of January 1 of each year.

Consider the loss of 25% of tax revenues on all lakefront homes on Lake Buchanan and Lake Travis for at least three years, and 10% for another two years.  Consider the city and county governments, school districts, and other taxing jurisdictions that depend on those revenues to operate and provide services.  Populations and school enrollments did not decline during those years.  Neither did the need for services.

In addition to the loss of property values compared to previous peaks, these properties failed to enjoy the broad value appreciation seen throughout Central Texas, so the combination of lost and never-realized tax revenues was even larger.  For the Economic Impact section of the 2016 Region K water plan, CTWC estimated this combined effect to be a loss of $2 billion to $3 billion in taxable property values across the region.  Obviously, that loss has continued to mount.  Moreover, low lake levels significantly impacted tourism and recreational uses of the lakes and the jobs and business incomes from those sources for many years.

I am not writing to discourage sales and purchases of lake-area homes.  The Highland Lakes are a beautiful part of our great state, and there is real value in being part of our lakeside communities and in owning property there, and in the long run property values will undoubtedly continue to grow.  My purpose is to point out that water is a precious resource in many ways, and that managing that resource for the long term is vital.  The City of Austin has prepared a 100-year water plan that has not yet been reviewed and approved by City Council.  The sixteen regional water planning groups in the state work to keep 50-year water plans up to date and to keep up with changing demands and developing techniques and technologies.  All of this work is extremely important, and I hope this article has highlighted the impacts that one ill-timed water management decision created.  We can and must do better!

Hays County tax appraisals rise

After five years of strong demand, limited supply, and rising sale prices in Austin-area residential real estate, it’s no surprise that the taxable values of homes are also rising.  Here’s a summary from Hays County:

Hays County home values rise nearly 9%

For comparison, these are similar recent reports about Travis and Williamson counties:

It’s Tax Appraisal Season!

Williamson County Tax Appraisals Are Out

So, Hays County appraisals are up almost 9%, Travis up 10%, and Williamson rose 6%.

I have provided data to quite a few of my clients this year to help them protest their appraisals.  Everybody’s situation is unique — how long they’ve owned the property, whether they have a homestead exemption, and over-65 exemption, etc., how long those exemptions have been in place … and, of course, where the property is located.  Yes, prices have trended upward pretty much everywhere over the past few years, but some areas and some specific neighborhoods have experienced this market very differently, rising much more than the average, or somewhat less.

As I commented a couple of days ago, it looks like another very busy year with an out of balance real estate market, so buckle up for similar increases in tax appraisals next year.

 

 

How Was Austin-Area Real Estate in 1Q 2018?

I commented in a couple of posts late last year that things seemed somewhat calmer in the residential real estate market than they had been earlier in 2017 and for the previous few years.  I was uncertain whether we were seeing a genuinely slower market, or just a return to something like “normal” seasonality.  With residential listing inventory still at half of what market economists consider “balanced,” the slower market theory didn’t make any sense, with possible exceptions in some specialized market segments.

Now, with final data in for the entire first quarter of 2018, I can report that we have NOT returned to “normal” this year.  Here’s a look at the percentage of active listings that sold each month from 2005 through 1Q ’18:

The fact that the traditionally slow month of December was the fastest-paced month in all of 2017 was a clue that we had not seen a slow-down.  For comparison, the average “odds of selling” for all of 2016 was 42%.  The same calculation for the first 11 months of 2017 was 38%.  But then it went to 51% in December!

Notice, too, that the “odds of selling” calculation was edging back toward 50% in March.  The average since January 1990 was 25%, but it has now been five years since the percentage of monthly sales of active listings dropped below 30%.

That makes it very difficult to keep inventory:

The orange line in that chart is Inventory.  The dark blue line at the bottom is Sales.  Inventory divided by Sales tells how long the existing inventory will last if the pace of sales remains the same.  Market economists generally consider 6 to 6 1/2 months’ inventory to represent “balanced” market conditions, in which neither buyers nor sellers have a built-in advantage in negotiations.  The teal-colored line across the middle of the chart is that normal inventory.  The Austin metropolitan area has been at half or less of that inventory level for five years now.  The “Months Supply” figure was 2.0 in January and February, and 2.2 months in March.  If you’re a buyer almost anywhere in the metro area, you’re probably very conscious of that out-of-balance supply and demand situation.

And … being in a textbook “seller’s market” for so long has implications for home prices:

As I have said here and in conversations many times, “Market cycles happen,” and this one will too.  The local economists and market analysts that I know and trust agree, but they also know that this pace of real estate activity in Central Texas is being driven by real growth in employment and population, not by speculative investments and nonsensical mortgage products like we saw in the early years of this century.  Personally, I believe movement in the direction of better balanced supply and demand would be healthy, and home builders are trying to catch up, but the consensus of forecasts seems to be that we have at least another year or two with market conditions much as we see them now.

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