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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

Market moving toward “normal”?

About a month ago I wrote in Trends to Watch about signs that the Austin/Central Texas residential real estate market might be moderating a bit after 5-plus years of unprecedented boom times.  I didn’t reach any solid conclusion then, and 30 days later the signals are still mixed.  Nonetheless, with final data in for October I want to comment on some related metrics.

One more month of Days to Sell data doesn’t visibly change the graph in my previous post.  The five-year trend in that metric is clearly upward, however.  On the other hand, a look at changes in unit sales and sale prices continues to show a strong market:

The slopes of both lines, now including October 2018 data, look largely unchanged and looking at the rate of change in unit sales seems to support that conclusion:

In this view, it’s clear that the “weakest” year-over-year performance in this market cycle actually happened in mid-2016.  That’s not to say that the “normalization” I wrote about isn’t on the way, but it is an encouraging bit of information for comparison.

Another way to use the same data is to look at month-over-month price changes.  I have also included a 12-month rolling average to filter out seasonality:

This view also shows surprising stability given other changes I wrote about last month.  Still, there has been a clear upward trend in the time it takes to sell a home over the past few years, and the pace of price increases has slowed since 2015:

That resistance to increasing prices correlates with increasing Days to Sell, but doesn’t indicate a sharp downturn for our market.  Indeed, this is the way a healthy, properly-functioning market works.  Sales again outpaced new listing activity last month, and the “months’ supply” figure for the metro area dipped to 2.9 months in October. For now, the forces of supply-and-demand will likely continue to support prices through what may remain a gradual decline.  With that said, it may be a few months before we can tell whether we’re seeing fairly typical seasonality or a fundamental change in our market dynamics.  I will keep you informed.

 

Building Permits and Housing Mix

I haven’t written about Austin-area building permits since More on Housing Supply and New Construction in January 2018.  This post includes an update on permitting activity for this year as well as a couple of observations about the history of housing supply in various categories in the Austin metropolitan area.

First, here’s where we are in permitting through three quarters of 2018, with a look back to 1980:

Note that the total units permitted peaked in 1983 at about 26,500, in 2006 at just over 26,000, and again in 2017 at 26,700 units.  If 2,816 units are permitted in 4Q 2018, this year will set a new record.  That permitting activity would be about half of the average of the past five 4th quarters, so there is reason for confidence that we’ll achieve at least that much.

But … the Austin area emerged from the last recession in 2012, and it was 2017 before permitting again matched the pre-recession 2006 peak.  Compare the number of newly permitted dwelling units to population growth:

As you would expect, permitting activity declined during major market downturns — notably over the past 30 years during the savings and loan crisis in the late 1980s and after the mortgage market meltdown in 2008-9.  Confidence was not so significantly impacted by the market decline in 2001, as indicated by the much shallower dip in new building permits in 2002 and 2003.  Notice that permitting was far below population growth from 1987 through 1993 and from 2008 through 2016.  That discrepancy is at the heart of the housing shortage that Austin has experienced in recent years, but it doesn’t fully explain the affordability crisis that continues to worsen.

Referring back to the first chart above, notice that permitting new units in 5+ family projects peaked in 1983 at a little more than 16,000 units.  It fell below 12,000 units in 1984 and continued to decline, staying below 10,000 units annually until 2012 — more than 25 years!

Notice also that permitting of 2-to-4 unit residential structures peaked in 1984, at almost 3,500 units.  In that first graph, details of the following 30-plus years aren’t discernible, so this chart will help:

Permitting of these properties dropped below 500 units in 1987 and stayed very low until it next reached that level again 1996.  The most recent peak in this housing type was in 2006, at just under 1,100 units — less than 1/3 of the 1984 level, more than 30 years earlier!

Combining both multi-family housing categories, from 1981 to 1985 they comprised 60% or more of all permits, averaging 66%.  Since 1986, permits for single family homes have dominated, representing 2/3 of all new residential activity.  That is significant, and has serious implications for housing affordability.  In this chart, note what’s glaringly missing:

It’s no coincidence that permitting and construction of 2-to-4 family properties virtually ended in the mid-1980s.  The City of Austin adopted a new land development code in 1984 that effectively prevented all of what code consulting firm Opticos calls the “missing middle,” and when existing permits had been exhausted almost none were allowed again.  Austin’s suburbs did not pick up much of that demand, so the entire area has developed on the large lot/single house template for more than 30 years.  Even with serious affordability concerns among city leaders and influencers, here’s how residential sales in Austin have been divided so far in 2018:

Most of us have images in mind of what a duplex or a fourplex looks like, but walk or drive through many of Austin’s most treasured neighborhoods and you’ll see many examples of structures that contain two or more dwelling units and that blend beautifully into their surroundings.

More dwelling units per acre obviously can affect the cost of each unit, and especially around the periphery of great neighborhoods that can be done without changing neighborhood character, while allowing more Austinites to live where they want or need to live.  Austin needs land use policy that will allow for this kind of development in the future.  This is a conversation worth having.

Affordability and Austin-area schools

I have commented previously on housing affordability issues in the Austin area.  Not only do rising home prices in the city of Austin cause urban sprawl and exacerbate transportation/mobility issues throughout the region, but they are also contributing to an ongoing loss of students in Austin ISD:

Austin school district enrollment tumbles by 1,600 students, as adjacent districts grow

Readers who follow me here know that this kind of story makes me wonder about more specifics, and this one does just that.  As a key point of reference, note that according to MLS data, the median price of a single-family home in the five-county Austin Metropolitan Area at this point in 2018 is $315,000.  There are ten school districts with median home prices below that level:

In-demand Leander ISD is a little higher than the Metro median, but Austin ISD is $84,000 — 26% — higher at $399,000!

ACS data shows metro area median household income at $73,800 in 2017.  For discussion’s sake, assume it has increased to $75,000 in 2018.  With 10% down and reasonable assumptions about taxes and insurance premiums, the monthly payment at a price of $315,000 would be about $2,445, or about 39% of a median household’s monthly gross income.  Generally, the median-priced home in the ten lowest-priced school districts should be affordable for a median-income household with little or no other debt.  In Austin ISD, however, the median-priced home requires just under $100,000 annual income.  Note that the definition of “median” is that 50% of all houses in Austin ISD require more than $100,000 household income.

As you might expect, migration toward the suburbs is putting pressure on home prices there as well.  Look at the rate of price change over the past five years:

There’s not a perfect correlation, but the lowest-priced school districts are generally experiencing the most dramatic increase in home prices, from just under 40% in Round Rock, Lago Vista, and Leander to almost 85% in Del Valle ISD!

Ultimately, where we can afford to live is a function of housing and transportation/commuting costs.  As Austinites move farther from the city, their commuting costs generally increase.  The combined cost of housing and transportation will ultimately impose a real limit on how much sprawl we can sustain.  In the meantime, hollowing out Austin ISD is impacting the region’s largest school district in very detrimental ways.

The city of Austin has talked for years about land use policies aimed at creating activity centers around the city where at least some residents can live, work, and play, and which will concentrate enough of our growing population to make a functional transit system at least possible.  In addition, Austin voters recently approved $250,000 in bond debt that will be used to address the city’s affordability issues more directly.  The issue is a regional one, however.  Central Texas remains an attractive place to live and to visit.  Let’s do everything we can to keep it that way.

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“Bill helped me through the worst buying transaction I’ve ever experienced. Dealing with the seller and his agent was a nightmare. There’s no way I would have gotten through it without Bill’s help.”
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