July 2010 preliminary housing numbers for the Austin market show volume down 19% and average prices up 18% (from $255k to $299k). 1   While this may seem contradictory, a closer examination reveals two factors working simultaneously: the Tax Credit and Jumbo Loans (see my blog Did Austin housing prices really set a record in June 2010).
  This continues the pattern of a higher percentage of affluent home buyers first seen in June 2010.    While volume is down in most areas, the notable exceptions are Lakeway and West Lake Hills where volume is up almost 50% compared to a year ago.
  Anecdotally, several agents in my office have lamented the fact that showings for homes priced below $200k have dropped off significantly in the past 2 months. On weekends at open houses, I have noticed more traffic in the higher priced listings.
  By years expect prices to return to 2009 levels as pent up demand for more expensive homes becomes satisfied and first time buyers again enter the market. Overall sales volume should stay below 2009 levels if the national recession continues. For those who choose to buy in 2010, the silver lining is that interest rates should remain low.

1 Chicago Title, Austin

     Local housing median sales prices  set a record at $202,800 in June 2010 according to numbers compiled by the Austin Board of Realtors. How is this possible given the current economy?
    The Austin market has been relatively stable over the past two years: housing prices have only dropped between one and two percent. The June 2010 record numbers are caused primarily by two factors: 1) the first time buyer tax credit, and 2) availability of jumbo loans.
    To qualify for the $8000 credit, many buyers shifted their plans ahead to spring. In the succeeding months, we are seeing fewer written contracts for homes in the entry level price range. A reverse trend is occurring on the opposite end of the spectrum.
    A year ago, jumbo loans (over $417k) were almost impossible to get. Today, sales volume is up in higher income neighborhoods. In the West Lake Hills area (8E & 8W) for example, there were 85 homes sold in June 2010 compared to only 47 for the same month a year ago.
    While the overall Austin sales volume in June remained stable (2216 in 2010 vs 2254 in 2009), a larger percentage occured in the higher priced range which helped pull the median price up. In general, higher median sales prices usually signify a robust  market. But in the summer of 2010, sales volume is a truer indicator of  local housing trends.

Note: Residential data includes single-family, townhouses and condominiums.
http://recenter.tamu.edu/data/hs/hs140b.htm

Three credit bureaus each assign a score to your credit history.
Lenders view all three scores and use the middle one to qualify
applicants for mortgages.   Currently a 620 mid score is the
minimum threshold for a loan. However, some loans (and lenders)
require even higher scores. Below are a few important guidelines
to improve credit scores.
1) Continue paying all bills on time.
2) Ask a loan officer that you trust for a copy of your credit
reports (from all three bureaus).   There are several websites
where you can access a (single) bureau report for free.   However,
an experienced loan officer can give you valuable advice on what,
and (more importantly) what NOT, to do.
If you choose to do it yourself:
3) Review your credit report and dispute any collections that do
not belong to you. With persistence, you should see results in 3
to 4 months. Reputable credit repair agencies can get results in about
half the time. However, make sure you understand how much work  
they do for the fee they charge (e.g. do they write letters or just
advise you on what to write).
4) If you have little or no good lines of credit, apply for a
credit card. Check with the card issuer to make sure they report
to all three credit bureaus. As a last resort, “secured” credit
cards are an quick way to establish good lines credit.
5) If your mid score is near 600, and you have open lines of credit,
there are techniques  which can raise your scores 10, 20 or even 30
points (e.g. paying down your balances).
If you have additional questions, contact me. I’ll be glad to help.

Anyone who has lived in Austin for more than a few years is aware that July and August are the hottest (and driest) months.
As the jet stream retreats north, a dome of high pressure sits over central Texas causing temperatures and water usage to rise. Homeowners should be aware that this is the time of year when most foundation problems occur.
Central Texas soil has a high percentage of clay which acts like a sponge, expanding when wet and contracting when dry.   In years with little precipitation, most soil contraction occurs toward the end of a hot  summer.   Movement in the soil puts stress on foundations causing bending and even cracking.
Over 90% of foundation problems can be avoided by using a soaker hose around concrete foundations to keep the surrounding soil damp. A 50 foot soaker hose costs less than $10: many home owners double up and use two at a time. Since the hoses are designed for efficiency, water usage is kept to a minimum. Based on current water rates, using a soaker hose every other weekend should only add $20 or $30 per month to your water bill.
This is a small price to pay to protect what may be your biggest asset and could save you tens of thousands of dollars in foundation repairs in the future.

Due to economic uncertainty in 2010, more families are choosing to rent instead of purchase. The Austin Housing Market is seeing a 20% drop in buyers this summer compared to 2009, along with a corresponding rise in renters. Most landlords qualify applicants on their credit and rental history. When mistakes cause you to be denied for a lease, it costs you time and money.
Before your next move, review your credit report for errors and dispute them.   Correcting mistakes usually takes about 4 months by yourself or about 2 months with professional help.   Contact me if you have additional questions on how to begin.

Realtors define a buyer’s market as one where there are more than 6 months of inventory for every home sold. In May 2010 for the 9 county Austin housing market, there were 12786 listings, and 2300 sales which is considered to be a “neutral market”.
Preliminary numbers for June indicate there should be about 13400 listings, and 2100 sales. If those numbers hold up, we would officially be in a “buyer’s market”.
For the seller, this means fewer showings and longer times on market before getting an acceptable offer. Buyers can expect to view homes in very good condition and negotiate with sellers more willing to pay for the purchaser’s closing costs.
Over the past 3 months, the median sales price in the Austin market was $184,600 compared to $186,500 for the same 3 month period a year ago, or about a 1% drop. A few neighborhoods (ie South Austin and NW Austin) have seen modest price increases. If you are looking for a home in a specifc neighbood and want to know current trends, contact me. I will be glad to provide that information.
 
Sources tamu.edu and Alamo Title

100% financing USDA Rural Home Loans are available to any buyer who meets the income and credit requirements. It is a great program for First Time Home Buyers, but not limited to First Time Buyers. Also on a USDA loan there is no PMI or monthly mortgage insurance.
The income limits are determined by the number of people in the household as well as where the property is geographically located. Currently, USDA loans require at least a 620 credit score.
Note: There are a few loans available for buyers with scores as low as 580. Contact me is you have additional questions.

Although the average square footage of a new house is still double what it was in 1960, in the last year, it decreased slightly to 2,215 square feet from a high of 2,277 square feet in 2008, according to data from the U.S. Census Bureau.   In a small home, space needs to be maximized for both living and when selling.  Since eighty percent of people appreciate only what they can see, it is important  that each room  can be  easily identified. Get rid of that computer in the dining room. Make sure buyers can see it™s  for dining. Buyers also want to see the floors and the walls.

Interior designers advise clients with smaller kitchens to clear the counters of small appliances. Do you really need half a dozen different pans when a single flat griddle will do? Everyone has too much stuff.   If you think you might need something, put it in a box and store it for six months. Then go back through it.   Have you used it?   If not, donate it.

Removing clutter is only one aspect of getting a smaller house ready to sell”or just for living contentedly in it. Some big pieces of furniture, for example, won™t fit in modestly sized houses. Does the comfy chair stick halfway out into the room?   If you™ve got a huge china cabinet in a small dining room, at least take the hutch off.

 Color palette is very important in a smaller house.      The walls and furniture should recede, not jump out. Blend colors in medium tones. A single type of flooring throughout the house maximizes perception of space.

Strategic lighting creates the illusion of more space. Corner uplighting makes a room  feel more open. Make sure the house is flooded with as much light as possible. Trim bushes that block windows and tie back heavy draperies.

Overstuffed closets create the impression of not enough storage space in the house. Store off-season clothing under the bed.

Don’t forget the outside of a house. High bushes, overgrown trees, and lots of outdoor furniture, can make a house look smaller.   Installing flower boxes or hanging a swing on the front porch adds a touch of charm and coziness to a smaller house.
 
For those with a remodeling budget, a few easy structural changes can give the illusion of more space.   Building out a small soffit along the edge of the ceiling creates a tray effect, and tricks the eye into thinking the center of the room is higher than the edges.

When creating the illusion of space in a smaller home, the adage “less is more” holds true. Make sure the overall package blends well together. You’ll be amazed at how much more space both you and buyers will think you have.

The above tips are highlights from Living Large in a Small Home by Maggie Sieger

US and Austin December Home Sales

December nationwide home sales dropped 17% compared to a year ago, the National Association of Realtors said January 25th. This followed an increase of 44 percent for November. Much of the change was due to the first time home buyers tax rebate originally set to expire on November 30th.      Many who planned to purchase in the first half of 2010 closed in November to qualify for the the $8000. When congress extended the tax rebate on November 25th, it did not change the plans of those who already planned to close in November.

While these are nationwide numbers, the overall trend was apparent in every market.    Central Texas  saw a 5 percent increase (1373 total sales) for December according to the Austin Board of Realtors. This followed a 58% rise in November. For all 2009 local sales were down 19% due to a slow first half. The dramatic November increase was caused by a combination of pent up demand combined with the tax credit. However, many of the realtors I speak with expect  large increases to be temporary until businesses start hiring.  

Current expectations are for slow economic growth  over the next 9 months. In Austin   the economy is in relatively good shape, and moderate growth in home sales is expected for 2010. It is important to note the extention of the $8000 tax credit through April 30th which is expected to again cause first time home buyers to  move up their schedules. Locally, expect better numbers in the first 4 months of 2010, followed by slower sales through September.

    Four years ago, it seemed that all mortgage lenders cared about was a good work history. How times have changed. Today, an applicant’s credit is as important as their income and work history. Every few months, the bar for qualifying credit scores is raised again. While most buyers know they need “good” credit, they don’t know that latest lender definition of what “good” is.
    Traditionally a majority of first time buyers have financed their homes using Conventional or FHA loans. Conventional loans with 100% financing disappeared about three years ago. Today these loans that require at least a 5% down payment and a 680 credit score.
    Over the past 2 years we’ve seen a dramatic shift toward FHA loans for two reasons: they only require 3.5% down, and have lower (620) qualifying credit scores. With all the recent foreclosures, lenders have no choice but to raise eligibility requirements so these loans can be packaged and resold to investors. Until the number of forclosures drops sharply, expect mortgage qualifying standards to rise even more.
    To use your time effectively, it is best to know your credit score before searching for a home. There are websites where you can obtain a copy of your credit report for free.   However, some will charge a fee for giving you the score.   Another option for finding your credit score is to apply for a mortgage. Qualified loan officers can pull your credit, tell you how much you qualify for, and estimate your monthly payment.
    If you have at least a 620 credit score, congratulations. You are ready to start looking for a home.   If you have at least a 580 score, some credit repair is in order. If you aren’t sure where to start, speak with an experienced Buyer’s Agent or loan officer about getting qualified.