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livinineurope

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Reply with quote  #31 

 

Tour,

 

I tend to agree. I see Tx as one of the few safe havens for RE now.  It's the only place with viable job growth to support higher prices..  I don't expect huge run=ups though..  After owning in SA you can still buy and just about breakeven on rents.  My house in SA didn't budge until this year.. stayed flat for the previous 11 years.

 

Outside of that I'm hanging with energy right now and a lot the companies I read about are building or have plans to exapand/build in TX, Lousiana etc..

 

Seems the safest bet right now.  Then again I'm way more conservative than others on this board.

samzell

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Reply with quote  #32 

Tour,

 

Excellent post.  Sound analysis.

 

 

 

 

 

taddyangle

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Reply with quote  #33 

Tour,

 

Are homes in Austin cash flowing with 20% down?  Did you ever end up buying anything in SLC?


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Erik

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Reply with quote  #34 
Quote:
Originally Posted by tour

I'm not sure you are too late because there are multiply offers in Austin.  Sure, it would have been nice to get into the market before the multiply offers began.  However, Austin has gone through a very flat appreciation for the last 10 - 20 years.  I do agree with samzell, the areas near downtown Austin are hot, and the out-lying areas are not.

 

However, I do remember that San Diego went through a similar cycle.  The nicer areas appreciated first, until buyers started looking at less desirable neighborhoods, until they wound up in South East San Diego, which was the fastest appreciation area for the last couple of years. 

 

Anyway, I curious to find our why you think Austin is dead because a couple of areas have appreciated in value?  The home price to income ratio is about two for some areas.  These people can afford to pay more for their home, they just don't believe it. 

 

Currently, you can buy properties in the Austin area for under $75/S.F, I know because I just did.  I'm currently buying three homes in Austin and one home in San Antonio.  You can not build a home for under $75/S.F., especially since the cost of building supplies have gone up substantially.  Prices of homes in Austin will go up, as long as jobs continue to flow into the area.  It is much easier for Texas companies to attract good talent than California ones.  Where would you like to start out? 

 

I do think that Texans will limit their property taxes once the properties reach a median of $200k.

 

Anyway,  I think Texas has a long way to go before it is done.  Many people thought CA was done in 2003, including me.

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Austin hasn't been flat the last 10-20 years. In fact, prices appreciated quite nicely in the late 1990s.

 

I don't entirely agree with your analogy with the San Diego market. A big factor in Austin's current appreciation is out-of-state investors, something we didn't have in CA from 97-04. When fickle out-of-state buyers decide Austin isn't a prime buying market anymore, this should affect prices. I agree their economy should keep things moving up, but at a slower pace.

 

Overbuilding in TX also is also why their cycle won't match ours. One of the reasons TX prices typically barely move is supply has always matched demand. It doesn't matter what the demand for houses is, if builders create enough supply to match it, prices don't move much unless there's some artificial boost, such as a swarm of out-of-state buyers quickly decreasing inventory. The same thing happened in overbuilt Phoenix.

 

Now the value argument is a good one, but why is it that Austin houses  least undervalued, houses in Central Austin costing 300k+, are the ones appreciating most, while 110k, 2000sqft brand new houses in Round Rock and Leander don't move at all?

 


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tour

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Reply with quote  #35 

 

I agree with you that homes prices in Texas will not see a huge appreciation, like the one we saw in San Diego for the last decade.  The run up in prices in San Diego was due to the lack of build-able land, and to many other factors that happen to align.  Texas has a ton of build-able land.  However, you can not keep building forever.  Usually there is some other unforeseen factor that comes into play, like building permits not being issued because of increase traffic, water supply systems or sewer systems not being able to keep up with demand.  By investing in Texas, I'm looking to preserve equity, generate some cash flow, and hopefully see a decent appreciation.

 

Homes prices do not appreciate evenly across a region.  It has been my experience that the more desirable neighborhoods appreciate first until people get price out of the area and start looking at neighboring neighborhoods in which they can afford. 

 

My point was that builders will not build unless they believe they can make a profit.  And if homes are selling for 20% less than you can build them for, How can you build?  The increase costs of building materials will cause the home prices to go up, not the value of the land.  I just spent $102 for a roll of wire that a few weeks ago costs me $79.  The cost of concrete, steel, and plywood is increasing dramatically.  I realize that new homes are more desirable.  But at what price?

 

Yes, the houses near downtown are appreciating much more than the ones little further away.  Traffic sucks in Austin!!  They have two major freeways,  So people are willing to pay a premium to live near work to avoid the traffic. 

 

 

 

 

Bernard,

 

No I never made it to SLC.  My wife an I had our third child in under three years in February.  Anyway, life has been a little crazy.  SLC appreciated quite a bit since I first started to research the area.  So, I felt I was a little late getting into the market in SLC. 

 

Hope all is well with you and your family.  I hope we can do lunch sometime soon and catch up.

 

tour

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