According to the Multiple Listing Service (MLS) report released today by the Austin Board of REALTORS® (ABoR), Austin-area home sales topped 3,000 sales for the first time since July 2013, increasing five percent year-over-year to 3,051 sales for the month of June. Mid-year statistics show that Austin-area home sales increased an average of four percent year-over-year to 13,917, putting 2015 on pace to potentially exceed 2014’s historical high in sales volume.
In June 2015, total dollar volume reached $1,018,625,166 and increased by eight percent compared to June 2014. Additionally, the total dollar volume of single-family properties sold in the first half of 2015 was $4,617,178,959, a year-over-year increase of 12 percent.
Barb Cooper, 2015 President of the Austin Board of REALTORS¬®, explained, “June’s increased home sales, combined with total dollar volume exceeding $1 billion for the first time ever, shows the amazing equity Austin homeowners have in the market and the powerful impact of real estate in Central Texas. However, this increase heightens the need to replenish and expand housing stock to help achieve sustainable growth.”
According to the report, the median price for Austin-area single-family homes increased eight percent year-over-year to $272,250 in June 2015, while average price increased two percent to $333,866 during the same time frame. Keeping with the upward trend over the last several months, less than three in 10 single-family homes sold in the Austin area were priced below $200,000.
Price increases are similar for the first half of 2015, with median price increasing 10 percent to $263,000 and average price increasing eight percent to $331,765. At the same time, homes spent an average of 50 days on the market, three more days than the same time last year.
“If this growth continues, 2015 could become another historical year for Austin-area home sales. Both homebuyers and sellers can expect a strong, competitive market for the rest of the summer selling season,” said Cooper.
Active listings increased by four percent year-over-year to 6,701 listings in June 2015 and pending sales increased by eight percent to 3,023 compared to June 2014.
While new listings increased by three percent to 3,812 for June 2015, inventory held steady at 2.8 months, remaining well below the 6.5 month level the Real Estate Center at Texas A&M University estimates as a balanced housing market.
Cooper concluded, “While growth shows positive momentum for our city, ABoR supports solutions that serve the entire community, accommodate new populations and help residents find the homes they want. To help achieve these goals, ABoR and Austin REALTORS® recently met with members of the Austin City Council and Mayor Adler to discuss big picture issues affecting Central Texas residents and with a strong focus on sustainable and managed growth. We’re pleased to see the steps city leaders are taking toward a more affordable Austin.”
June 2015 Statistics
- 3,051 – Single-family homes sold, five percent more than June 2014.
- $272,250 – Median price for single-family homes, eight percent more than June 2014.
- $333,866 – Average price for single-family homes, two percent more than June 2014.
- 42 – Average number of days single-family homes spent on the market, three days more than June 2014.
- 3,812 – New single-family home listings on the market, three percent more than June 2014.
- 6,701 – Active single-family home listings on the market, four percent more than June 2014.
- 3,023 – Pending sales for single-family homes, eight percent more than June 2014.
- 2.8 – Months of inventory* of single-family homes, unchanged compared to June 2014.
- $1,018,625,166 – Total dollar volume of single-family properties sold, eight percent more than June 2014.
2015 Mid-Year Statistics
- 13,917 – Single-family homes sold, four percent more than the first half of 2014.
- $263,000 – Median price for single-family homes, 10 percent more than the first half of 2014.
- $331,765 – Average price for single-family homes, eight percent more than the first half of 2014.
- 50 – Average number of days single-family homes spent on the market, three days more than the first half of 2014.
- 19,865 – New single-family home listings on the market, three percent more than the first half of 2014.
- 5,727 – Active single-family home listings on the market, eight percent more than the first half of 2014.
- 15,984 – Pending sales for single-family homes, five percent more than the first half of 2014.
- $4,617,178,959 – Total dollar volume of single-family properties sold, 12 percent more than the first half of 2014.
The following sections describe trends in other sectors of the Austin-area real estate market.
Townhouses & Condominiums
The volume of townhouses and condominiums (condos) purchased in the Austin area in June 2015 was 331, a 12 percent increase from June 2014. The median price for condos was $234,500, which is eleven percent more than the same month of the prior year. When compared to June 2014, these properties spent 8 more days on the market, or an average of 39 days.
For the first half of 2015, 1,510 Austin condos were sold, which is seven percent less than this time last year, while the median price was $226,250, or six percent more than the first half of 2014. Condos spent an average of 43 days on the market, one day fewer than the first half of 2014.
In June 2015, a total of 1,861 properties were leased in Austin, which is fourteen percent more than June 2014. The median price for Austin-area home leases was $1,600, seven percent higher than in June 2014. In the first half of 2015, a total of 8,525 properties were leased in Austin, which is eight percent more than 2014, and the median lease price was $1,520, a five percent increase from the first half of 2014.
If you’re considering a major home renovation project, you have two options on how to pursue it: You can hire a construction firm and a design firm and manage them separately or hire a design-build firm that would integrate the two functions into one contract.
Prior to starting my own architecture firm, I worked at a traditional architecture firm for six years, and at a design-build firm for two. So I know the pros and cons of each option.
Design-build is becoming an increasingly popular buzzword in the industry — many contractors market themselves as such; you see many more signs for “design-build” companies. It now represents 16 percent of all billings.
According to data from the Construction Industry Institute, the design-build approach can be more cost-effective and efficient than the traditional method of signing separate construction and design contracts. For instance, according to the institute based at the University of Texas at Austin, the unit cost of design-build projects is 6.1 percent lower and the delivery speed is 33.5 percent faster than the traditional method.
Still, you can achieve the same result by hiring your own architect and contractor separately who can work together.
Here’s what you need to know before deciding whether to hire an architect and contractor separately or a design-build firm:
• Learn what exactly a “design-build” is. Simply put, design-build is a way to streamline the design and construction of your project to save both time and money. A budget is typically identified early in the project, and the design is tailored to meet the budget.
Having both the designer and builder involved from the beginning allows for more accurate pricing information as well as designs that are closer to that budget.
Traditional design-build firms offer themselves as a one-stop shop for your entire project; you can work with the same single company from the design through the construction.
Ideally, they are licensed as both architects and general contractors. However, that’s not the only option. A second, equally successful option is to assemble your own design-build team. That option typically involves hiring both an architect and general contractor at the beginning of your project and allowing these professionals to work together, as a team, for you.
I have been involved in design-build style projects completed in both ways with almost equal results. It is different that the traditional design-bid-build method in that the contractor’s involvement comes much earlier and provides an early price-check to ensure the adjustments can be made earlier than not to meet your budget, though certain detailed decisions become more budget driven and are often finalized in the field.
• Shop around: Meet with several firms, design-build firms, architects and contractors to decide who is the best fit for you.
• Make sure you are working with both a licensed architect and a licensed contractor. This ensures you’re working with properly trained professionals. The American Institute for Architects (AIA) and the National Association of the Remodeling Industry (NARI) are important professional organizations that list many professionals. Your state or local jurisdiction can help you determine if the professional is licensed.
• Understand your contracts. True design-build firms offer a single point of contact and contractual relationship. This can be good, but be sure you read your contracts. Many will discount their architectural fees initially, but if you do not continue through and use their in-house construction services, you are often back-charged the amount you were originally discounted.
One way to avoid this is to look for firms that charge a market rate design fee and a credit toward construction. You should be rewarded, not penalized in this process.
• Be honest and upfront with your team about your budget. If you hire professionals you trust (and you should), letting them know your true budget will help them tailor the project to you. Follow the process outlined by your team — it will likely involve multiple steps designed to guide you through each decision as required.
• Avoid two-against-one conflicts: If you hire an architect and contractor separately, you have two points of contact/separate contracts. But you also have two professionals that can each advocate for you throughout the process. This will create fewer conflicts of interest when questions arise.
• Pay attention to the “design” half of design-build. Make sure a licensed architect is involved, either as an employee of the firm, or as your own hire to work together with a contractor. This is the best way to have the end result meet your expectation as you see it on paper. After I show my clients the initial schematic, I ask them to wait at least a week before responding so they can study the drawings in their home, and really think how they’ll live.
• Determine whether speed is more important than controlling the numerous phases of the project. Generally the design-build method offers a quicker timeline, but many decisions are made over the course of the entire project including during the construction phase. I’ve seen more projects go from paper to brick using this method than not.
The traditional process of contracting an architect and designer separately is a slower process, but would be ideal for someone who wants to understand every detail and aspect of their project prior to any hammers hitting nails.
While planning your project, keep in mind that the AIA is reporting tremendous demand for remodeling and renovations, with 4.5 month average backlog of projects at residential architecture firms.
So be patient and persistent in your search for a professional to meet your design needs. Spending a little more time in the beginning can help ensure a more successful end result.
By Matthew S. McDonald
SmartAsset has compiled a list of the 10 best housing markets for stability and growth — those with steady growth that avoid the temptation and pitfall of the bubbles.
To find the U.S. housing markets with the most stable growth, SmartAsset analyzed home price data from theFederal Housing Administration on the 358 largest urban markets. They looked at home prices for each of these areas going back to 1990.
For each market, SmartAsset first calculated the overall growth since the first quarter of 1990. These ranged from as high as 320% (in Casper, Wyoming) to as low as 27% (in East Stroudsburg, Pennsylvania).
They then calculated the probability over that same period of time that a homeowner would have experienced significant price declines (5% or more) at any point in the 10 years following his or her home purchase.
Five of the top 10 housing markets with the most stable growth over the past 25 years are located in the west.
These cities — one each in Colorado, Wyoming, Alaska, Montana and Washington State — have all had overall growth north of 200% and very few dips in home prices.
The Lone Star state also fared well, with three of the top ten cities.
The state capital, Austin, placed second overall, with a 242% total growth rate since 1990. Texas is known as a relatively homeowner-friendly state because of its low closing costsand light zoning regulations.
1. Boulder, Colorado
Over the past 25 years, home prices have grown an average of 4% a year in Boulder and are approaching a price level nearly quadruple that of 1990. During that time, home prices have never once seen a decline of more than 5% in Boulder – not even during the national foreclosure crisis. That stability means homeowners in Boulder have been spared the stress of a plummeting market, while still reaping the benefits of price appreciation.
2. Austin, Texas
The Austin housing market is among the hottest in the country, but unlike many other hot markets, Austin isn’t recovering from a major bust. While many cities such as San Jose and Seattle saw price declines of over 10% during the housing crisis, in Austin prices declined by just 3.4% in that time.
Those relatively minor declines were more than compensated for during the rest of the past two and a half decades. According to data from the FHFA, home prices in Austin have climbed 242% since 1990.
3. Bismarck, North Dakota
North Dakota’s economy has consistently been among the strongest in the country over the past three decades. The state’s current seasonally-adjusted unemployment rate is just 2.6%. That economic stability also helps lead to stability in the housing market. Even during hard times, housing demand stays strong, foreclosures are low and price declines are minor and short lived. The average homeowner who bought a Bismarck house at any point in the past 25 years never experienced price declines of 5% or greater.
4. Midland, Texas
This West Texas city has had among the highest overall growth rates in its housing market over the past 25 years, with prices increasing by an average of 3.3% annually. While the city’s economy has historically been driven by the local oil industry, in recent years that hasn’t led to the booms and busts typical of many oil towns. There have been zero periods of significant price declines in Midland since 1990.
5. Casper, Wyoming
The second largest city in Wyoming, Casper’s economy has expanded in recent decades as the region’s coal and uranium fields have been developed. Likewise, the city’s population has grown significantly over the past 30 years. That combination of economic and population growth have led to the highest average home appreciation of any U.S. city over the past 25 years. Home prices in Casper have increased 320% since 1990, an average of 4.7% annually.
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6. Anchorage, Alaska
The largest city in the Last Frontier has remained largely untouched by the housing market swings that have affected much of the lower 48 states over the past two and a half decades. While the city has seen annual average growth of over 3% since 1990, it has not suffered any significant price declines over that same period. That, in general, means more equity and less stress for Anchorage homeowners.
7. Billings, Montana
Even during the recession of the last decade, the economy in Montana’s largest city never really faltered. The unemployment rate in Billings never exceeded 7%. With most people in the city retaining their jobs, foreclosure rates remained relatively low and the housing market in Billings saw relatively minimal price declines. On average, homeowners in Billings had 0% odds of seeing their home value decline by 5% if they bought at any point in the last 25 years.
8. Walla Walla, Washington
Walla Walla is located in the southeast corner of Washington State, in one of the state’s most productive winemaking regions. Growth in the local winemaking industry has bolstered the economy in recent years and sent the housing market to new heights. Home prices have grown nearly 30% since the start of 2005, despite temporary losses during the housing crisis. In fact, Walla Walla’s overall growth rate of 256% since 1990 ranks as the 5th highest of the 358 markets in SmartAsset’s study.
9. Odessa, Texas
On average, a homeowner buying in Odessa over the past 25 years has faced just 4% odds of seeing price declines of 5% or greater. Compare that to cities like Las Vegas and Atlanta, where the odds of such declines since 1990 were 41% and 39%, respectively. But it isn’t just stability in Odessa’s housing market. Home prices have consistently increased there as well. Price levels today are more than triple what they were in 1990.
10. Houma-Thibodaux, Louisiana
Home prices in the Houma-Thibodaux region have grown nearly uninterrupted since 1990. In fact, despite the multiple setbacks of Hurricane Katrina and the recession, home prices declined by just 2.5% from their peak at the beginning of the crisis to their low point. That, combined with average annual price growth of 2.8% make the Houma-Thibodaux market one of the top 10 markets with the most stable housing growth.
By: Trey Garrison
After setting a record in April, single-family home sales dipped two percent to 2,767 home sales in May, according to the May 2015 Multiple Listing Service (MLS) report released today by the Austin Board of REALTORS®.
Single-family home prices remained high, both setting a record for the month of May and increasing at a rapid rate that is outpacing historical appreciation, which is typically four percent annually according to the Real Estate Center at Texas A&M University. The majority of homes entering the market continue to be priced outside of an affordable price range for many residents, with only 25 percent of single family housing options in Central Texas below $200,000.
Barb Cooper, 2015 President of the Austin Board of REALTORS¬®, explained, “Affordability remains an issue across the region, identifying a need for Central Texas to address the “missing middle” with an influx of diverse housing stock.”
According to the report, the median price for Austin-area single-family homes increased nine percent year-over-year to $271,000 in May 2015, while average price increased seven percent to $348,201 during the same time frame.
New listings for single-family homes decreased three percent year-over-year to 3,865 listings, while active listings increased by six percent to 6,323 listings in May 2015. Pending sales remained unchanged at 2,936 pending sales compared to the same time frame last year.
A combination of a slight decrease in home sales and an increase in active listings caused inventory levels to rise in May 2015. Austin-area housing inventory increased 0.1 months year-over-year to 2.7 months in May 2015, a figure still well below the 6.5 month level the Real Estate Center at Texas A&M University estimates as a balanced housing market.
“Unfortunately, the majority of single-family homes can no longer be developed within the region in an affordable price range for most homebuyers. Creating conditions that allow for housing options for all of our residents, such as medium-scale housing options, will help increase housing affordability, improve the tax base and potentially provide income for homeowners,” said Cooper. “Equally important, this type of housing stock allows for greater density and helps residents to live close to where they work and go to school.”
May 2015 Statistics
- 2,767 – Single-family homes sold, two percent less than May 2014.
- $271,000 – Median price for single-family homes, nine percent more than May 2014.
- $348,201 – Average price for single-family homes, seven percent more than May 2014.
- 42 – Average number of days single-family homes spent on the market, two days more than May 2014.
- 3,865 – New single-family home listings on the market, three percent less than May 2014.
- 6,323 – Active single-family home listings on the market, six percent more than May 2014.
- 2,936 – Pending sales for single-family homes, unchanged from May 2014.
- 2.7 – Months of inventory* of single-family homes, 0.1 months more than May 2014.
- $963,472,167 – Total dollar volume of single-family properties sold, five percent more than May 2014.
The following sections describe trends in other sectors of the Austin-area real estate market.
Townhouses & Condominiums
The volume of townhouses and condominiums (condos) purchased in the Austin area in May 2015 was 299, a 15 percent decrease from May 2014. The median price for condos was $231,000, which is eight percent more than the same month of the prior year. When compared to May 2014, these properties spent approximately the same amount of time on market, or an average of 41 days.
In May 2015, a total of 1,569 properties were leased in Austin, which is seven percent more than May 2014. The median price for Austin-area home leases was $1,600, seven percent higher than in May 2014.
More and more people are buying real estate, especially single-family homes and condos, as investments. Real estate can be not only a great investment — it can be a great tax shelter as well. And the more your clients save in taxes, the more real estate they can purchase.
To help you advise your clients how to invest in real estate tax-free, here are four success strategies, including how to use tax-free loans, like-kind exchanges, depreciation and tax elimination.
1. Borrow cash with tax-free loans
Remind your clients that the beauty of real estate is that it’s the easiest asset to borrow against. An investor can always borrow from a bank through a refinance and pay no tax on this debt. The cash is a tax-free loan plus the investor can keep the real estate asset and tax deductions that go along with it.
2. Shelter cashflow using like-kind exchanges
To shelter real estate investment cashflow from taxes, emphasize to investors that they can buy like-kind properties through tax-free exchanges, also referred to as a Section 1031 exchange. In this case, an investor can buy a second property without paying tax on the sale of the first property.
3. Use like-kind exchanges plus depreciation plus debt to never pay taxes on real estate
By combining a 1031 like-kind exchange with depreciation deductions, an investor can avoid taxes on both the cash flow and gain from a real estate sale.
Through a tax-free exchange, the investor not only avoids tax on the gain from the real estate, but he or she also gets to use the bank’s money to purchase the property and get all the tax basis and depreciation. The bank does not get any of it. To ensure success with these more complex transactions, we highly encourage you to refer clients to an excellent tax advisor.
4. Eliminate tax on real estate gains completely
You can also advise clients that they can avoid real estate taxes completely. An investor can benefit from depreciation deductions while alive, hold the property until death, and then the heirs will not have to pay any tax.
The next time you work with a client, you’ll be a hero for sharing these real estate tax-free investment strategies. Simply by mentioning this information, you’ll increase their trust and loyalty because it shows you are thinking about their financial success way after the sale closes.
Tax-free loans, like-kind exchanges, depreciation and tax elimination are all valuable options that can save your clients millions over a lifetime.
This power of real estate investing is emphasized in my book, “Tax-Free Wealth”: “Real estate is such a good tax shelter that a serious real estate investor should never have to pay taxes on their cash flow or on the gain from the sale of their real estate … With proper planning, rental real estate can create huge tax reductions for your business and salary income.”
Here we recap the building permit basics, with links to more in-depth analysis of various stages of the planning, permitting and inspection processes. It’s an overview of a subject you should familiarize yourself with before tackling your home remodel project.
The building code has evolved to protect a home’s occupants as well as the community, but first you need to determine whether a permit is required.
In cases of simple interior cosmetic changes, such as repainting and installing interior trim or carpet, a permit will not be required.
For remodels that add square footage to your home or make structural modifications, a permit will definitely be needed. Other projects, such as those involving cosmetic changes to your exterior or landscape, may or may not require a permit.
When in doubt, take a trip down to your local building jurisdiction and ask, or seek help from a reputable professional in your area.
Your first mission is to determine the entire scope of your project with as much specificity as possible. With a clear understanding of what the job entails, you can prepare your plan for the submittal process.
Once the scope is determined, the next step is getting the approval of your planning department. Planning departments review your plan to ensure that the general plan and rules governing land use in your community are followed. If you live in a community with a homeowners association, you may also need approval from your association.
After receiving planning approval, your plan can be reviewed by the building department. The building department carefully reviews plans for adherence to the building code, including review of any structural, electrical and mechanical modifications.
The generally accepted building code is the International Building Code (IBC), which has been adopted, with some regional modifications, throughout most of the United States.
If you are using a design and building professional, they should have a thorough understanding of the code, but the code continues to evolve, and if you plan to oversee your own project, there are certain rules you should familiarize yourself with. These include egress and electrical requirements.
The purpose of the building code is to protect not only occupants, but also the general community. This is where green building and energy code requirements come in.
Your project will be required to adhere to these codes adopted by your community. Green building codes set minimum standards for a project in terms of water consumption, air quality, toxicity of materials, building efficiency, general waste reduction and storm water management.
Energy code requirements vary greatly depending on the region you live in, and they involve details such as insulation and HVAC systems regulating the energy efficiency of your home.
While the number of inspections required for a given project can vary greatly, from one simple visit to a series of a dozen or more, there is one piece of advice that holds true in all cases: It pays to develop a relationship with your inspector and seek his or her advice every chance you get.
Reputable building professionals establish trust with local inspectors, and if you are doing your own work, you should build a rapport with your inspector by communicating openly and listening to the inspector’s advice.
The required inspections for your project should be clearly defined by your building jurisdiction and might include areas such as concrete, utilities, underfloor work, exterior walls, roofs and insulation, all leading up to the final inspection.
It’s the moment of truth. On the day of your final inspection, all the planning and all the work are in the rearview mirror, as long as the inspector conducting the final review says so.
If you have properly prepared for the final inspection by communicating with your inspector, seeking a checklist of all the requirements to be reviewed, you have gone a long way toward ensuring success. There are some specific requirements that commonly trip up projects (we list some in the story linked below), but the most common infraction is a failure to follow the approved plan.
Hiring a reputable professional is the best way to ensure success, but if you are doing the work yourself, be sure you are educated on the building permit requirements relating to your project.
By: Matt Clawson