Austin Texas is one of the tightest real estate markets in the country. Austin still is ranked as one of the fastest growing cities in the United States with an estimated 130 people moving here a day. This can make finding a place to hang your hat extremely difficult. If you plan to rent, it's a renters market. This means you will pay top dollar to rent a decent apartment and your rent will only continue to rise at an alarming rate. You can look into buying a resale home in the area, but it is also a sellers market. This means you can expect to have to bid on a house in order to purchase the home. On a $400,000 home it is not uncommon to have to pay an extra 3% or more to secure the contract. In addition, many sellers are over pricing their home in order to get top dollar and if they are patient the will get it.
I am a licensed real estate agent in Austin and focus exclusively on new construction homes. This segment of the market is where my clients can get the best bang for their bucks in today's market and here's why: New homes are priced to be competitive with other builders in the area and this competition keeps the prices of the homes lower. New homes are new. You don't have to worry about renovation or replacing things like AC units and water heaters for a long time. New homes have the latest technology and can save you money in the long run. Things like radium barrier insulation, new window technology and hi tech thermostats can keep energy costs down as much as 45%. Many people desire new homes. Who wouldn't? Would you rather buy a brand new car or a 15 year old one? Especially if the new car was less expensive. It's the same with a home, yet many real estate agents steer their clients away from new homes simply because they do not know about new homes or have builder relationships. The majority of agents tend to focus on what every other agent is doing and that is selling premium resale homes listed on MLS. That is what they know and are comfortable with. Yet studies show that 45% of the people looking for a home desire new. This leaves a huge segment of the market unserviced. Many of the people looking for a new home end up going it alone. I hear directly from the builders on-site agents that anywhere from 20% to 40% of clients buying a new home from builders do so unrepresented.
I am the managing partner for a real estate agency in Austin, TX. That is where my company New Home Locators comes in. This segment of the market is what we specialize in and our service is essentially free to our clients. Our commissions are built into the price of the home. If you do not have a real estate agent, the builder simply keeps the commission. There is a myth that you can save money on a new home by not using an agent. This would be an unethical practice. It's like telling someone they can save on court costs if they come to their trial without a lawyer. Remember this is a legal process that involves purchasing the most expensive item most people buy in their lifetime. Your agent will now if there is anything out of the ordinary in all those papers you sign at closing.
Financing a new home is much simpler that with a resale home. There were no previous legal owners of the property so you don't have to worry about inspections, liens, judgements and the like. There are also loan programs in Texas that allow you to buy a home with no money down. These $0 down loans are sponsored by the USDA and are designed to relieve over populated areas like Austin and to spur economic growth in rural areas. There are zones in and around the Austin area that can make a home eligible for a USDA sponsored loan. These areas are based on population. Since these areas are growing at a rapid rate, the opportunity window to buy a $0 down USDA home is quickly shrinking. The qualifications for a USDA loan are a minimum credit score of 640 and a total income of at least $3600 a month before taxes. You also can not make more than $87,700. This limit can increase depending on the number of members who will be living in the home.
Affordable housing is still available in Austin and surrounding areas. The secret is to think new homes. These homes are in safe and desirable communities. In Austin, the prices start in the $190s. That is not a typo. However, these homes go very quickly so the trick is to be ready. I know of really sad stories where people were interested in homes but wanted to think about it for a few weeks and when they came back to buy the home, it was already off the market.