The Heat is on in Austin!

With the recent release of the film "Hope Floats," movie-goers were able to experience the beauty of Texas Hill Country. In fact, the film's star, Sandra Bullock, maintains a home in Austin in the heart of Hill Country, an area the actress has been quoted as saying represents a quiet refuge not available to her in Los Angeles or similarly large cities. It used to be that if you weren't from Texas, you probably hadn't heard much about Austin, other than its capital city status. Now, it seems the cat's out of the bag. Texans and out-of-state transplants alike are flocking to Austin and its surrounding areas, drawn here by the coexistence of urban development and nature preservation, the lively local music scene, friendly weather, and laid-back pace.

That pace, however, has increased as the city grows. One happy transplant from Manhattan told me she'd initially visited Austin about 10 years ago, prior to her move to Austin just three years ago. Back then, she says, the city's pace felt "comatose." These days, however, the story has changed. Urban development along the Barton Springs -- the jewel of Austin, which cuts through the heart of the city -- has put a charge on the pulse of the city, not only for the increased traffic it generated, but also the contention from local environmentalists fighting to stave off development near the springs. Dressed in Birkenstocks and denim at her office near downtown Austin, the New York native smiled and told me that the city's pace felt "just right" now -- after all, Austin is still a far cry from the frenzy she left.

There's a frenzy going on in Austin's residential market, as well. Prospective buyers are finding they have to move fast and pay more if they want the bragging rights to a home in Austin. One recent buyer, quoted in a recent story in the Austin American-Statesman, told of his shock upon arriving in the city from Oregon, only to find himself shut out of the home of his dreams when he didn't move quickly enough. Lesson learned. The buyer found another house and made an offer 10 minutes after walking over the threshold. His winning bid was $250,000. What did he get? A two-bedroom, 1,500-square-foot home. That's quite a contrast to other Texas cities, where $250,000 often will get you a four-bedroom home with far more square footage. The feeding frenzy is on in Austin.

What's fueling this boom is the city's growing status as the country's other Silicon Valley. This high-tech haven recruits graduates from all over the United States, who are lured here by the lifestyle and the fact that while Austin's home prices are high, they're a bargain compared to prices in America's other Silicon Valley in the San Francisco Bay Area. What Austin now shares with San Francisco, however, is a residential market in which homes sell within hours, and desperate bidders end up paying much more than they planned -- figures well above the original asking prices.

Low interest rates and high consumer confidence are driving the frenzy, as well. And of course, all of these contributing factors are boosted by the fact that we're right in the middle of moving season.

"Houses are selling before they're even on the market," Marty Halseth, president of the Austin Board of Realtors, told the Austin American-Statesman. "It's [the market] spinning so fast you can barely grab hold of it," Charlotte Lipscomb, a Realtor with Avenue One, said in the same report.

The Austin Board of Realtors reports there were 5,408 homes on the market in the Austin area in June. That's 18 percent fewer homes than the same period one year ago. Median home prices rose by about 4 percent in 1997. Currently, the average home in Austin is on the market for approximately two months before being sold.

Here are some other "believe it or not" stories out of Austin's red-hot residential market: In the city's Lakeway neighborhood, one buyer recently paid $15,000 above the asking price to make sure he got a house (little wonder he did). And in Austin's Clarksville area, one couple offered a woman $10,000 in return for the sales contract on a condominium. And in Austin -- much like San Francisco -- some trusting home buyers are asking real estate agents to make sight-unseen offers on homes.

Austin renters, too, are paying record amounts for the privilege of residing in Hill Country. The city's tight apartment market has driven rental rates to an average of $840 per month for a 1,000-square-foot apartment. Rents like those are driving many consumers into home ownership for the first time.

The available supply in some areas of Austin, however, hasn't been able to keep pace with the growing demand -- particularly Central Austin, West Lake Hills, and Northwest Austin. Uncharacteristically strong home sales last winter -- a period usually considered the slowest time of the year -- has led to a low inventory. It's hard to watch the current feeding frenzy without recalling the mid-1980s, when the housing boom was followed by a significant bust, by many Austin agents and brokers claim that the city's healthy, more diverse economy driven by the high-tech market will provide an insurance policy against the repetition of history. Realtor Bill Stanberry told the Statesman that the current boom is in fact a bona fide demand for housing, unlike the '80s, when people bought and sold houses at a record pace in order to make fast money.

Prospective buyers who have their hearts set on Hill Country are being well-advised by their agents to obtain prequalification for a mortgage and prepare themselves to move quickly, making offers quickly and above asking price, if necessary -- and it usually is.

Published: July 15, 1998

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