With the latest reports suggesting that one out of 20 technology jobs will be shipped overseas by 2004, technology hub Austin, Texas has seen its share of tech-bubble job loss and foreclosures, leading Austin Realtors to differ on the advisability of buying a HUD home.

"Austin is a captivating city full of diversity, beauty, entertainment and a wealth of job opportunities," say Realtors Rob and Carolyn Abbott. "Whether you are looking for a home in the rolling hills or a condo with cityscape view, you can find it not too far from the vibrant musical culture and gorgeous parks downtown. In Austin, whether you choose to enjoy an afternoon of major college football, dine at any of the hundreds of fantastic restaurants, or relax in a spring-fed pool amidst the beautiful preserved greenbelts of Zilker Park is up to you. It's your city to explore in your time. Austin brings a little something for everyone."

The Abbotts say, "While sales are down from last year, home listings taken are up. With a normal load of buyers entering the marketplace for the season,a surplus of inventory means there aren't enough buyers at this time to meet demand. Prices on homes continue to edge downwards in order to encourage the buyers there are out there to make that decision!

"The end of the war with Iraq didn't provide a dramatic lift to business and consumer confidence we were expecting, however, residential real estate is doing well in the big picture, with all-time low interest rates and a slight increase in housing starts," they explain. "So, we still find ourselves in a buyer's market with a surplus of inventory keeping demand well-satiated and sellers often anxious to see more traffic. Less buyers than sellers means more inventory and a high number of lease/sale combos--frequently in already vacant homes.

"Since we also specialize in HUD-owned homes, allowing many of our buyers the option to view or purchase from the increasing number of foreclosed homes in Austin and surrounding areas--many now priced well under "As-Is" market value--we can say that there is more inventory in this market than we've seen in the last four years, allowing for a good chance for a great buy on a HUD-Owned home for those starting out or looking for investment opportunities. Other opportunities in this market include an opportunity to pursue a move-up plan--as the market continues to soften in the upper price ranges (especially 350,000+) and interest rates remain very attractive."

The Abbotts advise, "Those of you considering selling should carefully consider pricing your home to market value, and not pricing yourself out of the market at a time of inventory surplus. Those of you considering purchasing in the near future are presented with incredible choice, good negotiation leverage, and low rates."

Says Realtor Ron Helle, "The Austin and central Texas real estate market are in transition. Whether you are buying or selling, you need the necessary information to make good decisions.

To buyers, Helle says, "Now is a good time to buy in the Austin market. Because there is a larger inventory, a buyer typically has a greater selection. There are some good opportunities out there! There seems to be some reluctance on the part of many buyers right now to make an offer, fearing that the market may continue to drop. Interest rates are beginning to rise, having just hit 6 percent in the end of July. I think that waiting could be more costly if you are considering a home purchase. By that I mean that a higher interest rate will cause your payment to be much higher even if the purchase price is lower. It is not going to be like the 80's were in Texas. There are an increased number of foreclosures, but for the most part they were probably overpriced to begin with, and the price that the bank places on them is not going to be significantly below market, if below market at all. My observation is that waiting for a foreclosure isn't necessarily going to get you a significantly "below market" sales price! Most of the foreclosures are HUD homes. These are homes with FHA and VA financing where owners with little equity walk on their lender. In many cases they are trashed, and the normal protection found in a conventional contract isn't there to protect you.

"We do not do HUD sales because they are usually not the best deal for qualified buyers," he maintains. "What my buyers are seeing is that homes that show well, and that are priced well, sell quickly. Most have found out the hard way that, if they see something they like, they need to move fairly quickly. That is not to say that there are bidding wars on homes for sale. It simply means that everyone else is probably looking for the same thing that you are! The reality is that the average sales price in Austin has still continued to have a slight increase on fewer sales, not exactly an indicator that the market has tanked! You need an agent that is going to be able to quickly get you information on homes in your range so that you can move quickly when you find something that you like. Just for the record, in the Austin market overall, the average sales price is up almost $1,000 for April 2003 from April 2002, and that was on fewer sales."

"Where you want to purchase makes a big difference as well. The overall inventory in the Austin market (all MLS areas) is 7.83 months. A seller's market is typically where there is 6 months or less inventory. A buyer's market is typically a year or more of inventory. In between is considered a healthy market. But when you go geographically, there are areas where the inventory is as much as 15 months. An informed Realtor can guide you through this process."

To sellers, Helle suggests, "Now is not the best time to have your home on the market. If you don't need to sell, I would wait. We are seeing some positive indicators of increased activity. If you do need to sell, however, it is not the end of the world! The median sales price and the average sales price vary in various segments of the market. There are some people who "fire sale" their homes or property to get out. The result is more one of expectations than reality. If you have "buyer's agents" conveying to their clients unrealistic expectations about the declining market, it becomes difficult if not impossible to get buyers and sellers together for a sale, since most sellers aren't as anxious as some agents seem to believe. The real issue is ensuring that your agent get you the proper market exposure needed to ensure a sale! In the Austin area real estate market there has been a sharp increase in residential listings, so there are more homes for buyers to choose from. It is important that your home show well if you expect to get an offer. Older homes typically need to have some updating done if they want to compete in the existing market. Few buyers want to tackle remodeling after closing! Paint, carpet, tile, appliances and roof replacement are typical areas where improvement is going to be necessary to compete. It is possible to sell without doing those things but it will limit the marketability of your home. In all likelihood, you will only realize a price increase equal to your investment but your chances of a sale are increased dramatically."

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Published: August 18, 2003

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