In Round Rock, Texas, Real Estate Values Bring Growth

Austin, TX – U.S. Housing News — Every few years, a little-known city or town will start to get national attention, followed by rapid growth. Someone in the media will “discover” the place and write about it favorably. This puts it on the radar of folks who are looking to relocate. And before you know it, you have a population bubble. Such is the case with the Round Rock, Texas real estate market, as of 2010.

Couple in neighborhoodIn July of 2009, the Census Bureau reported that Round Rock, Texas was the second-fastest growing city in the United States. New Orleans was #1 in terms of growth, but that city is in a different category altogether.

So you could say that out of all the cities in the U.S. that didn’t suffer a hurricane-fueled exodus, Round Rock is the fastest growing.

Rankings aside, we are talking about some serious growth. The population of Round Rock grew by 8.16% from 2007 to 2008, and the rate of growth has slowed only slightly in subsequent years.

So what’s driving this growth, and how does it affect the Round Rock real estate market? These are questions worth asking, because they make for a good case study in housing markets and population trends. Here are some of the factors that are attracting people to this Central Texas location:

Round Rock at a Glance

Home prices. By and large, Texas avoided the housing bubble that recently burst over the rest of the United States. From the late 90s to the early 2000s, much of the country was swept up by housing mania. Fueled by speculation (and a touch of lunacy), home prices shot up across the nation. But not so in Round Rock, Texas. Appreciation in that city could be described as slow and steady. As a result, the Round Rock real estate market is one of the most affordable in the country. For now, at least.

Bedroom community. Round Rock is located about 15 miles north of Austin, the state capital and the Live Music Capital of the World. And Austin has plenty to offer, from restaurants to recreation. Homeowners in Round Rock have the convenience of living close to Austin, without the cost of living in the city.

Infrastructure. It recently got a lot easier to drive to Austin from Round Rock. In fact, you don’t even have to drive. A brand-new MetroRail began running in March of 2010, and it links Austin to several stations located near Round Rock. Several new toll roads have also made north-and-south transportation a lot easier.

Media. In 2008, Money magazine listed Round Rock as the seventh-best American small city in which to live. In March 2010, Forbes magazine published a list of ten cities where the recession is easing the most. The Austin / Round Rock metro area tied for first place, along with the Washington DC.

This kind of coverage has put the city on the radar of relocation-minded people from all over the United States (especially Californians who cashed out before and during the bust).

Family Friendly. This phrase gets tossed around quite a bit in marketing pieces, but Round Rock truly measures up. The city offers solid schools, plenty of parks and rec, and one of the lowest crime rates in the country.

Attention home buyers: If you have questions about buying real estate in Round Rock, Texas, you can visit our main website. There, you’ll find hundreds of tutorials on the home-buying process.

How to Sell a House in 2010 – Special Report

Austin, TX – U.S. Housing News — It’s a buyer’s market in most cities across the country. So if you want to sell your house, you need to go the extra mile. You can start by focusing on the three P’s of home selling.

Reader Question: “I’m trying to sell my house, but it’s been on the market for a long time. A few people have looked at it so far, but only one person made an offer. That deal fell through because the buyer could not get their financing. Now the home is back on the market. How do I sell my house quickly in this kind of economy?”

soldThis is a common question among homeowners right now, and it’s easy to understand why. Housing inventories are high, buyers are having trouble getting loans, and foreclosures are dragging down property values. This is the recipe for a buyer’s market, and that’s exactly what we are seeing in most cities across the United States.

So let’s revisit the question at hand. What does it take to sell a home in this kind of environment? What steps must a homeowner take to get it right? In short, you must go through the same steps that have always worked. You just have to do them better. This is what separates the houses that sell quickly from those that stay on the market for months.

But let’s get specific. Here’s how to sell a house in a buyer’s market.

Pricing, Prepping and Promoting – The Three P’s

When a person can’t sell a house, it’s usually due to one of the following reasons. Let’s call them the three P’s.

1. Pricing — If the home is priced too high based on current market values, it will be less likely to sell. This is one of the biggest mistakes sellers are making right now, and it has a lot to do with our economic downturn. Home values have declined over the last few years, in almost every city in America. But some homeowners don’t realize this, so they base their asking price on the amount they paid for the house a few years ago. Others homeowners are simply in denial and refuse to accept the market reality. Either way, it leads to an overpricing situation. And that’s the number-one reason why homes don’t sell.

You (or your agent) should review comparable sales in the area for the last three months. This will tell you what people are willing to pay for your house. Buyers today are more savvy about listing prices, and they’re on the lookout for overpriced properties. Some will make a reduced offer for such a home — others will dismiss it entirely. This is not the kind of scenario you want. If you want to sell your house in a buyer’s market, you need to price it accordingly.

2. Prepping — Up the street from where I live, there’s a home for sale. The sign on the yard says “Priced to Sell.” The house has been on the market for about eight months now. It might be priced to sell, but it’s clearly not prepared for the market. The front yard is a jungle. The shutters are in desperate need of a paint job. And based on what a local agent has told me, the inside is just as bad — outdated, ill prepared, and unimpressive.

Pricing is the most important factor when selling a house, but preparation comes in second. If you want to sell a house in a buyer’s market, you need to make it outshine similar homes for sale. This means staging, painting, cleaning, landscaping, and updating the fixtures and features. Compare these small expenses to the extra mortgage payments you’ll make if it doesn’t sell, and the path becomes clear.

3. Promoting — Let’s assume you’ve set a realistic asking price, and you’ve worked hard to make the home look its best. What’s next? Now is the time for marketing. You must promote the home in every way possible, in order to bring in qualified buyers.

Remember, there are fewer buyers right now, as a result of soaring unemployment and tighter lending standards. Your audience has shrunk. This means you must market the home more effectively, to bring in as many buyers as possible. At a minimum, you should list the house on the Multiple Listing Service (MLS). You should also put it on at least one of the big real estate listing websites. It helps to have a yard sign too — simple but effective.

Old advice … with a new twist. The three P’s have always been important when selling a house. But in a buyer’s market such as 2010, you have to go the extra mile in all three areas. You must price the home competitively, prepare it for the market, and then promote the heck out of it. This will bring in the highest number of buyers, which is the first step to getting an offer. This is how to sell a house in a buyer’s market.

How to Sell a House in 2010 – Lessons from the Field

You can learn a lot from the folks who deal with these challenges for a living. Here’s what real estate agents across the country are saying about this subject:

  • San Antonio real estate agent Matt Stigliano reiterates the pricing point: “A bad price can label a home with the dreaded ‘overpriced’ stigma very quickly — and that stigma is hard to wash off.”
  • Joe Manausa, a Tallahassee real estate broker for Century 21, talks about the importance of online visibility: “To successfully market a home on the internet, the home must be positioned on a highly trafficked real estate web site where … home buyers are shopping.”
  • The folks at McMillin Realty also stress the importance of property photos: “The more photos of your home are associated with the listing, the longer time buyers will spend looking, and they will be more likely to come see your home.”
  • 512 Developing, an Austin home builder, explains how shoppers become more picky in a slower market: “In a transition from a sellers to a buyers market, buyers become much more sensitive to things like dated light fixtures and other things that you might over look.”

Recent Home Sales in My Area – Hot Topic for Homeowners

Lately, a lot of homeowners want to find recent home sales in their neighborhoods. More so than usual. Google queries for this topic have skyrocketed in recent months. Here are three websites you can use to find recently sold homes near you.

soldWe review Internet search trends on a regular basis, as part of our publishing process. This helps us identify the topics that are most important to home buyers and homeowners. Here’s what we recently discovered: The phrase recent home sales in my area has skyrocketed in popularity over the last few months.

According to Google’s keyword research tool, there are thousands of searches for this phrase every day. When you add in similar phrases, such as “recently sold homes” and “home prices in my area,” the number of Google searches exceeds 10,000 per day. And this doesn’t even account for the other search sites, like Yahoo and Bing.

This is a relatively new trend, driven by economic events. Over the last three years, we have seen a dramatic decline in property values across the country. As a result, homeowners have lost a lot of equity in what they thought was a safe investment. Now, people are going online by the thousands to research recent home sales (and prices) in their areas.

How to Find Recent Sales in Your Area

In the “old days” before the Internet came along, you had to visit your friendly county officials to retrieve this kind of data. These days, you can visit any of the websites listed below to pull up recent sales. It’s a great way to find out what the market is doing in your area. It’s also a good starting point for pricing your home effectively.

trulia-corner
Trulia has expanded its horizons quite a bit, since it first went online in 2005. Today, the real estate website offers a wealth of information, search tools and other resources. They also give you easy access to recent sales data on homes. You can see the “recently sold” tab in the image above.

zillow-corner
Zillow started off primarily as a home value website, where you could get an estimate of your property value. But like most of the sites in this niche, it has broadened its content offering. It now offers a comprehensive search tool that allows you to find recent home sales in a particular area (among other things). When you’re presented with a map or a list of results, you can check certain boxes to tailor the data. In the image above, you can see that the box is checked for recently sold homes.

sold-corner
Sold.com is owned by the same company that owns Homes.com, and other realty websites. It’s easy to find information about recently sold homes on this site, because that’s their primary offering. The name says it all. You don’t have to check any boxes or click on any tabs. You just do a search by address or city, and you’ll be presented with a list of sold homes.

Getting Your Home Appraised

If you’re planning to sell in the near future, you might want to have your home appraised by a real estate appraiser. The websites listed above are helpful, in the sense of giving you sales data for your neighborhood. But they don’t take other variables into account, such as the upgrades you might have made to your house.

You should also realize there are still plenty of foreclosures on the market, in most cities across the U.S. This has a negative effect on property values, and it could drag down the appraised value of your home as well.

Low Property Appraisals – The Hottest Topic in Real Estate?

There is much ado about low property appraisals lately. Many home builders, sellers and real estate agents complain that appraisals are skewed by foreclosure homes.

Low property appraisals are the topic du jour in the real estate world. Today, for example, nearly a dozen major news outlets ran stories about low appraisals on their real-estate front pages. It’s also generating a lot of discussion, such as this recent Q&A session on the MarketWatch website.

We are going to throw our hat into this ring as well, but from a different angle. In true DHN fashion, we will put this news into perspective for first-time home buyers. Here’s what a first-time buyer should know about property appraisals, and what it means when they “come in low.”

What is a Property Appraisal?

When you buy a home, the mortgage lender will send a professional appraiser out to review the property. He or she will compare the house you’re buying to recent sales in the area. They also consider upgrades to the property, such as swimming pools and kitchen renovations. Based on all of this, the appraiser will come up with a property appraisal — an educated guess of the home’s current value. The lender does this to protect its own financial interests. If the appraisal comes in lower than the amount you’ve agreed to pay, there’s a problem.

When the Appraisal is Below the Purchase Price

Let’s say you’re interested in a home that’s listed for $270,000. Your real estate agent reviews some comparable sales in the area and advises you to offer $250,000. You do this, and the sellers accept your offer. If you’re paying cash, the deal is nearly done. But if you’re using a mortgage lender, like most people, you have to get their take on the home’s value. So the lender sends an appraiser out to evaluate the home, and he says it’s only worth $210,000. Based on the low appraisal, the lender is only willing to give you a loan for the lower amount — $210,000.

This kind of scenario happens often, especially in the current economy. High foreclosure rates have a lot to do with it. Many real estate agents don’t use foreclosure sales when they evaluate pricing. But a lot of home appraisers do consider foreclosures. Thus, we have a discrepancy in values. In the current real estate market, this a common reason for low property appraisals.

How it Affects Home Buyers

A low appraisal actually works in favor of the home buyer. In the end, it can help you save money on your purchase. It can also prevent you from paying more for a home than it’s worth. The down side is that it can add some hiccups to the process.

For example, if your initial offer gets accepted, a low property appraisal could delay (or even derail) the whole transaction. It all comes down to what the sellers do in response to the lower appraisal. If they agree to lower the asking price to reflect the appraisal, then the deal is back on. If they stick to their original / higher asking price, then you’ve got a problem.

Here’s the bottom line. It’s never a good idea to pay more for a home than it’s worth. This puts you in a negative-equity situation, right from the start. But it’s not always easy to determine the “true” value of a home, especially when different players are looking at different data. If you’re presented with two different appraisals from two real estate professionals, you should base your offer on the lower of the two.

Home Prices in Your Area are the Only Ones that Matter

If you only read the news headlines right now, you’d think every real estate market in the country was experiencing an upswing. For example: “Home Prices Rise for the Fifth Month in a Row.” That’s the headline making the rounds today. But this is based on national trends and averages, so it’s essentially useless to an individual home buyer.

home prices seesawTake Denver and Las Vegas, for example. From a home-value standpoint, these two cities are on opposite ends of the seesaw. Prices in Denver have been rising pretty steadily for the last few months. On the contrary, home prices in the Las Vegas metro area continue to fall, with no “bottom” in site.

So a headline proclaiming a rise in home values would be irrelevant to a buyer in Las Vegas (or one of the many other declining markets in the United States).

As a first-time home buyer, there is only one real estate market you need to worry about, and that’s the market where you plan to buy. Here are some of the key factors you need to know about home prices and other factors, before you buy a house in a particular area.

5 Things to Know About Your Real Estate Market

  1. Home-value trends for the last 12 – 18 months. This will give you a general sense of what has happened in your area (bubble or no bubble), and will also help you understand the other items below.
  2. Changes to home prices in recent months. This gives you a more accurate idea of what’s happening in your real estate market right now. Combine this with item #1 above, and you’ll know whether a home purchase is a good or bad investment right now. If you buy a house in a declining market, you could be losing equity from day one.
  3. Price differentiation for the neighborhoods / areas you are considering. In some areas, prices are fairly consistent across the board. But in other cities (like San Francisco), you can pay 25% more for the same house just by going across the street. You need to know how neighborhoods affect pricing in your area, in order to make an educated decision.
  4. Foreclosure rates in your area. Do you live in a high-foreclosure area? If so, home prices are less likely to rise (due to the increased surplus). Also, if you’re up for the challenge of buying a foreclosure home, you could save money by purchasing below market value. The first step, as always, is to understand what’s happening in your local real estate market.
  5. Property taxes in different neighborhoods and communities. I live in Round Rock, Texas, which was recently named the second-fastest growing city in the U.S. Property taxes here are ridiculously high. But if I had purchased a home in the subdivision across the street (a Municipal Utility District), my taxes would have been much higher. Taxes are the ‘T’ in the PITI acronym that makes up your mortgage payments — principal, interest, taxes and insurance. So a higher tax rate means a larger mortgage payment each month. You need to research this for your area.

National real estate trends help us understand what’s happening in the country as a whole. And that’s all well and good — there’s certainly a need for that kind of information. But for an individual home buyer, they are not nearly as important as local real estate trends in the desired area.

Reminder: Housing Tax Credit Expires in April 2010

If you are thinking about buying a home in 2010, you might want to do it before the end of April. That way, you can qualify for a tax credit of up to $8,000 (if you meet the other requirements).

The federal housing tax credit gives first-time home buyers some added incentive to buy a home. Granted, you should never purchase a home until you’re financially ready to do so. But it certainly helps to get a tax credit of up $8,000. The program has been extended until April 30, 2010, and it could even be extended beyond that cutoff. As of right now, however, you must buy a home by April 30 to qualify for the credit.

Here are some notable dates, straight from the horse’s mouth (the horse being the IRS):

“You must buy the home after April 8, 2008, and before May 1, 2010 (with closing to take place before July 1).” –Source

Housing Tax Credit Q&A

Here are some frequently asked questions about the program:

1. Who can claim the $8,000 housing tax credit?

Anyone that meets the loose definition of “first-time home buyer” is eligible for the federal tax-credit program. I put it in quotes because it has a broad definition. If you have not owned a home (as your primary residence) in the three years prior to your home purchase, then you meet the IRS definition of “first-time” buyer.

Example: Let’s say that I buy a house in February, and my closing date is on March 3, 2010. If I have not owned a home as my principal residence between March 3, 2007 and my 2010 closing date, then I’m eligible for the $8,000 housing tax-credit program. Of course, I might not qualify for the maximum $8,000 amount — that would depend on the purchase price of the home I bought. But I would qualify for a credit of some kind. Remember, you must purchase by the end of April, but your closing date can later than that (before July 1, 2010).

2. Are there any other restrictions, such as income?

Yes. Rich people are excluded from the tax-credit program. But seriously, there are some specific income limits for the program. Single filers must make less than $125,000 per year, and joint filers must make less than $225,000. Please note the publication date of this article (December 2009). This program could very well change in the future, so you’ll need to visit the IRS website for current details.

3. Is there anything for homeowners buying a new home?

Yes! Under the expanded tax-credit program, homeowners who sell their current home and then buy another one qualify for a credit as well. In this case, the credit amount is up $6,500. The same deadline applies.

4. Where can I learn more about the credit?

I recommend visiting the IRS website. There’s a lot of misinformation floating around about this program, especially on the Internet. I have seen some frightfully inaccurate information posted on blogs and websites. So start with this IRS explanation of the federal housing tax credit, and you’ll know exactly how it works.