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Austin Area Foreclosures Up 31%

Friday, July 25, 2008
by Kent Redding & Terrill Fischer
We are seeing a sizable increase in the number of foreclosures posted for next month (August 2008)) in the Austin area over last year. This was reported recently in the Austin American Statesman.

"The number of Austin area residential foreclosures posted for the upcoming August auction increased 31 percent over last year. There are 741 postings for August in the four-county region, up from 564 in August 2007, according to the latest report from Addison-based Foreclosure Listing Service Inc. The largest increase in activity was in Travis County, which experienced a 62 percent surge in postings in August compared with the same month last year. It's also the seventh consecutive month that Travis postings have exceeded 300. Through the first eight months of the year, there have been 5,715 foreclosure postings, a 20 percent uptick from the same period in 2007. In the four counties included in the Austin metro, year-to-date postings are: Travis: 2,902, up 23 percent; Williamson: 1,788, up 23 percent; Hays: 639, up 11 percent; Bastrop: 386, up 2 percent." Austin American-Statesman

Even with this increase this doesn't mean that all these foreclosures are good deals. In fact we've seen a number of them that are overpriced and the banks aren't too flexible in dropping the prices much. With the slowing economy and job market has contributed to this rise in foreclosures. Most of the foreclosures are in the lower priced home areas. Another factors is people bought these homes and should NOT have been approved for a loan. The lenders were way to generous with their money on a lot of these loans and now it's coming back to bite them.

Austin Foreclosures…the Effect on Homeowners Associations And The Taxbase

Thursday, May 29, 2008
by Kent Redding & Terrill Fischer
Delinquent fees at condo and homeowner associations are another result of the mortgage crisis. The increased foreclosure rate has negative connotations not just for associations but the entire tax base. In some parts of the country, new communities have mandated associations. This reduces the infrastructure a city or municipality has to maintain.

As foreclosures increase, associations are seeing a significant decrease in their income.  As a result, many have upped the fees for those homeowners who remain…but many aren’t paying.  As reported in the USA Today, associations don’t always get help from the banks and mortgage companies either.  They state that “In 13 states, banks or mortgage companies generally must pay at least a portion of the delinquent community fees when they foreclose.  In other states, the association’s only recourse may be to sue for unpaid fees, thereby racking up legal bills in what often turns out to be futile pursuit of dollars owed.” When an association has to pay legal bills, that money comes out of available funds.

Aside from an increase in fees, how are communities feeling the effects?  Cutbacks in services normally covered by the homeowners associations are being seen across the country. We've seen here in Austin with a number of homeowner associations. Landscaping takes a big hit as the common areas aren’t mowed as frequently and flowers aren’t always planted.  Planned improvements for the communities have been postponed or, in some cases, canceled. Also some have had to take on improvement projects or make big repairs which they pass on the homeowners in more fees.

Volunteers are being recruited to help with neighborhood cleanup and maintenance in pools and recreation centers.  In some areas, associations have been forced to temporarily cancel amenities such as trash removal, building maintenance and electricity.

Homeowners are encouraged to pay attention to their association by-laws.  Most associations have by-laws that should cover delinquent budget dollars and may even have significant reserves. Make sure you know the guidelines for fee increases in your community.

Buyers are ready! (Well...almost)

Friday, May 02, 2008
by Kent Redding & Terrill Fischer

We are seeing a lot of buyers that are sitting on the fence.  They want to buy, but....yet.....not.... quite now.  And that's ok.  Buyer should be prudent, but buyer's showing signs of pent up demand. Following more than two years in a real estate slump, a large majority of consumers surveyed say they want to buy real estate within the next two years, according to a new Housing Predictor poll.

According to the company, three out of four respondents to the online survey said they will be in the market to buy property in the coming two years. Some even want to make their purchases sooner. Congress is working on a plan to aid some victims of foreclosure, which are already at record levels. But the proposals lack the ingredients to help more than a third of those that are facing the possibility of foreclosure. Housing Predictor forecasts foreclosures will top 5.6 million units through 2011.

The real estate crisis has developed into the worst financial crisis for the nation since the Great Depression, which Housing Predictor analysts forecast last year. It has sent shock waves through the Wall Street community and other financial markets, sending the nation’s economy on a downward cycle.

The company says that many consumers are willing to take the leap back into the market in even shorter time frames.

Demand on the part of prospective real estate buyers has increased as a result of slumping home sales, lower prices and the Federal Reserve’s series of interest rate cuts. The over-whelming majority of housing markets in the nation are forecast to deflate in 2008.

All time record numbers of foreclosures are at least leading in part to the nation’s thirst for investing in real estate. More than two million homes have already been foreclosed as a result of the real estate crisis, and higher adjustable rate mortgages many home owners have been unable to afford. Foreclosures are increasing and are forecast to worsen over the next three years unless widespread Federal intervention occurs.

source: RISMEDIA - April 2008

In Austin, Waitin' Ain't Workin'

Saturday, February 23, 2008
by Kent Redding & Terrill Fischer

We continue to get this question from our investors, “When should I buy”?  Our answer is NOW!   This is not so we can achieve some sort of sales goal, but this BUY NOW! philosophy in Austin / Round Rock area is backed up by rock solid historical data.

 

Our market is continuing to show strength and considered one of the best real estate investment markets in the country (click here for New York Times article).  Despite our higher inventory of current available properties that is up 26% from 2007 (good for buyers) average home values have never slide and are continuing to rise (bad for buyers). 

 

In fact, after a quiet December / January season our market is heating up a quite a bit over the last 30 days.  The rental market continues to be strong as lower end buyers are having trouble with credit, lending and qualifying so they are forced to rent.  But what about the foreclosures?  Yes, foreclosure rates are rising throughout the country and the Austin / Round Rock market is experiencing some of that.  But think about it fans, what do those foreclosed on families due for a roof over there head?  They RENT!  So do mean you can by a foreclosed property and then rent it back to the former owner that was foreclosed out of their home?  Yep!  It sounds kinda of cruel, but in fact is the reality of the successful real estate investor.

 

Click here to view Round Rock investment homes less than $120K

 

A good example we are seeing by our savvy investors are purchases in some of the RR areas that have appreciated 4 – 6% over the past 6 months.  Hypothetical example… a home purchased at $130K in September 2007 with $20K down that rents for $1100 a month and that might have had a slight negative cash flow of $100/mon has appreciated 6% is now valued at $137,800.  So the ROI on that $20K investment is $7,200 or 36% in six months ($7,800 appreciation minus $600 negative cash flow =$7,200).  Obviously this is just an oversimplified example and a solidly researched purchase is still crucial.  Short sited investors miss this opportunity because they only see the $100 potential negative cash flow.

 

In summary, what we are seeing is our “Oh, I’ll just wait out this market” buyers in Austin are losing value as they wait.  We have had several investors lately that looked to purchase last fall, decided to wait and now are looking again.  They are mad at us that there is very little inventory below $120K and that they are now paying 4-6% more than last fall.  Hey, we were preaching this same message last Fall.

 

“Waitin,”…. ain’t workin'. 

 

Austin Area Foreclosures are Down 6%

Thursday, August 30, 2007
by Kent Redding & Terrill Fischer

We've had a number of buyers calling us asking about foreclosures. While we've a number of foreclosures we don't see as many good deals with them as most buyers think there are.. We've been tracking what is happening with foreclosures here in the Austin area. I know for the rest of the country is experiencing an increase in foreclosures, but here in Austin the foreclosure rate is down. It's even down across the state.

Below is an article I found in a recent Austin Busines Journal.

Foreclosures in the metropolitan area are down 6 percent so far this year making Austin the only major Texas market to show steady improvement in the foreclosure picture, a monthly report shows.

A total of 574 properties in the market are listed for the upcoming September foreclosure auction, down 21 percent from September 2006, according to figures from the Addison-based Foreclosure Listing Service Inc. So far this year, the metropolitan area has logged 4,971 foreclosed properties, down from 5,707 in the first nine months of 2006.

George Roddy, president of Foreclosure Listing Service, says Austin is faring far better than other Texas markets like Dallas/Fort Worth and San Antonio where foreclosures are up 12 percent and 5 percent respectively.

"In recent months, the increased rate of foreclosures has finally become 'national' news; however, in Texas, foreclosures have been on the high-side of the foreclosure cycle for the past several years," says Roddy. "Foreclosure rates began climbing in Texas back in 2001."

Yet while Austin is ahead of other cities, foreclosure rates here are still on the high-end of the cycle. For example, the 2,627 postings recorded for Travis County so far this year is up 112 percent compared with the same period in 2001.

While many want to blame lax lending practices for the current mortgage meltdown, Roddy says there are other factors also at work, including increases in cost of living, rising credit card debt, interest rate increases and the growing difficulty in filing for bankruptcy.

Speaking on the future of the mortgage industry Roddy says confidence in the market has certainly taken a beating, "but even with the new guidelines and requirements put in place for borrowers, this is not a problem that will be solved overnight."

The top states in the country are California and Florida. You can still find a good foreclosure deal here in Austin, but it require a lot of upfront work. If you are going to do it right you really need to know what you are doing. If you are interested in pursuing this market contact me to get more information. To read the full article here at Austin Busines Journal.

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