Tag Archives: new construction

New Construction vs. A Resale: Pros and Cons

Hello again friends, followers, readers and such—

It’s been a while since my last blog post and I thought now would be as good of a time as any to discuss the pros and cons of buying a new home in the Austin market…as I have 6 clients under contract for new homes…crazy. Some close next month, some as far out as 2018.

First off, when I say “new” I am referring to a brand new build, no one has lived in prior. And when I say “resale” I am referring to homes that have had at least one owner {example: a resale home is like a used car}.

NEW CONSTRUCTION-The Pros and Cons:

Timing Pro: If you have no lease and time is not of the essence for you, then perhaps waiting for your home to finish up works out nicely. How long can a new home take? Totally depends on the builder and complexity of the home and when you entered in on a contract.

Some builders already have pre-chosen floorplans, finishes etc, which makes the build process slower and some builders let you pick everything from start to finish. Always add on time from the builder’s original date of completion, there are always delays to account for! Always!

Timing Con: Almost always does a new home take longer than the originally projected date at contract to completion. I have had some instances where past clients have slept on different Air Bnb’s, had to pay exorbitant month to month fees on their lease due to delayed construction. It is something to be aware of, and it is honestly something that is not in the buyer’s control (which can be even more frustrating). Rainfall and labor shortage are often the biggest reasons for delays in this market….or so we are told. For example, I have clients building a DR Horton Express home. In late January we were told the completion date would be late March, then next update was mid April and now it is May 17. Be prepared to be flexible when building a new home!

Brand New Feels Pro: Having something move in ready and clean and just how YOU want it certainly has its perks. You picked the backsplash and the layout and maybe even the lot. You don’t have to put up with someone’s lack of maintenance to the outside, old windows, an HVAC that’s about to break, etc.

Brand New Feels Con: If you are one of those people who like more charm and character, a new home may not be the one for you. Or perhaps if you prefer to be “closer in” and within budget–a resale just may be the way to go to get both of those check boxes, but you will sacrifice in this instance maybe your desired finishes or taste. Some funky flooring you would have never chosen or an odd master bedroom layout. But again no home is perfect! You want to aim for a home that has 85% of the things you desire.

Warranties-New Construction: New homes usually have a pretty decent warranty. They will vary among builder, however the most common for production builders is called a 1-2-10. Which means the first year they’ll come in and do touch up’s, cosmetic issues, address things that may have broken or chipped away etc. The 2yr part of the warranty covers systems-HVAC, dishwasher etc (and most the time you can register for an extended warranty on your new home appliances). And lastly the ten year covers structural–if anything happens to the foundation/exterior the first ten years it falls back on the builder to fix.

Warranties-Resale: Resale homes also offer a home warranty. In the contract the seller pays for a one year home warranty for the buyer. You can put anywhere from $0 to $450 (about average) in the contract and the buyer chooses the home warranty they’d like coverage from. Some feel that home warranties are a “rip off.” And I will admit, sometimes they don’t have the best situations: Let’s say the HVAC goes out–well, often times the home warranty company covers all of the HVAC with the exception of a few parts. It just so happens that the parts that aren’t covered by the home warranty are traditionally the most expensive and parts that go out the most. However! There are many times when my clients have purchased a home warranty and had dishwashers fixed, leaky faucets repaired, among other items and that’s nice to have that covered right after moving into a home.

CONTRACTS for New Construction: The main point I tell my clients when they buy a new home is that builders have all the rights in a new home contract (for the most part). If you read most builder’s contracts it basically states–we can take as long as we want to build your home. If we finish early, you have to close that month, if we close late, we aren’t paying your late fees your apartment changes and you are still under contract with us. There is usually no right to rescind in a new home contract and no option period or 48hr policy to get your money back once you have put in the deposit and signed. In most cases the contract states– in the 6mo you are under contract with a builder and you lost your job and could no longer get financing–the builder has the right to keep your deposit. Some builder contracts state if the property doesn’t appraise, the buyer must make up the difference. This is important and something you should know before signing on the dotted line, it can be risky. Now, do the builders want to take forever to build your home or keep your money if something were to happen to your family? I’d like to say no, but I have seen specific situations with my clients and they can go either way.

When you purchase a resale–the buyer has many rights to cancel the contract, but the term is on average a 30 day process. The buyer has a deposit to pay (earnest money), however if they should cancel the contract post inspection or for ANY reason within the option period–which can be anywhere from 5-10 days, that money is returned to the buyer. There are several “outs” for a buyer on a resale contract that pertain to documents getting to the buyer in a timely fashion, etc.

INSTANT EQUITY?-New Construction Pros: For many people who buy in a neighborhood early enough, where there is projected growth {lots of plans for more homes i.e phases 2 & 3, projected job growth nearby or a new school coming in, commercial space coming or already existing up the road etc.} the perk often times are prices usually only rise in a new home community in Austin. There are lots of incentives that come into play when you purchase early and at the right time. Incentives vary, but being the first home on the block, staying put for a few years, you will definitely see value and equity fairly quickly, especially in the Austin market. I have seen it with several clients in a little as two years. My clients purchased, the neighborhood built up, opened a second phase and my clients didn’t have to do any particular upgrades and still ended up profiting after fees when the sold their home. This does not ALWAYS happen, but buying early has its advantages.

“Top of the Market”-New Construction Cons: This isn’t as common, but at times when you are the last person to purchase a new home in a neighborhood that has been building for a while you may be paying more than the other homes sold, naturally with market demand. That is due to new homes starting competitive and low, and as demand picks up, pricing increases sometimes weekly and incentives are given and taken away depending on how many contracts a builder has, etc. Usually one of the last homes to sell in a community is the model, and those are more expensive because they are decked out with upgrades. Appraisal issues can arise in new home subdivisions as well For example–when you are one of the first large homes with upgrades being built, if not enough homes have sold before yours, an appraiser doesn’t have much to compare yours to, therefore the value comes in lower than what you are paying–despite future floorplans selling for higher. I have seen this happen several times with new construction–they typically occur with VA loans (who have more strict appraisers) as well as those who use a credit union or lender not familiar with the community, unfortunately.

PRICING PROS and CONS: In real estate there are always some sacrifices you have to make. Price, location and size/layout are typically the big three. Some see new home’s pricing as a great deal due to the space you get, the fact everything is brand new, yet typically sacrifice location if you are moving further out where Austin is expanding. For a brand new home in a popular Central Austin neighborhood, for example 78704’s Travis Heights or East Riverside next to Lady Bird Lake, you are getting a fantastic desired location or an area with projected growth, but some sacrifices may be size or price–but again, you are getting a brand new home, so typically the cost per square foot will be much higher than something built thirty years ago. My main advise to all my clients who are looking to buy is to first get pre-approved and know what you want to spend. Secondly, start looking online, visit open houses, then perhaps visit new home models. From there, you can make a decision of what you like the most.

Now, I got this question the other day, so I thought I would clarify a few myths/misconceptions:

1. In Tx an agent doesn’t help you buy new construction homes, right? No. Clearly, like I stated above, I have helped many people purchase brand new homes. The ones who usually are not licensed are the sales agents who work for a model home. Some do have a Tx real estate license, but most are trained by the builder to sell the homes they are building. Just note, in Tx if you don’t sign a buyer’s representation agreement with a real estate agent, then technically the Seller is represented.

2. If I don’t use an agent to help me buy new construction, can I save on the sales price since now there is no commission to be paid to an agent? No. A builder has already set in their budget their cost of building, marketing fees and cost of doing business. I have quite a few friends who work for builders and sell new homes, they told me–in a town like Austin with over 5k agents, the last thing a builder wants to do is gain the reputation for cutting Realtors out of deals. BUT the most important thing to note is that if you purchase a new home with the sales agents who works for the builder, you now have NO representation. No one to go to bat for you when things are delayed or you are trying to get your money back or something was installed incorrectly in your home.

Here are some great communities where you can find my clients have a contract with a new home builder:

East Shore by David Weekley

Woodland Park (Georgetown) By Century Builders

Pioneer Crossing by DR Horton

Edgewaters (Pflugerville) by KB Homes

South Shore Pointe by InTown Homes

Colorado Crossing by Lennar Homes

 

 

 

 

 

 

 

 

Austin Real Estate Market Stats April 2015 v 2016: Where did Austin Increase 33%?!

Hello, hello!

It has been a while since I shared some market updates with you, so I was doing a little researching–and decided to share some interesting finds on the Austin market (for the month of April, 2016 in comparison to same time last year) as the market is really starting to stir up, school comes to an end & the busy Summer begins from home projects and vacations, to buying and selling.

Some areas have increased from last April as much as 33%, some down 5%, to find out more about which hoods, and where your next investment may need to be…read on.

“The market is hot!” Bet you haven’t heard that yet? (sarcasm).

As I am sure you have noticed: VALUES ARE UP! Taxes are up! Rents are up. Highrises are going up, and travel times are going up…and my clients who purchased only three years ago… Are movin’ on up.

jeffersons

All signs of a booming metro (according to Forbes, Jan 2016) show how much our housing market has increased–and this blog is more so about in what particular areas…

First–to understand what areas I will be referring to in the charts below-You must know the Austin MLS areas. You can choose a particular area to see the stats. I did not break them up by zip code, there are several zips in an MLS area.

Secondly, if you would like data specific to you, not listed in this blog-let me know- I can get it for you. All data comes from the Austin Board of Realtors, based on MLS data (which 99% of home sales are entered into).

Let’s look at Austin as a whole, first. All the Austin Board of Realtors area coverage (from Austin to Dripping Springs, Wimberly and Kyle to Georgetown, Taylor and Cedar Park for example):

 Greater Austin

Median

Average

 

Apr 2016

Apr 2015

% Change

Apr 2016

Apr 2015

% Change

List Price

$282,000 $269,900

+ 4.5%

$343,647 $336,725

+ 2.1%

Sold Price

$280,000 $265,000

+ 5.7%

$338,844 $330,111

+ 2.6%

Square Feet

1,958 1,957

+ 0.1%

2,132 2,141 -0.4%

LP/SF

$141 $133

+ 6.3%

$167 $160

+ 4.7%

SP/SF

$140 $131

+ 6.5%

$165 $157

+ 5.1%

SP/LP

99.7% 99.4%

+ 0.3%

99.0% 98.7%

+ 0.2%

DOM

12 11

+ 9.1%

45 44

+ 0.6%

Note above I bolded “as a whole.” Because when you are just looking at Austin in general, and not including the 5 MSAs surrounding Austin, the numbers are lower.

Now, let’s get down to the Austin core…yep DT (downtown).

skyline2

How were prices in April of this year compared to 2016? (Also note we have a few more high rises in the works to be built DT as well as more apartment complexes that are projected and just opened in the last year downtown.

                   Median Average
 DT AUSTIN Apr 2016 Apr 2015 % Change Apr 2016 Apr 2015 % Change
List Price $397,500 $434,500 - 8.5% $509,920 $682,700 - 25.3%
Sold Price $387,500 $430,000 - 9.9% $497,007 $654,846 - 24.1%
Square Feet 831 1059 - 21.6% 960 1171 - 18.0%
LP/SF $506 $450 + 12.5% $523 $543 - 3.7%
SP/SF $489 $435 + 12.2% $510 $526 - 3.0%
SP/LP 97.9% 98.0% - 0.2% 97.5% 97.4% + 0.1%
DOM 23 21 + 9.8% 42 53 - 21.3%

Yes, you did see a decrease that I highlighted on percentage changed for our average sales prices, BUT not to be alarmed-as the stats are only comparing downtown to one month vs “the big picture.” Downtown still increased year to year and the other important thing to note is that the square footage listed in April was smaller than that of April 2015, therefore it skews the numbers to look as if there was a decrease–when there is really no area in Austin that has dipped in sales values. And while all signs point to the market steadily increasing–timing could be off in comparison. For example, more people put their expensive condos on the market April 2015 v 2016, but there may be an influx of listings coming the next few months.

longcenterDTview

CHECK OUT VOLUME IN APRIL ACCORDING TO HOUSING PRICES FOR GREATER AUSTIN:

Price Range Quantity DOM Price Range Quantity DOM
$149,999 or under 207 46 $500,000- $549,999 90 48
$150,000- $199,999 424 26 $550,000- $599,999 60 53
$200,000- $249,999 517 29 $600,000- $699,999 94 73
$250,000- $299,999 425 49 $700,000- $799,999 52 56
$300,000- $349,999 312 46 $800,000- $899,999 28 41
$350,000- $399,999 260 51 $900,000- $999,999 25 53
$400,000- $449,999 176 71 $1,000,000 or over 47 67
$450,000- $499,999 138 53 Total: 2,855 45
Apr 2016 Apr 2015 % change 2016 YTD 2015 YTD
Sold Listings 2,855 2,847 +0.3% 9,527 9,244 +3.1%
Volume $967,399,611 $939,825,174 +2.9% $3,141,290,016 $2,950,183,540 +6.5%

As I mentioned above, some of the decreases I am seeing in specific central Austin areas (downtown, clarksville, west lake etc.) more so have to do with scarcity of inventory and higher prices than lack of desirability. Some of these areas take very specific buyers; for example, the average sales price in charming Clarksville is $910k!

INVENTORY 1B Apr 2016 Apr 2015 % change 2016 YTD 2015 YTD
Sold Listings 24 28 -14.3% 69 94 -26.6%
Volume $11,928,174 $18,335,700 -34.9% $45,552,206 $58,488,050 -22.1%

Let’s talk about North Austin (aka: area 2n; aka 78758, 78753). With the growth of the Domain and many tech companies moving and expanding in North Austin, it is no wonder over one year’s time the average sales price has shot up 19.5%!

Area 2N April-16
Median Average
Apr 2016 Apr 2015 % Change Apr 2016 Apr 2015 % Change
List Price $230,000 $199,900 + 15.1% $226,642 $187,470 + 20.9%
Sold Price $237,500 $206,390 + 15.1% $227,839 $190,629 + 19.5%
Square Feet 1425 1415 + 0.7% 1446 1363 + 6.1%
LP/SF $148 $131 + 12.7% $155 $135 + 14.8%
SP/SF $153 $138 + 10.8% $156 $137 + 13.8%
SP/LP 100.4% 100.7% - 0.3% 100.5% 101.3% - 0.8%
DOM 4 4 0.0% 33 10 + 229.2%

Click HERE to see the map breakout of areas. This is also the area I personally live in (what! what!) want to know more? Contact me!

domain growth

Let’s explore some more areas and evaluate home prices…read on…

When you head North east to the MLS area: NE (out toward Parmer and 290… near Samsung…and yes an old landfill) you have some new developments on the rise. If you are commuting to N. Austin, I think this can be a great buy for those who:

1. Solely want new construction (various builders and neighborhoods) at an affordable price and/or

2. As an investment–the area only has more acreage and room to grow with easy access to large companies, toll roads and highways and if staying E. not too bad of a commute into central Austin. Great for rental property or to live in, and hold.

Area NE
Median Average
Apr 2016 Apr 2015 % Change Apr 2016 Apr 2015 % Change
List Price $225,000 $192,900 + 16.6% $239,439 $199,669 + 19.9%
Sold Price $226,021 $193,900 + 16.6% $237,895 $198,490 + 19.9%
Square Feet 1739 1928 - 9.8% 1876 1939 - 3.2%
LP/SF $134 $111 + 20.7% $131 $107 + 22.4%
SP/SF $134 $109 + 22.6% $130 $107 + 21.8%
SP/LP 100.0% 100.0% 0.0% 99.6% 99.7% - 0.1%
DOM 6 5 + 20.0% 16 19 - 13.8%

Which neighborhoods and builders am I referring to exactly in NE Austin? Check out the homes in this area above: HERE. There are a lot of new neighborhoods (and some only a few years old, still growing in this area). This area mainly comprises 78754 and 78753 and extends East to Manor. Some of the neighborhoods are Bellingham Meadows. Enclave of the Springs, Walnut Creek Enclave, Stirling Bridge, Parkside at Harris Branch, Pioneer Crossing, Pioneer Crossing West. In price points ranging from the affordable starter home, $205k, only a few years old to brand new homes you can pick finishes etc. around $350k. (here’s an old blog on purchasing new construction HERE).

And how is East Austin (area 3, aka 78723) fairing in home sales? Well, there is no doubt about it, the development of Mueller has increased housing not only in the diverse and eclectic, new community (that is still developing), but the surrounding neighborhoods such as Windsor Park, The Grove, University Hills, Cherrywood and St. John’s have all seen an increase in sales due to Mueller.

There are plenty of homes built in the late 60’s, updated and renovated, but like many areas of Austin–tons of new (and not so “affordable” developments can be found…like, HERE)!

Median Average
 AREA 3 Apr 2016 Apr 2015 % Change Apr 2016 Apr 2015 % Change
List Price $375,000 $309,900 + 21.0% $371,796 $315,289 + 17.9%
Sold Price $372,500 $300,000 + 24.2% $370,279 $311,335 + 18.9%
Square Feet 1579 1508 + 4.7% 1593 1483 + 7.4%
LP/SF $244 $207 + 18.0% $238 $216 + 10.2%
SP/SF $244 $206 + 18.4% $238 $213 + 11.8%
SP/LP 100.0% 100.0% 0.0% 99.7% 98.6% + 1.1%
DOM 8 11 - 31.8% 41 43 - 4.0%

Perhaps two of the hottest Austin areas are South of the river and East of 35 (78741 and 78744).

One area in particular, {in my opinion that is undervalued and coming around–great rental investment opportunities} I have been telling many people who want to invest in is: 78744..or aka Area 11 on the map, check out what homes you can find HERE.

Median Average
Apr 2016 Apr 2015 % Change Apr 2016 Apr 2015 % Change
List Price $199,900 $190,303 + 5.0% $211,912 $174,797 + 21.2%
Sold Price $203,110 $186,393 + 9.0% $211,246 $172,907 + 22.2%
Square Feet 1313 1466 - 10.4% 1590 1545 + 2.9%
LP/SF $144 $120 + 20.0% $139 $116 + 20.2%
SP/SF $149 $120 + 25.1% $139 $114 + 21.4%
SP/LP 100.0% 99.4% + 0.5% 99.8% 99.2% + 0.6%
DOM 8 17 - 51.5% 30 59 - 48.7%

You can find everything from grandma’s house to new construction in this area, above, that’s for sure.

 

However, if you are willing to spend a bit more—and you heard the news of Oracle relocating to East Austin on 27 acres, East of DT, overlooking Lady Bird lake… then this may be the area for you, (but the cat is out of the bag on this area–as it has increased already since last year 33.2%). Holy moly…one of the largest increases of all the Austin areas. With the boardwalk completion, easy access to airport, DT, ACC campus and more, it is no wonder people are choosing to invest in this area.

Median Average
 Area 9 Apr 2016 Apr 2015 % Change Apr 2016 Apr 2015 % Change
List Price $242,450 $224,500 + 8.0% $251,058 $193,749 + 29.6%
Sold Price $242,750 $217,000 + 11.9% $253,746 $190,471 + 33.2%
Square Feet 1122 1245 - 9.9% 1233 1239 - 0.4%
LP/SF $206 $159 + 29.8% $209 $153 + 36.2%
SP/SF $206 $143 + 44.2% $210 $150 + 39.9%
SP/LP 100.0% 97.6% + 2.5% 100.4% 97.9% + 2.6%
DOM 5 20 - 75.0% 9 37 - 75.2%

 oracle campus(Artist’s drawing of Oracle campus above)

When evaluating the sold prices from April 2015 to 2016, here’s a few popular areas and if you’d like more specific info like I have above-feel free to contact me and I will send it over (it is just too much to put into one blog).

  • Round Rock East and Round Rock West had about a +4% change for April 2015 v2016 (RRW was a little less than RRE with all the growth out East of Austin, w toll roads etc)
  • Pflugerville experienced a +5.8%, average sales price under $230k, so quite affordable!
  • NW Hills and Great Hills in Austin jumped +13.5% w/ avg sales price around $544k
  • The 78745 (or area S of Ben White, N of Slaughter-ish area) is steadily increasing, +4.8%
  • 78703 (aka Clarksville or a very desirable central Austin location near DT) actually decreased -5.1%, yet the average sales price in this area for a home in April 2016: $910k
  • The UT area (78705, or campus better yet) decreased in April as well, -3.4% w/ avg sales price around $290k
  • While DT showed to be down-24.1% in Apr 2016 v 2015, it also decreased in listings volume by 36%, what does $510/sq ft buy you? Check it out…HERE.
  • Cedar Park is still growing quite a bit, with an increase of +9.7% and avg sales price at $317k where you can get on avg 2300sq ft too!
  • Northern part of Cedar Park & Leander, due to all the growth in N. Austin are at an average sales price of $280k and up +11.7% from 2015 (examples of homes/area HERE)
  • Hays County experienced the largest annual gain in home sales in April 2016, with single-family home sales jumping 17.8% year-over-year to 338 home sales.
  • Williamson County was the only county in the Austin-Round Rock MSA to experience a decline in home sales in April 2016, with single-family home sales dropping 5.1 percent year-over-year to 816 home sales.

While I didn’t touch much on affordability in this blog, it is still a large issue in our growing metro areas.

Housing affordability includes not only a home’s sale price, but the homeowner’s ability to continue to afford the home as property values rise from year to year. “The Austin Board of REALTORS® encourages homeowners to learn how their home is being appraised and all property tax exemptions they might qualify for. A Central Texas REALTOR® can help homeowners contest their assessment by identifying comparable properties and gathering the necessary background information to formulate an appeal.” -Aaron Farmer, ABOR President

Anyway, thank you for reading–I hope you found these charts helpful and if you have any questions about your specific area, market stats, neighborhood stats, school ratings, home values, etc, please do not hesitate to reach out! To read more about me and contact me click here.

Ashley Brinkman, ABR, GRI @ Realty Austin.