Add 400 more tech-salaried potential buyers to the conversation.

https://www.bloomberg.com/news/articles/2022-01-09/meta-expands-in-texas-with-major-office-lease-in-downtown-austin

one MEEN Ag said:

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tlepoC said:

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Agree with most of your points. One that I have been trying to think through is whether or not companies will continue playing the COLA game when they expect to (at least communicate to staff) that they will remain fully remote for most of the positions. To me, you will only ever get one or the other.

In reality, some tech companies will bring people back quickly - or at least certain positions probably at the leadership level - and some companies will try out the fully remote life and start experimenting with "rural" hires that will do the job cheaper due to lower cost of living. A lot of assumptions there that would determine how successful that could be....but it's going to be done.

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Austin is the only city they can convince these californians to consistently move to. Dallas/San Antonio/Houston is for conservative squares. So I expect to see more offices/headquarters moved to Texas to help the corporate side out on taxes.

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There have already been a bunch of other corporate relos to other Texas cities other than Austin, the majority of which are from California. Add in the lower cost of living and strong job markets, and all four Texas metros are seeing an influx.

There are a ton of Conservatives in California, especially in SoCal. Lots of those folks are the ones moving and they love the Texas metros.

Here is a good definition of a Housing Bubble, that we can dissect.

What Is a Housing Bubble?

A housing bubble, or real estate bubble, is a run-up in housing prices fueled by demand, speculation, and exuberant spending to the point of collapse. Housing bubbles usually start with an increase in demand, in the face of limited supply, which takes a relatively extended period to replenish and increase. Speculators pour money into the market, further driving up demand. At some point, demand decreases or stagnates at the same time supply increases, resulting in a sharp drop in pricesand the bubble bursts.

Some of the above may apply to Austin but not enough yet to say bubble IMHO.

Why? For Austin the growth is real! So Demand is VERY REAL. TESLA and now Samsung are putting in significant investments in the AUSTIN MSA that is now and for the next 10 years will bring on line 1000's of new HIGH PAYING JOBS. Demand is CRAZY, what about Supply.

Between 2008 and 2012 Real Estate Developers got hammered! Resulting in them shutting down completely for several years. Subdivisions half built! They have be slow to come back and when they did they concentrated on high end, multi-story homes because that is where they could make the money as land cost were high. So the entry level new homes were neglected. 2014- to Present developers started to come around that affordable housing is needed in the Austin MSA and apartment building is now in full swing! Covid hits and now we have both material shortage and labor shortage to build homes! Supply hit hard in 2008 - 2010 Recession, Developers focused on high end homes 2012 to 2018, Covid hits 2000 and Supply is in the Dumps.

Housing Bubble needs to have some SPECULATION! NOT PRESENT. Housing investment is still based on logical deduction and not SPECULATION yet! Until job growth slows or wanes, speculation is a non-factor.

An added boost is not only job seekers are coming but the young crowd loves Austin and they are coming. But the NEAR DEADS 65yrs-75yrs olds are leaving the NORTH as they retire for warmer weather and Texas is getting more than its fair share! A Baby Boomer turns 65 every 10 seconds, 10,000 a day, 4 million a year for the NEXT 18 YEARS. Many are coming to TEXAS!

Can't tell me we have a bubble unless you can show me how the DEMAND will significantly slow. I do think in about 5 years we might have an over build of apartments but we have a long ways to go before then. If you are in the stick build, either SFH or small multi-family now is the time to get your retirement in order by getting you a few rentals, if not in Austin then anywhere along the HYW 35 corridor from Dallas to San Antonio!!!!
Cheers!

Ran across this article just after reading this last post.

https://dallas.culturemap.com/news/travel/01-17-22-the-next-austin-northwest-arkansas-bloomberg-alice-walton/?fbclid=IwAR33cbgZ4iv99IPr2-x0J5RowouGEDP7ShEQUCAWaVYLoYkzjrjozV6IFTM

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Now, there's a new entrant in "the next Austin" sweepstakes a candidate that you might never have imagined. Bloomberg Opinion columnist Conor Sen, founder of Atlanta-based Peachtree Creek Investments, makes the case for the mountainous Northwest Arkansas region to be the Austin-in-waiting.

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I think we all feel that Austin is protected because of job demand. However, I have come to find out that numerous homes we've been outbid on (by +$200K) were purchased by realtors or investment groups to flip and rent.

Interest rates of 0.2% in banks and inflation are eroding the value of a dollar. I think we are going to feel the impact of inflation for multiple years, but wages will not exactly keep up. The level of further growth in the Austin area is likely to be much less than what we just experienced in the last 18 months.

Another +15-20% literally puts pricing in the Bay Area territory. Property valuations will have to massively diverge from real pricing.

evan_aggie said:

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I think we all feel that Austin is protected because of job demand. However, I have come to find out that numerous homes we've been outbid on (by +$200K) were purchased by realtors or investment groups to flip and rent.

Interest rates of 0.2% in banks and inflation are eroding the value of a dollar. I think we are going to feel the impact of inflation for multiple years, but wages will not exactly keep up. The level of further growth in the Austin area is likely to be much less than what we just experienced in the last 18 months.

Another +15-20% literally puts pricing in the Bay Area territory. Property valuations will have to massively diverge from real pricing.

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That's about the way I see things going. Housing slows but doesn't have a 2008 style crash, ultimately appreciating less than the rate of inflation.

What I want to know from people back in Texas is how property taxes are keeping up? My last place in the SA northside (sold 11 years ago) went for around $335K and the assessed value was $280K. Altogether property taxes were $8,300/year, I think the school district was a big factor but they were excellent.

I see a pending comp in the area for $560K so I'll use that as a wild-ass guess for what the place would sell for now. There's no way property taxes have kept up with sales, right?

The Fife said:

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evan_aggie said:

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I think we all feel that Austin is protected because of job demand. However, I have come to find out that numerous homes we've been outbid on (by +$200K) were purchased by realtors or investment groups to flip and rent.

Interest rates of 0.2% in banks and inflation are eroding the value of a dollar. I think we are going to feel the impact of inflation for multiple years, but wages will not exactly keep up. The level of further growth in the Austin area is likely to be much less than what we just experienced in the last 18 months.

Another +15-20% literally puts pricing in the Bay Area territory. Property valuations will have to massively diverge from real pricing.

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That's about the way I see things going. Housing slows but doesn't have a 2008 style crash, ultimately appreciating less than the rate of inflation.

What I want to know from people back in Texas is how property taxes are keeping up? My last place in the SA northside (sold 11 years ago) went for around $335K and the assessed value was $280K. Altogether property taxes were $8,300/year, I think the school district was a big factor but they were excellent.

I see a pending comp in the area for $560K so I'll use that as a wild-ass guess for what the place would sell for now. There's no way property taxes have kept up with sales, right?

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I think you've got basically a non-linear fudge factor that appears to benefit the very expensive homes.

What I mean is that you will see many valuations climbing rapidly. But the homes worth < $700K are showing 80-90% market rate in many cases. But homes worth $2M are still assessed at $1.2M. There gets to be a point that if the entire city had to pay wha their real market value is you would have anarchy...truly. People would riot that they are having to pay $25,000 a year in property taxes.

So the idiots that we are will keep voting for more bonds and more trains and other stupid crap. I need to get a tree evaluated by the city. 3-4 week wait time and permitting department is massively understaffed...but the mayor will start putting together a $500M housing bond instead of solving real underlying problems.

Sounds about right, especially with the high end of the market which I was really curious about. I assume there's some kind of property tax cap for seniors? My parents are still in the same place they bought in the '70s.

For whatever it's worth in SC (Charleston) we have a state income tax and much lower property taxes and when I moved here it came out about a wash between here and Texas but I've assumed that TX has come out more expensive since then. Sales tax used to be lower than the 8 1/8% back in SA but of course the bonds come along plus eating out tax that's probably intended as a money grab from all the tourists.

Whenever I go back to the Austin-San Antonio area I no longer recognize anything, especially what used to be all ranchland between San Marcos and Austin. New Braunfels to 1604 maybe looks a little familiar I guess.

The Fife said:

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evan_aggie said:

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I think we all feel that Austin is protected because of job demand. However, I have come to find out that numerous homes we've been outbid on (by +$200K) were purchased by realtors or investment groups to flip and rent.

Interest rates of 0.2% in banks and inflation are eroding the value of a dollar. I think we are going to feel the impact of inflation for multiple years, but wages will not exactly keep up. The level of further growth in the Austin area is likely to be much less than what we just experienced in the last 18 months.

Another +15-20% literally puts pricing in the Bay Area territory. Property valuations will have to massively diverge from real pricing.

---

That's about the way I see things going. Housing slows but doesn't have a 2008 style crash, ultimately appreciating less than the rate of inflation.

What I want to know from people back in Texas is how property taxes are keeping up? My last place in the SA northside (sold 11 years ago) went for around $335K and the assessed value was $280K. Altogether property taxes were $8,300/year, I think the school district was a big factor but they were excellent.

I see a pending comp in the area for $560K so I'll use that as a wild-ass guess for what the place would sell for now. There's no way property taxes have kept up with sales, right?

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If you sold 11 years ago, that puts you in 2010-2011. Around that time, post great recession, in Houston is when the CAD started getting serious about having appraisal properties closely match real estate prices. Before the great recession the city was serious, but not super serious about having up to date records. Recession hits and they start squeezing for every penny. Haven't let up since. Just anecdotally, it looks like the San Antonio CAD has lagged Houston and other metros with how serious they take valuations.

The state has finally weighed in and said you can't go greater than 3% without a vote unless there was widespread emergency situation. Of course every taxing authority then squeezed once more thinking they'd never get another shot at a big jump, then covid hit, and the taxing authorities claim that is a widespread emergency. Paxton is saying its not, but I haven't followed up.

All I know is every local politican likes to claim their rates go down every year while being dishonest about evaluations going up and them always getting a bigger windfall than they need year over year.

Evaluations on the top end of the spectrum are always way lower than what they truly cost. Those buyers and sellers will tell the CAD to piss off while your local suburbanite neighbor can't help themselves when the CAD sends out those 'tell us how much you paid' letters. Also middle class homes are a commodity while super expensive homes are more unique and harder to appraise. There's a huge discontinuity between what the top end of the market will pay versus what the fundamental appraisal model will spit out based upon square footage, sinks, bathrooms, garage space, etc. The CAD has to support their findings in an ARB review. For super high end homes, they can only get away with so much bull**** about what the land costs underneath a home before someone is able to find enough comps to discredit that.

I'm most interested in the Dallas (I think) MLS sending a cease and desist letter to the CAD for using their 'sold range' estimates in appeals.

I would love it if the CADs couldn't look up anything on MLS.

Sales are all public here but the county doesn't just copy/paste the price into their database when a property is transferred. I hear you about the problem appraising higher end stuff. My neighborhood is a mix of houses built from the '50s to '00s / 1,400 to 6,500 sq ft with all kinds of unique factors affecting what something would actually sell for. It's been a roll of the dice what the appraiser was going to do every time I've had to get mine done. The nicer ones are definitely not a commodity.

I just received an email from another broker looking to source a home for a buyer in DFW. Screenshot below. Obviously this isn't Austin, but it highlights one of the major causes for price growth in Texas since Covid...folks from out of state moving to Texas with play money. In my mind, until builders catch up with the demand created by hundreds of thousands of people moving in from out of state, as well as our own growth, prices will continue to rise, ABOVE the rate of inflation. There is no putting the cat back in the bag. Once inventory catches back up with demand (which isn't happening any time soon), then it will settle back down to inflationary growth levels. Texans have been blessed with affordable home ownership for a long long time, but I am afraid that era is ending. And before anyone says to themselves "you agents must love this", at least on the buy side, I don't. It is not very much fun writing dozens of offers and delivering bad news over and over again for a single client before one finally gets accepted.

Hahahahaha, that's not an example of play money. That's an example of irrational expectations. New construction on half an acre with a 2 car garage for under $2MM? There are absolutely zero options that fit that criteria in Dallas proper and based on a quick search there appear to be a total of 2 options, both under construction in Flower Mound.

I can't imagine cross shopping Lakewood and Flower Mound so good luck to those out of staters.

Edit: Does anyone even build separate formal dining rooms anymore? That's going to be just as hard to find as the lot size and three car garage for a new build house.

Red Pear Realty said:

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I just received an email from another broker looking to source a home for a buyer in DFW. Screenshot below. Obviously this isn't Austin, but it highlights one of the major causes for price growth in Texas since Covid...folks from out of state moving to Texas with play money. In my mind, until builders catch up with the demand created by hundreds of thousands of people moving in from out of state, as well as our own growth, prices will continue to rise, ABOVE the rate of inflation. There is no putting the cat back in the bag. Once inventory catches back up with demand (which isn't happening any time soon), then it will settle back down to inflationary growth levels. Texans have been blessed with affordable home ownership for a long long time, but I am afraid that era is ending. And before anyone says to themselves "you agents must love this", at least on the buy side, I don't. It is not very much fun writing dozens of offers and delivering bad news over and over again for a single client before one finally gets accepted.

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That email is spam. I'd guess it went out to over 10k agents in DFW (yes, I got it too). It's the equivalent of those letters that show up to all of our clients from other agents saying they have a buyer lined up for their home...just fishing.

I get the marketing tactic and understand that it went to everyone with a MetroTex membership. But he wouldn't be fishing for leads if he didn't have buyers like this. I used it as an example, not the ultimate cause of Texas' housing issues.

I hear you and understand your point. I was looking at it from a slightly different lens as a person who has been looking for a similar house (albeit without the lot size requirement) in a similar price range in Lakewood or UP. When I read your post I was thinking the out of state buyer would be offering way above current going rates for something to get in quick and was surprised because what they are asking for costs a lot more than the price they are willing to pay (at least in Dallas proper). I acknowledge there are lots of factors that have lead to higher prices with in state migration being one of many.

If you find the house they're asking for in Lakewood send it to me first

Quote:

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That email is spam. I'd guess it went out to over 10k agents in DFW (yes, I got it too).

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FTAco07 said:

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I hear you and understand your point. I was looking at it from a slightly different lens as a person who has been looking for a similar house (albeit without the lot size requirement) in a similar price range in Lakewood or UP. When I read your post I was thinking the out of state buyer would be offering way above current going rates for something to get in quick and was surprised because what they are asking for costs a lot more than the price they are willing to pay (at least in Dallas proper). I acknowledge there are lots of factors that have lead to higher prices with in state migration being one of many.

If you find the house they're asking for in Lakewood send it to me first

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Dallas Proper???

Take a look at this home I found on Realtor.com
5330 Meadow Crest Dr, Dallas
$1,399,900 5beds 5.5baths

https://apps.realtor.com/mUAZ/4291d6d3

What about it?

That house doesn't meet the less than 5 years old, half an acre, or three car garage.

There are currently three houses for sale in Dallas/UP that meet all of their criteria other than price. They're listed at $5.9, $9.0, and a whopping $43MM.

Edit: each of the three are over 7k SF so literally not a single home is for sale in Dallas that meets that wildly unrealistic criteria.

So you tell the client that a 3 car garage should be a want, not a need.

There are plenty of homes pretty damn close is my point.

Edit: Agreed. Wildly unrealistic but can check many of the important boxes. 5 years vs 10 years is a don't care.

HomeFinderCody said:

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Red Pear Realty said:

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That email is spam. I'd guess it went out to over 10k agents in DFW (yes, I got it too). It's the equivalent of those letters that show up to all of our clients from other agents saying they have a buyer lined up for their home...just fishing.

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Spam from a realtor who can't even glance at what he wrote to see if things are even spelled right for his "Reay to buy now" clients.

https://www.zillow.com/homedetails/1000-W-Wintergreen-Rd-Desoto-TX-75115/96512950_zpid/

Just move to Desoto and have it all.

FTAco07 said:

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I don't mean to argue, I'm probably just venting frustration from 12ish months of looking and being picky since I don't HAVE to move.

Even without the 3 car garage (I want I also share and gave up on) and including anything built in the last 10 years, the rest of that buyer's criteria would still only give them three options, all in Flower Mound.

That one screams of a Californian or other urban dweller who has this preconceived notion that getting a half acre in Texas is easy, even in a major metro area.

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You seriously think, in the hottest market in fifty years with record low inventory, that you can be "picky"?

Yes, because I don't have to move. I already live in the area and my current home is paid off. I'm willing to pay the going rate for what I want, but I'm not dropping $1-$2MM on something I settled for. If I get to the point that my desire to move is sufficient enough I would rather buy a teardown and pay up to build exactly what I want than live somewhere I don't love.

FTAco07 said:

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Yes, because I don't have to move. I already live in the area and my current home is paid off. I'm willing to pay the going rate for what I want, but I'm not dropping $1-$2MM on something I settled for. If I get to the point that my desire to move is sufficient enough I would rather buy a teardown and pay up to build exactly what I want than live somewhere I don't love.

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That's basically what I did with the move to Charleston because I thought that both new and old housing stock here sucked. The style is just a total 180 from anything I'm into so I made something my own.

Preach!

My wife and I came to the same conclusion. We are in the middle of designing a house to go on a lot with a tear down on it.

Good luck!