Austin Duplexes
Austin FourplexesBlog
- Austin 2-4 Unit Market Update – Feb, 2012
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MARKET REPORT: FEBRUARY 2011 
1. 2011 Sales – Steady As She Goes
Total number of sales of duplexes and fourplexes was 505 buildings in 2011, a modest 3% increase in deal activity over 2010. Median sale price was unchanged at $195,000 in both years. For a detailed analysis of each MLS area’s performance, colleague Steve Crossland has done an excellent job compiling the statistics here.
2. Excess supply is tapering off, firming up pricing in all areas.
As of this writing, there are only 196 duplexes and fourplexes on the market. This is a historic low in my recollection, and I’ve heard colleagues comment that there is very little good inventory available. This reality reflects the fact that given record high rental values, sellers are not motivated to sell. Prices in all areas have firmed up and reflect values similar to those in 2008. These are 5-10% less than the record high values of early 2007, but are stronger today than we’ve seen them since 2008.
3. Demand Remains Relatively Low
Despite record low listing inventory, buyers are also relatively scarce. Activity has certainly picked up since the dog days a few years ago, but there is no rush to the market from new buyers. This is due to the usual suspects – the continued difficulty in obtaining financing, general economic pessimism, and the shine of real estate still not having returned to pre-recession levels. Long story short – it stinks to be a broker right now, because you’re not making much money.
1. Though there are simply no “killer” deals to be had, quick movers can still take advantage of fairly priced listings in good areas; usually properties that have been updated and leased up prior to sale. Sellers know that they can’t pass off junk because buyers have plenty of time to scrutinize it.
2. Little competition doesn’t necessarily mean sellers will come substantially off their prices, but lower competition allows for more orderly evaluation of potential investments. Our policy is to price properties low enough that a full price offer is, in our opinion, a fair value for the property. In some cases the sellers will reduce a little, but I haven’t seen more than $5,000 or so reductions in at least 18 months.
3. The rental market continues to be red hot here; one of the hottest in the country. Well-qualified investors can still obtain sub-5% loans on $150,000 properties that generate $1600/mo in gross rents. Properly managed, there is simply no alternative investment that I know of that comes close to providing the same leveraged return.
1. Pricing right is still key, as is offering a property in good condition. We consult with all sellers to identify the proper price range and updates, if necessary, to obtain full market value. That said, given the low inventory, this is the best time to list since 2007. I have extremely low inventory right now, and could sell most properly priced listings in a short period of time. If you’ve been leaning towards a sale, call me now.
2. If your property is in Central Austin with few competing rental properties nearby, it is likely your duplex will be a better candidate for owner-occupant positioning rather than investment. A unit in the building should be vacant or month to month, and the tenants need to be clean and facilitate easy showings.
3. If the property is in a rental neighborhood or more working class area, it needs to be leased at market rents and have limited deferred maintenance. There are always bargain hunters in the market that will buy a vacant and/or a building with deferred maintenance, but the discount has to be higher in a slow market, and selling this way is not recommended.
1. There are whispers that financing will gradually loosen up and more investors will qualify for duplex and fourplex loans. I think this will happen, but it will be a slow process; as banks are not eager to repeat the devastation of a few years ago.
2. Supply continues to become marginally pent-up. Some owners cannot wait for the market to return to 2007 levels and increasingly, these sellers will move their buildings on the market. These will be far and few between, however. The ultimate irony I’ve noticed in this market is that sellers don’t start putting their properties on the market en masse until the rental market takes a hit and they suffer a turnover or two. Then we start getting the phone calls; but by then there is often quite a bit of competing inventory. 2006 and 2007 was a rare event, in that the poor rental market had sellers selling in droves at the same time that out of state buyers were purchasing everything they could. This perfect storm will not recur any time soon.
3. 2012 is a big election year, so expect optimism as the year progresses, as inspirational messages, improved unemployment statistics, and general shaking-off-of-the-malaise gathers speed. I expect this year to end better than it started.
4. Austin continues its growth march in earnest, as the second fastest growing metropolitan area in the United States. These folks need homes, duplexes, rental units. They will buy and rent our inventory. This will move prices upward. But as we’ve always advised our clients; one must be reasonable. Historical price appreciation in the U.S. is 4-6% per year. Austin simply must beat the national average, given its rapid growth.
We finished 2011 with sales volume of $24.1M (represented by over 131 transactions). This volume represents seven times the volume of the next runner up in duplex and fourplex sales. I am pleased that the market recognizes our leadership in duplex and fourplex listings, and hope that we are able to maintain this reputation through fair and honest dealing, and rigorous buyer and seller representation.
We are excited that Jeff Lowther has come in and set new sales records as Director of Buyer Services. We are proud to have the premiere duplex and fourplex buyer agent broker on our team. Investors looking to get into the Austin market could not be better served than by working with Jeff Lowther.
This year, Adrienne Laosa has become my partner in the brokerage services side of our business. Adrienne has four years experience in sales and transaction coordination with me, and routinely is named the highlight of clients’ experience in working with our firm. She understands the market, has an incredible work ethic, and endeavors to provide an “over the top” client experience with every transaction. I am proud to have her by my side, as she takes a larger role in our brokerage business.
Thank you for your continued business, and please reach out if there is anything our team can do for you.
5005 Cana Cove, Austin TX., 78749 - $219,900
Duplex
2/2.5 and 2/1.5
Total monthly rent – $1890/mo
Built in 1983
2,158 total square feet
Rare opportunity in SWW on one of only a handful of streets in this green, beautiful area of Austin with duplexes. Appropriate investment for someone looking for solid, super-clean rental in great area.
+ IN THIS ISSUE Market at a Glance 
AUSTIN IN THE NEWS A roundup of stories about Austin’s economy
Austin Multifamily Outlook, High Employment 1 of 10 Cities Poised for 2012 Greatness
Copyright © 2011 Castle Hill Investments. All rights reserved. - Austin home sales rise 11% in November
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Premium content from Austin Business Journal
Sunday, July 4, 2010
The number of existing single-family homes sold in November rose 11 percent and the median price for area homes was up 3 percent when compared to the same month last year, according to the Austin Board of Realtors .Last month, 1,358 homes were sold and the median home price was $189,300.
On average, homes spent 83 days on the market in November, which is exactly one week less than the same month last year.
Austin’s market listed 18 percent fewer active listings and 15 percent more pending sales in November 2011 than November 2010.
The Austin market had 4.5 months of inventory, 1.4 months less than November 2010 and the lowest figure reported since the organization began tracking the statistic in January 2009, according to the Multiple Listing Service report.
It was the sixth month in a row that the volume of home sales in Austin outpaced 2010 while the inventory of available homes decreased, according to Judith Bundschuh, chairman of the Austin Board of Realtors.
“As we approach the end of the year, sellers should be encouraged that demand and prices are strong. Buyers should know the decrease in inventory combined with increased demand could mean they will encounter more competition for properties,” said Bundschuh.
The Austin townhouse and condominium market spiked as well.
According to ABoR, 123 condominiums sold in Austin last month, up 21 percent over November 2010. Median prices for condominiums were up 1 percent over November last year, rising to $157,000.
When compared to the same month of the prior year, these properties spent 12 percent longer on the market, or an average of 114 days.
Some real estate brokers on the ground are seeing the numbers in action and analyzing what they mean for the coming year.
“The numbers ABoR is reporting still reflect the hangover effect from the buyer tax credit that expired in April 2010,” said Robert Grunnah, broker and owner of Austin-based Castle Hill Investments .
Grunnah said the vast majority of homebuyer demand in 2010 was satisfied prior to the federal homebuyer tax credit’s expiration that June, leading to a significant dearth of sales later that year, making the November 2011 numbers seem like a more significant increase than they actually were.
“2012 will see continued moderate increases in sales volume and a less significant increase in overall values,” said Grunnah.
Regarding condo activity, Grunnah said “the increase in activity in the condo market is clearly a result of owners being more realistic with their values, and reducing prices to stimulate sales. We’ve also seen a large number of foreclosed condos coming onto the market at reduced prices, which increases the rate of overall condo sales.”
Looking into the crystal ball, Grunnah expects growth.
“Once the pent-up supply works through the system, we will likely to see a return to more typical 4 percent to 6 percent annual value growth. I’d like to say this will happen in 2013, but it depends on factors outside of Austin’s control such as residential financing becoming more available and unemployment decreasing in other parts of the country,” Grunnah said.
Todd Grossman with Realty Austin said the residential real estate market is currently seeing a lot of activity even though this time of the year is typically slow.
“Rates are still low, employment is high in Austin, press is positive nationally, and weather is great, which is probably doing something for us currently,” said Grossman.
If current trends remain unchanged, Grossman said the biggest challenge in Austin’s immediate future is a lack of quality inventory for buyers when the selling season hits.