in this issue…
Putting a Face on Real Estate since 1995™
• ABoR/HBA Housing Forecast • NAPMW Housing Forecast • AYREP 2013 Kick Off Happy Hour • WCAoR TREPAC Bowling Tourney • First American Title Tech Symp. • and much, much more!
Associates in Progress
Model Home
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Inside Front Cover
FEBRUARY 2013 • VOLUME 17 • ISSUE 10
Experts upbeat on housing market By Stacy Hale
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n Jan. 8 we heard from industry real estate analysts about trends from 2012 and obtained valuable data for setting expectations in 2013 at the Housing Forecast, presented by the Austin Board of REALTORS (ABoR) and the Home Builders Association (HBA) of Greater Austin. Speakers Eldon Rude of Metrostudy, Dr. Jay Hartzell of the University of Texas, and Tim Fisher of the Texas Mortgage Bankers Association presented local and national economic information to help REALTORS,
builders and other industry professionals plan their business strategy. It was quickly noted in the opening remarks that you have to look backward before you can begin to look ahead. In 2012 we were in the midst of a lingering drought and an economy still on the mend from a meltdown. Experts were optimistic but there were a lot of unknowns. Austin continued to be sheltered somewhat, but starts were still down and the lending market was tight. The day after the 2012 forecast, traffic began to increase in the sales offices of Austin area builders, eventually resulting in a 30 percent increase in production over the course of the year. Today, the influx of new people into what has become one of the fastest (if not the fastest) growing metropolitan areas in the U.S. has made Austin a pretty smart place to make your bets. Job growth was up 3.2 percent at the end of 2012, and we have the No. 1 Gross Metro Product per capita in the United States, according to Moody’s. Our strong local dynamic—it’s a hip, young and affordable place to live with plenty of jobs—plus a global low cost of capital keeps our real estate market in a healthy place, but we don’t get to completely escape what’s happening on a national level, according to Dr. Jay Hartzell, chair of the finance department at the McCombs School of Business at the University of Texas at Austin. We are now in a period of deleveraging. European debt and political uncertainty, coupled with spending cuts coming up as Washington struggles on deals and the ramifications of the fiscal cliff, give some reason for pessimism. Corporate profits are up, but undergrad hiring still outperforms MBA hiring, which means companies are still not ready to pull the trigger on major investments. Banks are feeling the same hesitancy; deposits have certainly grown, but lending hasn’t caught up. Tim Fisher, president of the Texas Mort-
gage Bankers Association, highlighted some of the issues we face on a national level as policy struggles to catch up to market conditions. Currently, the federal government is backing 95 percent of all mortgages, with only five percent financed by banks. FHA loans make up 50 percent of the market, but the government has designs to reducing that number down to 15 percent, and the FHA reserve fund is insolvent. We are looking at some serious reform, with HUD considering increasing the minimum down payment to 5 percent with a minimum credit score of 580. With the formation of the Consumer Financial Protection Bureau (CFPB) in 2011, some of the new rules are finally being drafted in an effort to prevent another meltdown; unfortunately, the regulations are largely being written by those who do not understand the industry. There will likely be a firm cap on the debt-to-income ratio, and credit is expected to be even tighter than it already is, especially for FHA. Tightening lending requirements, more conservative lenders, audits and increasing net worth requirements will cause many lending entities to shut down or join a larger lender. What this all amounts to is that it will get even more difficult to secure a home loan. The good news is that interest rates are low and will likely stay low for the next two years. We didn’t expect all the government programs that lowered rates and got people loans over the last year; but as Fisher pointed out, “Low interest rates don’t get people into homes as much as jobs do, and that’s why it’s great to be in Austin.” Eldon Rude, director of the Austin Market at Metrostudy, wrapped up with an overview of the condition of the regional economy, including resale and new home markets. With a net gain of over 35,000 jobs from 2011 to 2012 and a low supply of resales in core areas, we experienced a “structural
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Upcoming Events Tuesday, February 19 HBA Networking Social Wilson A/C & Appliance - 5 to 7 p.m. Thursday, February 21 Belterra Model Home Tour Belterra - 10 to 11:30 a.m. WCAoR February Luncheon WCAoR Office - 11:30 a.m. to 1 p.m. NAHREP Membership Drive Pappasito's Cantina - 4 to 7 p.m. Tuesday, March 5 HBA Lakeway/Bee Cave Chapter w/ 2013 Parade of Homes Builder Interest Meeting directly after Fore - 11:30 a.m. to 1 p.m. Wednesday, March 14 WCR Business Resource Meeting ABoR Office - 11:30 a.m. to 1 p.m. Tuesday, March 19 ABoR TREPAC Chili Cook Off ABoR Office - 6 to 9 p.m. Wednesday, March 20 HBA Georgetown Chapter St. Patti's Day Golf Tournament Forest Creek Golf Club - 11:30 a.m. Thursday, March 21 HBA Annual Crawfish Boil Builder/ REALTOR Mixer - Blanco Vista Community/San Marcos - 11:30 a.m.
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