Let’s say you are looking for your monthly mortgage payment to be $1,500. If you took the next year to decide and the fed increased the interest rate by just one point, your purchasing power would go from $300,000 down to $275,000. A $25,000 decrease in purchasing power would definitely impact the square footage, finish out and location you could potentially afford as a home buyer.

2011 should be a pivotal year for home buyers who are deciding to buy a home, continue renting or make the move to another city. Potential home buyers that decide to buy this year will be able to take advantage of Austin’s low real estate prices and interest rates before we see the economy and local market rebound in 2012. Rudy and Naseem in our Chicago office made a great video explaining how rising interest rates impacts a buyer’s purchasing power.

Video: High Cost of Waiting to Buy Real Estate

Use this buy vs. rent calculator to decide whether buying or renting is better for you. The Austin Rising Team would be more than happy to meet with you to discuss your living situation and help you make a decision on whether buying or renting is better for you.

Encouraging signs are also starting to show up across the economy. Retail sales recently hit their highest level since before the recession. Key measures of small and big businesses’ optimism marched back up to prerecession levels and new claims for jobless benefits are trending lower. Together they bode well for steady job creation and improved consumer confidence which is generally manifested in more spending. As the economy improves, current stimulus efforts by the government and the Federal Reserve Board are expected to gradually wind down. Meanwhile, serious buyers stand to benefit from historically favorable buying conditions.

The two indicators potential home buyers in Austin really need to  monitor are rising interest rates and rents. We believe interest rates bottomed out in the 4th quarter of 2010 and are on a slow and steady climb upwards. Also, as rents increase we’re going to see renters question whether or not it’s worth paying more in rent or is it time to make the move and buy a home in Austin. Although interest rates are still very low, we’re seeing the purchasing power for potential buyers lower as interest rates go up.  What does that exactly mean? If interest rates go up a half point, your monthly mortgage payment could potentially go up by $100 or less. Real estate investors also have to take advantage of this time in Austin since prices and interest rates are low and rents are rising. There could be a potential housing shortage in the coming year or two. If this is the case, demand will exceed supply and real estate prices will go up.

Buyers and investors need to take advantage of Austin real estate before things pick up in 2012. If a buyer is planning to live in Austin for the next four years, they will greatly benefit from buying real estate while prices are low and selling as prices increase. Feel free to contact us if you would like to discuss the market and how you could benefit during this downturn.

Austin Rising Real Estate Monthly Newsletter: November 2010

Austin Rising Real Estate Monthly Newsletter: October 2010

Austin Rising Real Estate Monthly Newsletter: August 2010

Sales of single-family homes in the Austin area were six percent higher in December 2010 than December 2009 with 1,442 homes sold, according to the Multiple Listing Service (MLS) report released today by the Austin Board of REALTORS®.

In the same time period, the median price in Austin was $191,760, the same as December 2009; and homes spent an average of 98 days on the market, 13 percent longer than December 2009. In December 2010, pending sales were up three percent compared to December 2009, indicating stronger demand leading into January than this time last year.

“With stable prices, stronger sales volume and more pending sales this month compared to last year, we’re encouraged that the housing market recovery in Austin is continuing,” said Judith Bundschuh, 2011 Chairman of the Austin Board of REALTORS®.

The report also included 2010 year-end real estate totals. In 2010, 17,905 homes were sold in the Austin area, five percent fewer than in 2009; the median price in Austin was $193,520, up two percent from 2009; homes spent an average of 77 days on the market, two percent less than 2009; and active listings were 10,158, nine percent more than in 2009.

Chairman Bundschuh continued, “Over the course of the year, slightly fewer homes were sold in 2010 than in 2009. In that time, however, prices in Austin remained stable and homes sold at a pace consistent with 2009, despite a larger inventory. Those factors bode well for the long-term future of Austin real estate.”

The Austin Board of REALTORS® is a non-profit, voluntary organization representing more than 8,500 licensed REALTORS® in Central Texas. Visit AustinHomeSearch.com, a public resource on Austin real estate, for the latest news on the local housing market.

The volume of Austin area home sales in October 2010 was 1,221, down 31 percent from the same month in 2009. Sales volume year-to-date was down five percent from the same period in 2009 with 15,228 homes sold. Homes spent an average of 92 days on the market in October 2010, up 26 percent from the same month in 2009.

The median price of single-family homes in October 2010 was $198,500, up 10 percent from October 2009. Year-to-date, the median home price was $194,990, up three percent from the same period in 2009. Sales activity in the higher prices ranges continued to increase on a year-to-date basis in October with homes priced at $500,000 and above experiencing double-digit sales increases.

According to John Horton, Chairman of the Austin Board of REALTORS®, “Higher priced homes have continued to sell well over the last few months. This trend has been a driver in the steady increases in the median and average prices the market has experienced during the same period.”

Chairman Horton explained, “It has been a unique year in evaluating trends in the real estate market due to the impact of the expired homebuyer tax credits. Monthly comparisons are still being skewed by the artificial stimulus the tax credits provided.”

Horton added, “The market is still providing exceptional opportunities for buyers as we approach the end of the year. Increased active listings throughout the month provide buyers with a good selection of homes to choose from. This, combined with stable home prices and historically low interest rates, makes it a great time for those looking to purchase.”

October 2010 Statistics

$321,786,003 – Total dollar volume of single-family properties sold, down 24 percent from October 2009.

$198,500 – Median price for single-family homes, up 10 percent from October 2009.

1,221 – Single-family homes sold, down 31 percent from October 2009.

92 – Days on market, up 26 percent from October 2009.

9,703 – Active single-family home listings on the market, up eight percent from October 2009.

1,402 – Pending sales for single-family homes, down 23 percent from October 2009.

Year-to-Date 2010 Statistics

$3,871,811,782 – Total dollar volume of single-family properties sold, unchanged from 2009.

$194,990 – Median price for single-family homes, up three percent from 2009.

15,228 – Single-family homes sold, down five percent from 2009.

74 – Days on market, down five percent from 2009.

10,497 – Active single-family home listings on the market, up 10 percent from 2009.

17,235 – Pending sales for single-family homes, down six percent from 2009.