Austin Is Capital of Homes Selling at Super Premiums

[Zorro]

Texas city’s job growth and cultural appeal attracting buyers ready to pay $100,000 or more above asking price

AUSTIN, Texas—A homebuying frenzy is gripping much of the U.S., but Austin takes the prize for the biggest increase in homes selling well above the asking price.

Nearly 2,700 homes in the Texas capital have sold this year for $100,000 or more above their initial listing price, according to an analysis by Redfin Corp. that examined sales through Aug. 11. While a few other U.S. cities have had more properties sell at that premium to the asking price, none have experienced as big a percent rise in homes transacting at that lofty an increase, Redfin said.

“As a consumer, it seems scary to be in a housing market where the home you’re looking at [is] priced at $400,000, then, when you go to put in an offer, you realize the true price is $500,000,” Redfin chief economist Daryl Fairweather said.

The number of homes sold year-over-year for at least $100,000 over asking price has grown nearly 10-fold in Seattle, and fivefold in Oakland, according to Redfin. In Austin, that figure grew by 57 times the number for last year at this time.

https://www.wsj.com/articles/austin-is-capital-of-homes-selling-at-super-premiums-11629279001

[Hugh_Lebowski]

1. Yeah, but Oaktown is where it's at baby ...

The number of homes sold year-over-year for at least $100,000 over asking price has grown nearly 10-fold in Seattle, and fivefold in Oakland, according to Redfin. In Austin, that figure grew by 57 times the number for last year at this time.

[Jspur]

2. By the end of this decade the prices of homes are going

to be as expensive as California and New York. After 2030 I see nobody being able to afford a house unless they are making a combined 200-300K a year.

[frazzled]

3. And there's one reason for it: Austin has become a tech hub

Elon Musk is building Tesla’s next U.S.-based factory in Austin, Texas. Likewise, Oracle announced in December of last year that they’re moving their headquarters to Austin. Dropbox’s CEO recently bought a house in Austin and plans to settle there permanently.

If you follow tech news, you’re probably aware that this phenomenon is called the Silicon Valley exodus. In fact, apart from the established tech companies mentioned earlier, newer businesses are flocking to Austin too. As an example, Papaya Global, an Israeli-based startup that recently raised $100 million with more than a billion-dollar valuation has 32 employees in Austin. This is just one example of many companies that previously wouldn’t have looked beyond Silicon Valley that are now choosing Austin.

... Apple, Facebook, Google and Atlassian already had thousands of employees working from their offices in Austin before the pandemic. In fact, Apple opened its first office in Austin more than 25 years ago and is currently constructing a newer, billion-dollar campus there set to provide even more tech jobs to the area.

Additionally, Dell Technologies headquarters situated in Round Rock, Texas, is pretty close to Austin. Out of Dell’s 158,000 employees worldwide, 13,000 work from Texas, roughly 8 percent of its global employees.

https://builtin.com/company-culture/austin-tech-hub

[Klaralven]

4. Home prices will drop when mortgage rates go back up

Mortgages are cheap, and so buyers can afford to bid higher.

Mortgage rates hit their highest level in a month, and weekly demand drops

Borrowers backed away from the mortgage market last week, as higher interest rates chilled a recent revival in refinances.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.06% from 2.99%, with points increasing to 0.34 from 0.30 (including the origination fee) for loans with a 20% down payment.

https://www.cnbc.com/2021/08/18/mortgage-rates-hit-highest-level-in-a-month-and-weekly-demand-drops.html

So you buy a $500 K house with $100 K down. It is immediately worth $470 K, since it would cost $30 K to sell it. Your $100 K turned into $70 K of equity.

When mortgage rates go up, it is likely that your $70 K equity will drop to 0, or possibly go negative. At any rate, you are locked into the house until you can save enough for another down payment.

[mnhtnbb]

6. Not necessarily. Prices may level off, but there's more to it than interest rates

Housing prices are not determined by any single factor. The number of available homes for sale, mortgage rates and even construction material prices and availability for new homes all affect how much a property is worth at any given moment.

Right now in the U.S. the supply of available homes is especially low, meaning buyers are competing over fewer properties. Historically low mortgage rates, around 3 percent, are certainly helping buyers gain purchasing power, but most experts agree it’s the scarcity of available supply that’s really putting pressure on the market.

https://www.bankrate.com/mortgages/rising-rates-will-not-slow-the-housing-market/

[leftyladyfrommo]

5. I don't think I could qualify for $50,000

People toss around these prices like it's nothing to buy a $400,000 house. I think I read that the average price now is about $400,000.

A lot of people can't even come close.

[Wingus Dingus]

9. It is crazy. I must be mentally stuck in the last decade, because

I thought houses over $300,000 were for rich people, LOL. Now $400,000 and up is commonplace.

[Jspur]

11. I'm 38 and feel those prices are too high.

Last edited Mon Aug 23, 2021, 04:28 PM - Edit history (1)

I remember from age 5-11 living in an 1800 sqft house in Westfield, MA which is a small town an hour and half away from Boston. When I was 11 my parents and I moved away from that house to Cary,NC which is a suburb of Raleigh. Anyways I looked up the price of the Westfield house in today's market and it's now 355K. My dad bought the same house way back in '88 for 150K and when we moved sold it for 160K.

The house I moved to in Cary, NC was a smaller house which was 1400 SQFT. My parents didn't buy that house but rented it for 3 year until we could move out to buy a bigger home. The owner of the house offered to sell it to my parents for 120K way back in 1996 but my parents rejected the offer. That house today is now going for 320K on the open market.

My parents ended up buying a 3800 sqft home for 350K way back in 1996. They were able to purchase that house by then due to their careers taking off and they were making a combined income of above 100K a year so they could afford to make the payments. They still own that house and paid it off 3 years ago.

A week ago I was talking with my mom about the prices of the old houses that we lived in. I remember she literally spit out water and yelled when I told her the price of the Cary house in which she she said "What that POS house is now over 300K in value. You would have to be nuts to buy that type of house."

Just using my parents as a reference. They couldn't afford to buy a house that was 300K plus until they were making over 100K combined. I really don't know how any normal person could buy a house today in any top 50 metro who isn't making 100k or more. Even though 100K purchasing power is not the same like it once was but only around 7-10 percent of the population make that type of money.

[Wingus Dingus]

14. I can't figure out who's buying all these $400,000+ houses.

They're all over my suburb, which used to be mostly middle class with a few pockets of upper middle class. Can't all be well-off retirees. Either millennials earn a lot more money than I realized, to push prices this high, or banks are far less stringent than they used to be--maybe it's 2005 all over again.

[Jspur]

18. Millennials are not earning more

money. I read somewhere that the majority of Millennials who have purchased homes got help from their parents. What's really going on is these hedge funds are buying up all of these real estate properties and in return are jacking up the prices of all the homes in the process. This started to happen after the '08 Financial crisis. One of the mistakes Obama made was he pushed hard for these hedge funds to buy up all the properties that were foreclosed in the '08 real estate crash and the '10 real estate crash.

The hedge funds did buy up all the foreclosed properties and then realized how much money they could make on owning and selling real estate properties. Now we have a problem where these hedgefunds are buying up properties left and right and preventing normal people from being able to afford housing.

It's why I depressingly laugh at the thought of how the rest of this country is going the way of California. Just like in California you are going to see small houses in these metro areas that go for a million when in reality they should only be worth 100-200K tops.

[ananda]

7. You can't know how happy I am to rent here.

My rent is relatively low, and I love my location.

I have covered parking and unlimited free maintenance.

Can't beat that with a stick and a nail in your foot.

[haele]

10. Just hope your rental isn't bought out by an investment firm or bank.

They've been buying up multi-home units and mobile home parks, then jacking up rents, for five/six years now.
Some investment firms have been buying up small property management companies and raising fees on the owners enough to encourage selling the property to the investment firm for cash. Then they dump the tenets, upgrade and "gentrify" the property for either sale or higher rents.
I sometimes check with VA and HUD listings as kidlet eventually wants to buy a house -there are far, far fewer homes on the eligible lists than there are listed on realitor sites, and almost none that are affordable on foreclosure listings. Almost like non-commercial house purchasing is not being encouraged. L
ots of investment buying out there.

There will be very little affordable housing left, either to rent or buy, so long as vampire capital system owns the housing market.

Haele

[ananda]

19. It's not a house. I'm safe.

...

[Texasgal]

8. It's crazy what people

are willing to pay for a 1980's ranch house. Over 500,000.00? 3 bedrooms, two baths... modest back yard? Crazy!

[Jspur]

12. The banking system has allowed these homes to be

overvalued. It's like how student loans caused tuition rates to go up to astronomical levels.

[Mr.Bill]

16. Adding 1 or 2% to interest rates

would put the brakes on this madness.

[WhiteTara]

13. At the height of the California housing bubble

we sold our home after owning it for 8 years with the purchase price of $140,000 for 20 acres and a 3/1 house which was considered top dollar and some thought Mr.WT over paid. When we sold it, there was a bidding war and we sold for $450,000.

We bought our house in NW Arkansas after the housing market collapsed in 2009 and we paid $200,000 for 16 acres and a 3/2.5 house. We had it appraised for refi last month and it came in at $437,000!!!

We have no intention of selling...where would we live? but houses here are not on the market for more than 30 days and often not even that. We are definitely seeing climate refugees from other states coming here in droves.

[Jspur]

20. Hedgefunds are a huge reason why you are seeing these houses

getting scooped up left and right along with the prices rises to ridiculous rates. All the houses in the area I have grown up in have double and in some case tripled out here in the Raleigh metro area. My parents and their neighbors have both paid off their houses that they purchased over 20 plus years ago.

They told me they had a conversation where their neighbor said "People keep pressuring me to sell my house but I'm not going to sell it. Sure I can sell it for a profit but all the money I make off of it would just go into having to buy an even smaller house for about the same price in this area. So there is really no point of selling it since I don't want to move from this area."

My parents feel the exact same way as their neighbor does when it comes to selling their house.

[WhiteTara]

21. There are a number of those kinds of buyers

but here, we're receiving all our friends from the coastal areas as they become more unsustainable for quality of life.

[Mr.Bill]

15. A home in Walnut Creek (SF Bay Area)

that was completely gutted by fire just sold for over one million. They were asking 850K.

[themaguffin]

17. Census results showed that the metro grew by a staggering third. Crazy.