San Marcos Mercury | Local News from San Marcos and Hays County, Texas

January 16th, 2008
Housing forecast slow, steady

Editor at Large

While a struggling housing market prevails across the country, the local scene for residential real estate figures to be relatively stable, though not especially strong, through 2008.

Industry analysts say a national mortgage crisis, leading to tougher lending requirements, will extend a national slow-down well into this year. However, real estate agents in eastern Hays County say projected job growth in the area will buttress the local market, as will the overall draw of the Austin area for relocating businesses and homebuyers.

If the area market for residential real estate isn’t smoking hot, neither is it disastrously slow, according to locals in the housing business. While Central Texas housing statistics in 2007 registered one-year declines across the board, they are declines from a record year in 2006. The Austin American-Statesman put area home sales in 2006 at 27,203.

In short, according to experts from Buda to San Marcos, 2008 shapes up as a better year to buy than to sell, and people will buy.

“It’s not what it was, but, right now, we’re normal,” Marilyn Van Uum, who manages business development for Gracy Title’s Buda office. “Normal is good.”

Eastern Hays County realtors expect the market to largely absorb new homes on the ground, meaning home sales will continue as the local population expands. However, the market won’t be so strong that homes purchased in the last year or two will appreciate on the resale market.

“People who don’t have to make a decision will try not to,” said Peter French, Director of Operations for Benchmark Land Development, about potential sellers in the Buda and Kyle areas. “You might have to write a check at the closing table, which is always a painful experience.”

With that said, French added that his development, Plum Creek, showed 100 home resales in 2007, a slow year for existing home sales throughout the country.

The National Association of Realtors (NAR) said last week that existing home sales stand to decline 12.7 percent for 2007, down to 5.65 million from 6.48 million in 2006. NAR forecasts a very slight increase to 5.7 million in 2008, up only 0.9 percent from 2007 projections.

Buda real estate agent John Sanford said most agents advice buyers to hang onto their houses for seven or eight years before selling, because substantial appreciation will not accrue in the first few years under most circumstances.

“Any time you buy a new one, you probably won’t see any equity for 10 years, unless you are in an area that is hot, hot, hot,” Buda Realtor Jackie Keenan said.

That’s especially apt within the Hays CISD, where homebuilders have aggressively platted properties to keep up with demand, even if that demand should explode. A Hays CISD study of known platted properties within the school district, dated April 17, 2007, shows that plans are in place for 32,405 homes and 2,950 apartments beyond the existent housing stock. Of 18 known developments on the map, 14 have started.

However, those homes won’t be built before demand calls for it. Austin-area new home starts declined 19.8 percent in 2007, down to 13,478 from 16,794 in 2006, according to Residential Strategies, Inc.

Residential Strategies also noted that new home sales in the Austin area slowed at less than the national average in 2007. Closings in the Austin area fell 9.1 percent (from 16,085 in 2006 to 14,629 in 2007). Nationally, according to the U.S. Census Bureau, new home sales fell 22.9 percent on an annual basis from Oct. 31, 2006, to Oct. 31, 2007.

For now, local real estate agents indicate that new home construction in eastern Hays County appears to be near equilibrium with anticipated demand for a growing population, which means motivated sellers can’t expect to profit unless they’ve built significant equity through time. The flip side is a nice market for buyers.

Sanford said national homebuilders suffering in other parts of the country are likely to slash product prices to stimulate sales. When those slashed prices show up in the local market, which isn’t as slow as the national market, those houses are likely to move.

“There are some steals out there,” said Matt Leschber of 1836 Realty in Buda.

An August 2007 demographic study commissioned by Hays CISD projected 1,427 new home closings within the school district from the fourth quarter of 2007 to the third quarter of 2008, about even with 1,414 new home closings from the same period two years earlier.

Like the NAR and local realtors, the Hays CISD study predicted a one-year rally ending with the third quarter of 2009 to 1,511 new home sales, a 5.9 percent increase from the one-year period ending with the third quarter of 2008.

Experts say the housing economy should pick up as more breadwinner jobs emerge in the Buda and Kyle area. The Seton Hospital is expected to open in 2010, RSI already has re-located its rugged technology production facility to Kyle with incentives to hire city residents and a branch of the Austin Regional Clinic is planned for Plum Creek.

“I’m very optimistic about our local market,” said Jason Tarr of Great Locations Realty in San Marcos. “There are so many developments going on to bring growth to the Kyle and Buda areas.”

French said commercial development will continue as business tries to capitalize on the rooftops that have sprung up in the Buda and Kyle areas in recent years. Along with home prices that run lower than Austin home prices, French said 6,000 jobs are on the drawing board for Kyle.

“That’s a draw for the housing market,” French said. “And Kyle is still a price draw out of Austin.”

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