Steep competition, cash offers and ‘hockey stick’ prices: On the ground of Austin’s ‘brutal’ housing market
The Austin housing market—historically a hot one—entered a new sizzling phase early this year.
Prospective buyers are likely to face dozens of competing offers, many of which are well above the list price and in cash. Realtors talk about extreme cases: winning offers $200,000 above list price and the Brushy Creek house that received 97 offers over one weekend.
The median home price in the city of Austin hit an all-time high of $566,500 in May, rising more than $142,450 year-over-year, according to the Austin Board of Realtors. And prices across the five-county Austin metro are rising at an even faster rate.
But there is room for hope. Local realtors report a small shift in the market in recent weeks, as fully vaccinated would-be buyers head out on summer vacations. "Don't give up," said Alex Gilmore, an agent at Paul Presley Realty. "Austin's only going to get more expensive."
A case study
Chris More, 44, and his wife recently purchased a new construction house in Pflugerville after a months-long search that included multiple rejections.
The couple moved from California to Round Rock in 2017, spurred by remote work options and the metro's relative affordability. Last year, midway through the pandemic when the market was hot but not scorching, they started looking for a new home with more privacy and a pool. "We were like, 'We can still catch that wave,'" he said.
Chris More and his wife faced multiple rejected offers while searching for a home earlier this year. (Chris More)
After the holidays, More noticed Zillow home prices in Round Rock, Leander and Pflugerville were rising dramatically from week to week—he described it as "hockey-stick growth"—and started to worry. Using a VA home loan thanks to his wife's time in the Air Force, the couple soon made their first offer: $75,000 over asking price on a home in the $600,000 range. They were immediately rejected but not discouraged.
The couple eventually made five more offers, one as much as $220,00 above the list price, but found sellers were only interested in cash. "We completely gave up, and it was kind of depressing," More said.
Discouraged by the resale market, they looked into new construction and found a builder who had three properties available on a first-come, first-served basis. Unbeknownst to them, they were first in line and able to purchase a home using the VA loan for under $800,000. Although higher than their initial budget of $550,000, More said, "I just got completely lucky."
The market also poses challenges for realtors. Realty Austin, a brokerage firm with more than 550 agents, brought in Bay Area realtors to speak about navigating such intense competition. "All of us had to set up new expectations with our clients," said Deanna Garza, an agent with 14 years of experience.
Buyers who found they were priced out of the resale market could seek out a cash bridge loan through a program such as Homeward, which has become "almost mandatory" in the current market given sellers' preference for cash offers, said Ashley Jackson, a Realty Austin agent with nine years of experience. They could also look at new construction or the rental home market. "You have to have tenacity in this market," she added.
Jackson recently worked with a buyer who offered $50,000 above the list price for a South Austin home in the 78704 ZIP code. She later learned the seller had received multiple offers $200,000 above the list price. But her client now has a home under contract after she called the listing agent to ask for the real price—not the one listed but the one the seller would accept.
"You have to walk the line between the brutal reality of our market … and the excitement of buying a home," she said.
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By Jonathan Lee
The Planning Commission was split Tuesday on whether to help save an eclectic lakefront estate from demolition by zoning it historic amid concerns over tax breaks and the likelihood that a previous owner participated in segregation as a business owner.
The property in question, known as the Delisle House, is located at 2002 Scenic Drive in Tarrytown. The main house, with Spanish and Modern influences, was built in 1923 by Raymond Delisle, an optician. A Gothic Revival accessory apartment was built in 1946. The current owner applied to demolish the structures in order to build a new home.'
Historic preservationists, for their part, overwhelmingly support historic zoning, which would preserve the buildings in perpetuity. The Historic Landmark Commission unanimously voted to initiate historic zoning in July, citing architectural significance, landscape features and association to historic figures. City staffers recommend historic zoning, calling both structures one-of-a-kind examples of vernacular architecture.
Tarrytown neighbors have also banded together to stop the demolition. Many have written letters, and a few spoke at the meeting. “How could anyone buy this property with the intent of destroying it?” Ila Falvey said. “I think it’s an architectural treasure.”
Michael Whellan, an attorney representing the property owner, said that the claims made by preservationists are shaky. The buildings are run down, he said, and have had substantial renovations. A structural engineer hired by the owner said any attempt at preservation would involve tearing down and rebuilding – an undertaking Whellan said would likely cost millions.
Whellan also argued that any historical significance derived from the property’s association with Delisle and longtime owner C.H. Slator is dubious. “These men are not noted for any civic, philanthropic or historic impact,” he said.
What’s more, according to Whellan, Slator likely participated in segregation as the owner of the Tavern on North Lamar Boulevard between 1953 and 1960.
A city staffer, however, said she found no evidence to support the claim. “We would never landmark a property where a segregationist lived, or there was a racist person,” Kimberly Collins with the Historic Preservation Office said.
Commissioner Awais Azhar couldn’t support historic zoning in part due to lingering uncertainty about Slator. “Focusing on that factor is not here to disparage an individual or family. It is not about playing the race card. This is an important assertion for us to consider as Planning commissioners,” Azhar said.
Commissioner Carmen Llanes Pulido said that allegations of racism should come as no surprise. “We’re talking about white male property owners in the 1950s, in Austin, on the west side – and of course they were racist,” she said. But she argued that allowing the house to be demolished based on these grounds does nothing to help people of color who have been harmed by racism and segregation.
The question of tax breaks was also controversial. Michael Gaudini, representing the property owner, said that the tax breaks associated with historic zoning would exacerbate inequality by shifting property tax burdens to less affluent communities. City staffers estimate that the property, appraised at $3.5 million, would get either a $8,500 or $16,107 property tax break annually, depending on whether a homestead exemption is applied.
Commissioner Grayson Cox preferred the commission focus not on tax breaks but on whether the structures merit preservation. “To me, nothing in the historic preservation criteria lists, is this person deserving of a tax break or not?”
Azhar, on the other hand, said he plans to propose a code amendment getting rid of city property tax breaks for historic properties.
The commission fell one vote short of recommending historic zoning, with six commissioners in support and three opposed. Azhar and commissioners Claire Hempel and Greg Anderson voted against.
The odds of City Council zoning over an owner’s wishes are slim. Nine out of 11 members must vote in favor, and there have only been a handful of such cases over the past several decades.
What's new in Austin food & drink this week:
- Nau's Enfield Drug closing after losing their lease. Did McGuire Moorman Lambert buy the building, with its vintage soda fountain?
- Nixta Taqueria Chef Edgar Rico named to Time Magazine's Time 100 Next influencer list, after winning a James Beard Award earlier this year.
- Question: From what BBQ joint did pescatarian Harry Styles order food this week?
- Austin Motel is opening the pool and pool bar Wednesday nights in October for Freaky Floats.
- Vincent's on the Lake closing due to "economic conditions and low water levels [at Lake Travis]."
- Cenote has closed its Windsor Park location. The East Cesar Chavez location remains open.
- The Steeping Room on N. Lamar has closed.
- Local startup It's Skinnyscored new financing for its gluten-free pasta business.
- P. Terry's opened a new location in Kyle, at 18940 IH-35.