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Austin home buyers are facing yet another hurdle as they battle high prices and bidding wars to get their patch of land: buyers are having to put more down—in cash.
Due to increasingly rising home prices, appraisers are skeptical of current values, which is putting buyers, more often than not right now, in what's usually a rare situation of having to fork up more money between what they agree to pay and what the appraisers say a home is worth.
The impact? Local mortgage brokers and realtors say it's pricing out some first-time homebuyers, who lack the cash from selling a home.
'A super heated market'
The median home sales price in the city of Austin has grown 22% in the last year, rising to $514,000 in March, according to the Austin Board of Realtors. A recent Redfin analysis found that the average home in the five-county Austin metro sold for 7% above its asking price, more than any other metro.
These high prices are the byproduct of a basic economic equation: high demand plus low supply. In an effort to compete, some buyers are offering more than $100,000 above asking price. Nearly all of them are waiving an appraisal, which means they commit to buying a home even if it is appraised for less than their offer price. This is the case 98% of the time, says Sydney Schuster, a realtor at Open House Austin, a real estate education company that specializes in first-time homebuyers and investors.
With sales prices rising so quickly, appraisals—which are based on historical sales data—often lag behind the offer price. "The problem is, if (a) house sold in April, it went under contract in March, two months ago," said Ashby McDonald, a loan officer for the Austin lender Highlander Mortgage. "In this super heated market, two months might as well have been two years."
How the math works
Let's say you want to buy a home in Austin. You're up against a lot of competition, so you bid $550,000 on a house that's listed for $500,000, planning to put 20% down. The seller picks your offer, and you enter into a contract and order an appraisal, scheduled by your lender, who has agreed to finance 80% of the appraised cost. Based on historical data, the appraiser values the home at $500,000. As a result, you can only get a loan for $400,000 and have to make up the difference in cash, fast. Your down payment just grew from $100,000 to $150,000.
Preparing for the worst
Aware of this trend, mortgage brokers and lenders are leveling with their clients. "Anyone who comes in looking for a house, I prepare them for the possibility that they will have to put down more than they think in a down payment because of this," McDonald said, adding that a down payment needs to be at minimum 10% of the offer price—and more likely 20%—to be competitive.
As a result, many buyers are required to make offers on houses that are less than what they can afford in terms of a mortgage but which allow them more flexibility in terms of a down payment or in case of a low appraisal. "I don't feel comfortable working with a client who's not prepared for the worst-case scenario," Schuster said.
Some clients are able to make such accommodations to be competitive in the current market. But those at the lower price range have nowhere else to go. "So you're priced out," said Dr. Luis Torres, a research economist at the Texas Real Estate Research Center at Texas A&M University.
There is room for hope, however. Austin's housing prices are at historically high levels, which are impossible to sustain in the long term, Torres said. Already McDonald is seeing the gap between appraisal values and offer prices shrink as the historical sales data catches up to current market values. "It's just that the growth has slowed down from insane to crazy," he said.
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Texas voters are split on whether Gov. Greg Abbott should run for a third term and whether Matthew McConaughey should run at all. But Democrats are clear: they want to see Beto O'Rourke on the ballot.
These are the findings of a Quinnipiac University poll of registered voters released this week.
Abbott and McConaughey received the highest favorability ratings of the elected officials, candidates and potential candidates, according to the Quinnipiac poll.
- Abbott: 49%
- McConaughey: 42%
- O'Rourke: 34%
- Former Texas GOP Chair Allen West: 25%
- Former Texas senator and Republican challenger Don Huffines: 8%
Overall, 48% say Abbott does not deserve to be reelected to a third term compared to 46% who say he does. "A Trump favorite in a state that is turning less red in recent election cycles, Abbott has a decent but in no way overwhelming grasp on reelection," Quinnipiac University Polling Analyst Tim Malloy said in a press release.
Abbott, McConaughey and Beto O'Rourke could vie for governor in 2022. (Office of the Texas Governor)
Voters are also divided on Matthew McConaughey, who is reportedly considering a gubernatorial run. Forty-one percent of voters say they would like to see him run, compared to 47% who say they wouldn't.
The poll found that Democrats and Independents favor the Oscar-winning Austinite, whose party affiliation is unclear. Forty-seven percent of Democrats would like to see him run, compared to 43% who wouldn't. Forty-four percent of Independents would, compared to 43% who wouldn't. Republicans, on the other hand, say 60%-29% they would not like to see him run.
Another possible candidate is former U.S. Representative and presidential hopeful Beto O'Rourke, who is also reportedly mulling a bid. Overall voters say 52%-41% they would not like to see him run for governor. But 77% of Democrats and 50% of Independents would, according to the poll.
"McConaughey and O'Rourke may still be on the fence, but their numbers suggest they have the attention of voters," Malloy said in the same release.
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Austinites will soon be able to train like some of Hollywood's biggest stars as F45, a fitness franchise backed by major celebs, like Mark Wahlberg and David Beckham, is on its way to Austin.
F45 listed Austin as the location of its corporate headquarters in a June 21 federal filing—a big shift for the California company. The fitness franchise is preparing for its initial public offering, which will be as an Austin-based company.
F45 will be one of many California companies—Tesla, Oracle and Samsung—that have recently expanded in the Capital City. The company has several famous investors on its side—famed basketball player Earvin "Magic" Johnson and golfer Greg Norman in addition to Wahlberg and Beckham.
The fitness company is opening a 44,000-square-foot headquarters, located at Penn Field on 801 Barton Springs Road, with a lease running through 2029. F45 was one of the early adopters of Austin-based real estate-technology platform AnthemIQ, helping tenants find commercial real estate.
F45 focuses on one-on-one 45-minute workouts, which patrons watch on in-studio displays. With 2,247 franchise agreements spanning across 63 countries, F45 also has offices in Australia and England.
"We believe this flexibility will enable us to capitalize on our estimated long-term global opportunity of over 23,000 studios," the company said in its filing.
The greater Austin area already has 11 F45 locations, which take up 1,600 square feet of space each.
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The staffers are coming! Texas Lege staffers turn to Twitter after special session announcement, defunding
Texas Legislature staff members have taken to social media to raise awareness—and also just air their misfortunes—following the summer special session announcement and their own defunding.
In a game-seven-type move by Texas Democrats, the 87th Texas Legislative session was capped off by a last-minute walkout to avoid a final vote on a bill that would add restrictions to voting.
Needless to say, Gov. Greg Abbott—who cheerleaded the bill throughout the legislative session—was not thrilled.
Not up to date on your Texas Lege drama? Abbott was pointing to when former Texas State Senator Wendy Davis staged a dramatic hours-long filibuster over a 2013 abortion bill, which the public gallery aided. The "story" Abbott is referring to ended with him and other prominent conservatives sweeping the 2014 statewide election and the bill passing in a special session.
According to Abbott, the regular session centered around supporting "hardworking Texans and building a state that is safer, freer, healthier, and more prosperous."
However, the two items deemed at the top of Abbott's wish list for this session—election integrity and bail reform—did not reach his desk at the end of the session, both championed by Abbott to be "must-pass emergency items."
"It is deeply disappointing and concerning for Texans that neither reached my desk," Abbott said in a statement. "Ensuring the integrity of our elections and reforming a broken bail system remain emergencies in Texas, which is why these items, along with other priority items, will be added to the special session agenda."
Abbott said he expected lawmakers to work out their differences prior to the special session and continue to pass other emergency items and priority legislation.
So, everything is cool, right? No worries?
Hours before the no vote, as the clock ran out on the bill that he championed, Abbott tweeted that he would veto funding for the entire state legislative branch. The decision would impact not only Texas lawmakers but their staff and aides. "No pay for those who abandon their responsibilities," Abbott tweeted May 31.
I will veto Article 10 of the budget passed by the legislature. Article 10 funds the legislative branch. No pay… https://t.co/KNyuNvxP55— Greg Abbott (@Greg Abbott)1622484820.0
With pay, health insurance and other support for staffers on the line, the threats became a reality on June 18 with an official veto of the funds from Abbott.
The veto effectively nixes all funding for the legislative branch.
"Texans don't run from a legislative fight and we don't walk away from an unfinished business," Abbott wrote in the veto. "Funding should not be provided for those who quit their job early, leaving their state with unfinished business and exposing taxpayers to higher costs for an additional legislative session."
However, questions have been brought up over the constitutionality of the veto itself. Section 24 of the Texas Constitution makes not paying members of the legislature illegal.
The special session is set to begin July 8. So, what does this mean for lawmakers, staffers and aides?
No pay, no insurance... and Twitter followers?
The staffers took their final stand on Twitter where they aired their grievances with the situation and asked for followers to increase their footprint.
Meet Jen Ramos, a staff member for Texas State Senator Judith Zaffarini—and also defunded by Abbott.
My name is Jen. I’m one of the #txlege staffers defunded by Greg Abbott. Apparently now I’m supposed to ask for Tw… https://t.co/pteKADP3Hj— Jen Ramos ✨ (@Jen Ramos ✨)1624466531.0
And she's not alone. Use the hashtag #txlege and you'll find other similar messages online, like Camille's and Hector's and more.
My name is Camille, my friends call me Cam or Cammie. I’m one of the #txlege staffers defunded by Greg Abbott. And… https://t.co/mOvcjxTiUL— Camille Lasin (@Camille Lasin)1624474153.0
My name is Hector. I’m one of the #txlege staffers defunded by Greg Abbott and who had to deal with elections stuff… https://t.co/88PINm9KCv— Hector 🏙🤠 (@Hector 🏙🤠)1624466987.0
My name is Jake Salinas. I'm the TX Dem that saved the film industry in TX and broke quorum on SB7 Now our Gov h… https://t.co/PLf9ScA4Ev— Jake Salinas (@Jake Salinas)1624464237.0
It's unclear whether Abbott and other prominent Republican lawmakers will come together with Democrats to overturn the veto and continue providing insurance and regular pay for lawmakers, staffers and aides.