HometownGeorgetown.com

Two days ago, driving down Williams Drive near the big H-E-B, I saw construction-type trucks in the parking lot of the newly built Catfish Parlour. (I thought it was spelled “Catfish Parlor” until I looked up their website.) They don’t mention the Georgetown location on their site, but I’m pretty sure they’re open. When I drove by yesterday, the parking lot was full, but there wasn’t a construction-type truck in sight. If you’re in the mood for casual seafood, give them a try, and then come back here to post a comment about how it was.

Shelly Hargrove, Georgetown’s Tourism Director and Main Street Manager, sent an email today to remind people in her address book that the Texas Hill Country Wine & Food Festival is coming to our area from April 10 through the 13th. The Festival events are scattered around the Hill Country region. Georgetown will host the Sunday Fair on April 13th at San Gabriel Park. I already bought my tickets online. Hope to see you there!

Time for our weekly look back at home sales here in the beautiful city of Georgetown, Texas. By now, you know I’m an optimist by nature. But I have to say, I am very encouraged by this week’s numbers. In the period between February 4 and February 10 of 2006 (our record year), 12 homes were sold in MLS areas GTE and GTW for a total of $2,388,508. In the same period in 2007, 11 homes were sold for a total of $1,669,322.

This year, 20 homes sold for a total of $4,438,457!

In large part, this sharp increase is because local buyers have been made nervous by the national headlines over the past few months. Only now are they beginning to realize that the outlook here in Central Texas is excellent. We are not going to experience a “popping bubble” because we didn’t have bubble-type growth. In California and Florida, home values were increasing by 20% or more per year, while salaries were not. That kind of growth simply can’t be sustained long-term. Here in Central Texas, we saw home values rise slowly but steadily.

As you can see from the chart at the left, we are still seeing a significant number of price reductions. Sellers are realizing that their expectations were unrealistically high. Sellers determine the price at which they want to market their home, but buyers have 100% say-so on the sales price. Buyers control the purse-strings. Sellers can decide not to sell a home, to hold onto it until the market swings back in their direction, but they cannot decide how much a buyer will be willing to offer.

The twenty homes that sold this week were on the market everywhere from 8 days on up to 280 days. I took a look at the listing for the house that sat on the market for 280 days before selling because I was curious to see why it took so long.

The thing is, there was nothing obviously wrong with this house. It was fine. The home is in Sun City, and it was listed for less than $130,000. Two bedrooms, one bath, like other homes in Sun City. It simply never came in first place in buyers’ minds. Buyers who were looking in that price range found another home that they liked just a little bit better. Over the past year, five two-bedroom, one-bath homes sold in Sun City. The other four were on the market between 4 days and 75 days before selling. The four buyers who were looking for this size of home liked another home better every time. Each time buyers looked, the home that was on the market for 280 days came in second place.

When you’re selling your house, you need to come in first place. Yours needs to be the prettiest home available for the price. If you come in second place, you lose the buyer. And you could come in second place a hundred times, or a thousand. In fact, when your home is on the market a long time, it’s more likely to come in second place in a buyer’s mind because homes somehow lose their luster just because they’ve gone unsold for some time. Buyers wonder why other buyers didn’t like it, and they worry that they might be making the wrong choice if they buy something that so many others have rejected.

What about the house that sold this week after only 8 days on the market? What made it so special? It’s a three-bedroom, two-bath home in the highly desirable family neighborhood of Georgetown Village. The listing agent said on the listing that it was “truly the cutest home on the market” in the Village. By the speed of the sale, I’d say that wasn’t an exaggeration. The price point was right, too, at less than $170,000. Right now, there’s only one house listed in the Village for less than $200,000. And by the way, that house came in second place to the home that sold after just 8 days.

I had lunch yesterday in the brand new clubhouse at Heritage Oaks, an active adult community for people aged 55 and up. The clubhouse is gorgeous. Rustic luxury is the phrase that came to mind. Beautiful wood floors and great big, thick wooden beams in the ceiling. The large, open area would be perfect for a dance and, in fact, we were entertained by a talented mariachi band. The clubhouse isn’t usually open to the public. It’s for residents only. I was there because the folks at Jacobs Custom Homes had invited area REALTORS to see the place.

The clubhouse boasts an enormous kitchen, which will be a great place to hold cooking classes for residents. They have also recently had line dancing classes, we were told. The fitness center is high quality all the way. I imagine the clubhouse will get a lot of use from residents. It’s wired for sound and has a great flat screen TV. If I lived in Heritage Oaks, I would want to host an Oscar party at the clubhouse, and ask all the guests to dress in their red carpet finest.

A lot of people come to Georgetown to look at Sun City, and buy in Heritage Oaks, instead. It really depends on what you’re looking for in a home. Both are excellent communities, but they have very different restrictions and very different HOA dues. HOA dues in Heritage Oaks are $350 per year, whereas the dues in Sun City are $250 per quarter. Those dues are worth the price if you are the kind of person who will take advantage of all the extras Sun City has to offer. Sun City is an excellent choice for people who want built-in opportunities to make friends. In Sun City, there is a club or group for just about any hobby you can mention. There are also three golf courses, which are a major draw. However, a lot of people don’t know that Sun City’s golf courses are public courses, so you don’t have to live there to take advantage of the links. Heritage Oaks offers a more peaceful, private lifestyle. The clubhouse is there if you want to use it, but you probably won’t have neighbors knocking on your door urging you to join their club.

In Sun City, you’re limited to a number of standard plans. In Heritage Oaks, you can build a custom home. Heritage Oaks has built just over 100 homes in a development that will be about 400 homes when finished.

There are currently three homes listed in the MLS in Heritage Oaks. The smallest is just under 1500 square feet, and the largest is about 1900. You can find two- or three-bedroom options or build on your own lot. Please call me if you’re looking for a home in a 55+ community, and I would be happy to give you a tour of everything that Georgetown has to offer. I can introduce you to the sales staff at Sun City and Heritage Oaks, to help you find the home that is right for you. My number is 512-876-6544, and my email address is Jenel@HometownGeorgetown.com. I’m here to help!

Today, George Lourigan, a Mortgage Consultant with Extraco Mortgage, has been kind enough to write an article for this website, to help homebuyers understand the Fed rate.

What does “The Fed Just Lowered the Rate” Mean to Me?

What does it mean when we hear that the Fed just lowered the rate again? We have all heard that the Fed either has lowered the rate or is going to lower the rate. But what does that really mean to each of us? Does it mean that it is time to refinance? Does it mean that interest rates on home mortgages are going down? Does it mean that it is a good time to buy a house?

To answer these questions we first need to know what interest rate the Fed controls. The Fed meets once a month to look at the economy and determine if they need to do something to keep the economy growing at the desired rate of 3%. The Fed influences the economy by controlling the Discount Rate and the Federal Funds Rate. The Discount Rate is the rate banks pay to borrow directly from the Fed. The Federal Funds Rate is the overnight bank lending rate that affects how much interest consumers pay on credit cards, lines of credit, home equity loans, auto loans, etc. These are not mortgage rates. These rates have a direct effect on the Prime Rate (normally 3% above the Fed Funds Rate) but no direct effect on mortgage rates. The Prime Rate is important because many banks use it to determine the rate for short term loans such as land loans, interim construction loans (used to build a house) and business loans. The Fed normally only changes rates once a month. They are reacting to what has happened according to several economic reports. The Fed does not have direct control over mortgage rates. Mortgage rates are actually based on Mortgage Backed Securities (MBS) which are bonds issued by Fannie Mae and Freddie Mac. The trading performance of those bonds determines the direction of mortgage rates.

If the Fed does not control mortgage rates, who does and how can I know if mortgage rates are going down or up? There are several economic reports which are published each month that show what has happened with the economy. These reports are used to give an indication of what the economy is going to do in the future. When the economy appears to be improving, money managers tend to move their money into stocks and the demand for stocks drive the price of stocks up. When the economy appears to be declining, money managers tend to move their money into bonds because bonds are considered to be more secure. When money managers are moving money into bonds, bonds perform better and the price increases. Increased bond prices mean lower bond yields. Normally when someone is talking bonds they are referring to US Treasury bonds. However, as you remember mortgage rates are directly tied to a different bond known as Mortgage Backed Securities (MBS). When the MBS price increases the yield goes down. The lower yield will result in a lower mortgage interest rate. So in simple terms interest rates tend to lower in a declining economy (recession) and interest rates tend to increase in an expanding economy (inflation).

What does the Fed rate have to do with all this? Remember the Fed normally meets once a month. Because of this the Fed is always playing catch up. However, money managers are moving money all the time. They are moving money in anticipation of what will happen in the economy. This causes changes in mortgage rates to occur before the Fed changes their rate. The Fed adjusts rates based on what has happened. The Fed tries to keep the economy at a steady growth of about 3%. If the economy appears to be growing slower than 3% the Fed may drop rates to boost the economy by making short term money cost less. If lowering the Fed rate causes the economy to improve, mortgage rates may actually go up. In a follow up article I will discuss in more detail several indicators that you can watch to get an idea of what the mortgage rates will do.

George Lourigan can be reached at George@HomeLoanHeaven.net or 512-635-3229.

Last week, the folks at Jimmy Jacobs Custom Homes were kind enough to meet with me to tell me all about Woodland Park, which is one of my favorite subdivisions in Georgetown. When Woodland Park was first started five or six years ago, the homes were $475,000-$550,000 on average. Now, some of them are more than $700,000. (There are currently two Woodland Park homes on the market for less than $400,000.) In fact, a home sold within the past month or so for more than $750,000 after just two days on the market. Of course, that house was on more than five acres, whereas the typical lot in Woodland Park has between 1 and 1.5 acres.

The final phase to be developed is Phase 4B, which consists of 20 lots. 15 of them will be released in the near future, each between 1 and 1.66 acres. The prices range from $55,000 on up to $115,000 per lot. In the rest of Woodland Park, there are currently 13 lots available. What comes next if you decide to buy a lot? Your next step will be to choose a builder. You don’t have to hire Jacobs Custom Homes to build in Woodland Park. However, you will need to go through them as the developer to get your builder of choice approved, if you do go with another builder. Production builders may not build in this subdivision. The homes in Woodland Park are all high-end custom homes. They must be at least 2500 square feet and have 100% masonary exteriors.

Woodland Park West has its own Home Owners Association, but in all other ways, it feels like an extension of Woodland Park. The restrictions are basically the same. The lots in Woodland Park West go for around $70,000-$90,000 and run between 1 and 1.88 acres. Phases 1 and 4 have been developed, and Phase 5 is currently under development.

If I were to build in Woodland Park, I would definitely choose Jacobs Custom Homes. They build a gorgeous house. The designers they have on staff seem to really have a handle on what people like. Many of the kitchens have brickwork around the stove and across the front of the island that looks Old World luxurious. The master bathrooms in their model homes are showpieces. I’ll confess… I first visited a model in Woodland Park six years ago, and I liked the bathroom so much that I saved a brochure with its picture for ages in my Dream Home file at home.

Speaking of models… Jacobs Custom Homes are in the process of building two new models in Woodland Park. They like to keep a model open for just a couple of years before building another. That way, they can stay on top of the latest trends and technologies for the home. The Jacobs folks don’t just build in their own developments. They will build on your own lot anywhere within the triangle created by Georgetown, New Braunfels, and the Highland Lakes area.

I asked them whether the recent tight market had affected them, and I was delighted to learn that they did very well in the fourth quarter of 2007. They typically build 110-150 homes per year, and usually have about 25 spec homes on the ground. At the time I interviewed them, they had only 8-10 spec homes unsold. The rest had already found happy families. Some of their prices have gone down simply because the tight market has enabled them to renegotiate with their suppliers and subcontractors. They felt that they should get a break because they had consistently paid in full and on time. The suppliers and subcontractors agreed, and the Jacobs folks passed those savings on to their customers.

There are currently 9 homes listed in the MLS in Woodland Park and Woodland Park West. 4 of them were built in 2007 and 2008, and the rest are resales. They’re priced from about $370,000 up to about $580,000. Six homes sold in the past six months, including the one I mentioned at the start of this article.

If you would like more information about Woodland Park, or about building a home on your own lot, please call me at 512-876-6544 or send an email to Jenel@HometownGeorgetown.com. I would love to talk to you.

I was curious to find out exactly how many homes are currently on the market in the MLS areas of GTE and GTW, so I ran a residential search for properties that are currently listed as Active or Active Contingent. (”Active Contingent” means that the sellers have accepted an offer on their house, but that offer is contingent upon the sale of the buyers’ home. If the buyers can’t sell their home by a date named in the contingency addendum, then the house goes back into Active status. In the meantime, other buyers are free to look at the home.)

There are currently 556 residences for sale through the MLS, 143 of which are in GTE, and the other 413 in GTW. (Two of them, by the way, are Active Contingent.) There are 20 condos for sale, 3 garden homes, 5 manufactured homes, 3 mobile homes, 3 townhouses, and 522 single family homes. The homes range in price from $52,000 all the way up to more than $2.5 million. The oldest home was built in 1870, and the newest is still under construction. You can’t get any newer than that. The smallest home is 480 square feet, and the largest is 8000.

What does the average home currently for sale look like? It’s a three-bedroom, two-bath home with 2367 square feet, sitting on a one-acre lot, and it’s listed for $318,502. This seemed like a high average list price to me until I saw that 13 of the homes currently on the market are listed at more than $1 million. These high-end homes have been on the market an average of 151 days, much higher than the 97-day average for the entire list of homes currently for sale. This market is so specialized, it makes sense that it would take longer to find the perfect buyer. There aren’t a lot of buyers looking in this price range. (But if you are - by all means, please call me at 512-876-6544. I’d be happy to help you find your dream home.)

Another month has passed, so I decided to step back and take a look at residential real estate sales here in Georgetown Texas for the month of January. Was I right when I said “Buyers are back”?

I do believe that buyers are out there looking, but their offers are not yet being accepted. There were fewer sales this past month than in the preceding three months, which were already somewhat slow. October 2007: 83 sales November 2007: 83 sales December 2007: 67 sales January 2008: 66 sales

Take a look at the chart above. In January of 2002, 64 homes sold in Georgetown. In January of 2003, that number had dropped to 45. That’s a 33% correction. Last January, coming off the record year of 2006, we saw 88 sales. This year, only 66 - a 25% correction.

A well-priced house will still sell quickly. Of the 66 homes that sold this past month, 13 sold in a month or less. By “well-priced,” do I mean “inexpensive”? Not at all. In fact, the quickest sale happened with a house that sold for almost $800,000. What made that house well-priced? It was prettier and had more desireable amenities than other homes in the same price range.

On average, homes took longer to sell this year than last year. 86 days compared to 67 days in 2007. But the range of days on market remained nearly identical in 2007 and 2008. In January of 2007, homes sold after zero to 294 days on the market. In 2008, the quickest sale happened after the home was on the market for two days, and one home sold after 290 days on the market.

This chart illustrates the best news: sales prices continue to rise. In 2007, the average sales price was $200,071. In 2008, that number jumped by 17% to $234,536.

These statistics can be very confusing, I know. On the one hand, I’m advising you to price your house well to get a quick sale, and on the other, I’m telling you that prices continue to rise. How can you make sense of it? My best advice is to hire a REALTOR. (Pick me, pick me!) This is my profession. I have walked through many of the homes currently on the market, as well as those that have sold, and I spend a lot of time studying the sales. I can help you price your home to sell, and I can help you to be sure you pay a reasonable amount for your next home. Give me a call at 512-876-6544 or write to me at Jenel@HometownGeorgetown.com. I’m here to help!