Austin Property Team Blog

Protesting Property Taxes

2007-06-17T20:01:00.000-07:00

As shown in the article below, appraised tax values have shot up over the past two years. If you need help protesting your property tax assessment, please call us.

Homeowners Paying Price as Values Rise

2007-06-17T19:46:00.000-07:00

By Marty Toohey
AMERICAN-STATESMAN STAFF
Sunday, June 17, 2007

On one end of Pennsylvania Avenue's 2200 block in East Austin, a dirt yard and a "For Sale" sign sit in front of a new, three-story tan house with a rust-colored Star of Texas nailed above the door.

On the other end of the block, a pair of matching fourplexes are nearing completion, one green with lemon trim, the other lemon with green trim, both advertised for lease.

In the middle is the older, one-story home of Maria Ana Guevara, who is not happy about the situation.

"All the new houses in the area have been making my taxes go up," the 55-year-old Travis High School custodian said. "I'm expecting them to go up again."

Her home was worth $59,000 in 2002, according to the Travis Central Appraisal District. In 2005, it was valued at $75,000.

Today, it's worth $117,745, according to the appraisal notice that arrived in Guevara's mailbox in early May.

For many property owners, this is the second consecutive year of steeply rising values, which are not just affecting the high end of the market. The county's median home value — the point at which half the homes are worth more, half are worth less — has risen 16 percent over two years.

Hardest hit in Austin: Guevara's East Austin ZIP code, 78702, with a 43 percent increase in median home value since 2005. Residences in downtown's 78701 ZIP code, where condominium developments are changing the skyline, jumped 39 percent, as did homes in Travis Heights, just south of downtown. West Austin and Hyde Park are up 38 percent.

The state caps the amount a homestead's value can rise at 10 percent each year. So, though Guevara's home has doubled in value since 2002, her tax bill has gone up by a less startling $417.

Landlords aren't as lucky, because their values are not capped. The owner of two West Austin duplexes is facing property taxes that will probably more than double this year, to $11,000 per duplex.

What's driving up appraisals countywide is not the houses. It's the dirt. Since 2005, median land values have shot up more than 60 percent, while structures have risen only 6 percent.

Travis County Chief Appraiser Art Cory cites two main reasons for this. First, he says, land has been historically underappraised, and the county is catching up with market values. Second is the trend of tearing down homes in desirable neighborhoods and replacing them with larger ones.

According to the appraisal district, if someone buys a house for $200,000 and knocks it down, that means in most cases the lot alone is worth $200,000 — and other lots in that neighborhood should be valued accordingly.

That is not happening in the suburbs of Manor and Pflugerville, where land is plentiful and 3,762 new homes have been built since 2004. Those areas have seen two-year increases of less than 9 percent.

They also receive the least benefit from the 10 percent cap, Cory said.

An analysis by Statesman statistical consultant Robert Cushing suggests that the cap is helping East Austin homeowners as much as wealthier neighborhoods on the west side of town. But it's a temporary relief.

If the market goes flat — and history suggests it eventually will — people who benefited from the cap will see their homes' taxable value continue to increase at 10 percent a year until the capped and appraised values match. That could mean years of steadily rising taxes ahead.

East side, west side

For some homeowners, the increases create nothing more troubling than a tightened checkbook.

This is the case for Sally Hawkins, a retired school music teacher. She lives in a two-story, 1,740-square-foot house in Hyde Park that she bought more than three decades ago, partly because it has a living room large enough to accommodate her grand piano.

In 2002, she turned 65, and her school taxes were frozen at $2,980.70 a year. School taxes make up the bulk of most people's property tax bill, and Hawkins' situation looked good. But her city and county taxes continued rising, and since then, her annual bill has gone up more than $700.

Still, she says, she is lucky. Her father believed Social Security would go bankrupt by the time she retired. He drilled into her the notion to save money and invest wisely.

Those investments have made Hawkins' taxes an inconvenience instead of a hardship.

"My retirement salary simply does not give me what I need to pay the taxes here," she said.
Her main worry is that if she leaves it to her nieces, they won't be able to afford the taxes either and will be priced out of the neighborhood.

That is Amanda Anderson's worry. Her mother died in 2005, and Anderson inherited the Cherrywood Road home in which she was raised.

Like the homes of many black families in East Austin, it holds special significance because her parents sacrificed to buy it in an era when banks made few loans to minorities.

Anderson's green-trimmed house is 1,666 square feet, according to the appraisal district, and was built in 1949, with the only major addition an attached apartment that her parents built in the mid-1980s.

In 1999, it was valued at $137,790. It's now $352,497.

When Anderson inherited the house, the senior-citizen and other tax exemptions granted to her mother vanished. She said she has to pay $1,465 a month in property taxes until October. Then she'll find out what next year's bill is.

Whatever it is will be added to the expense of a son at Southern Methodist University, another who has been accepted to the Juilliard School of performing arts and a daughter entering her senior year of high school.

Anderson could sell. But she has rented most of her life, and her 96-year-old great aunt lives in the attached apartment.

Besides, Anderson said, the house is close to her job at the Sweatt Travis County Courthouse, where she works as a court reporter. It's in a neighborhood she's known all her life. If she sold, she would have to live farther out, possibly outside Austin.

"I want to stay there for the same reasons people are willing to pay so much to get in," she said. "If it's a choice of wanting to live somewhere else, that's one thing, but why should I be forced to move?"

She sees that happening now in Cherrywood.

"People of my age, of my race, I don't see them. The only people I grew up with who are still here are the old people, and once they die, that may be it, because the kids can't afford it."

Renters' dilemma

Cherrywood is becoming what residents in the Blackshear neighborhood fear: a place where blacks are priced out, as they were in the Clarksville area just west of downtown. Blackshear is within walking distance of downtown, on the other side.

Neighborhood association President Jimmy Butler said some longtime residents are telling him they are feeling pressed to sell because of rising tax bills.

Rudy Williams, president of the Organization of Central East Austin Neighborhoods, said he finds it ironic that city zoning once consigned blacks to the east side of town and now high taxes are forcing them out of the neighborhoods they created.

"Our appraisal system is broken, in my opinion," Williams said. "It doesn't take into account the economic and cultural basis of the neighborhood."

Because commercial properties aren't capped, he worries that higher taxes will be passed directly to people who don't own their homes, in the form of higher rents.

"Renting has been a safety net for the poor people of East Austin," he said.

Former City Council Member Willie Lewis bought a 1,080-square-foot, red brick rental house on East 11th Street three years ago. Since 2004, the value has nearly doubled to $151,926, and the taxes have jumped 40 percent, to a projected $3,837.75 next year.

"It's almost a situation where landlords have to raise the rent just to avoid a negative cash flow," Lewis said.

"I think there will be empty properties," said Thomas "Hollywood" Henderson, a former Dallas Cowboys player who owns properties in East Austin, "because landlords are going to have to charge $1,300 or $1,500 a month, and I don't think anyone will pay that."

That concern is not limited to East Austin.

The West Austin Neighborhood Group is worried that escalating property values will price out many current renters and pressure investors to demolish old homes and erect huge new ones.

The owner of two duplexes, one on West 10th and one on West 11th, saw their values jump more than 150 percent, to $462,803 and $457,634.

In a frustrated e-mail to County Commissioner Sarah Eckhardt, the owner said he'd made no changes to the 880-square-foot houses and blasted the appraisal district, saying he's tried to keep rents between $400 and $600 a month but will have to raise them to keep up with the projected tax increase of $6,500 apiece.

Guevara worries that the same startling increases could happen regularly on Pennsylvania Avenue.

When new homes started popping up in her neighborhood, she grew frustrated, and she joined the Blackshear/Prospect Hills Neighborhood Association, despite the fact that Pennsylvania Avenue is just north of its boundaries. She found neighbors with similar concerns.

In 2001, Guevara paid $1,352.53 in property taxes, according to the tax office. In January, she was billed $1,769.70. Next year, when the new houses on her block are added to the appraisal rolls, she expects the bill to rise again.

Strength in Numbers. A Bright Spot in National Housing Figures, the Central Texas Market Looks Strong for 2007.

2007-01-31T10:09:00.000-08:00

By M.B. Taboada
AMERICAN-STATESMAN STAFF
Sunday, January 28, 2007

Hutto is hopping.

The once-sleepy Williamson County town just east of Round Rock ranked No. 1 in the percentage increase of single-family home sales last year.

That's just one of many surprises in an American-Statesman analysis of year-end home-sales statistics from the Austin Board of Realtors.

While Hutto ranked 13th out of 47 real estate zones in total single-family sales, it had an increase of 61.4 percent, leaving all other real-estate zones in the dust and illustrating the region's rapid suburban expansion. Part of that growth can be attributed to Hutto's affordability. The median price was $134,990, up a modest 3.9 percent from a year ago and well behind closer-in areas.

"Price: That's the bottom-line appeal," said Steve Kelley, a real estate agent with Keller Williams who focuses on Williamson County. "People are willing to drive to Hutto because they can get more house for the money."

And the new Texas 130 tollway "makes a huge difference," Kelley said. "People are able to commute in a much shorter time."

The closest competitor in growth of homes sold was also suburban: the Kyle/Buda area of Hays County, with a 26.5 percent increase. Round Rock, Cedar Park and Leander, meanwhile, showed the most overall real-estate activity, topping the list of total homes sold.

Statistics from parts of once-overlooked East Austin showed yet another big trend last year: the rapid gentrification and price increases for homes in areas close to downtown.

The median sales price in the Multiple Listing Service's area 5, east of Interstate 35 and north of the Colorado River, rose 24.3 percent last year, from $108,600 to $135,000 — the highest percentage increase in the region. And the number of single-family homes sold rose 28.8 percent, from 330 in 2005 to 425 last year.

San Marcos was also a big surprise. That area of southern Hays County had nearly a 24 percent increase in median sales price over 2005. And far northwestern Williamson County also had a price increase of nearly 23 percent.

But one key trend wasn't a shocker. Such close-in neighborhoods as Hyde Park, Mount Bonnell, Travis Heights and Bouldin had double-digit increases in median prices, putting them out of reach for many buyers.

As with many statistical analyses, some areas might not seem as strong as they really are. For instance, Tarrytown, in West Austin's area 1B, appeared to be cooling off in 2006, based on the number of homes sold. That number declined to 594 in area 1B, a 4.5 percent drop from 2005.

But people in the Tarrytown area "tended to hold on to the homes more," said Charles Porter, chairman of the Austin Board of Realtors. "They had this feeling that it will be much more valuable next year." With the neighborhood's appeal of being close to downtown and its "Leave It to Beaver" atmosphere, "families want to stay there," Porter said.

Also, area 1B did quite well in median price appreciation. It was sixth out of the 47 real estate zones, with median prices up 16.2 percent to $440,000.

The same can be said for the 8W area, which is west of Loop 360. The number of homes sold in the area increased only 2.6 percent. But the median price was up a whopping $59,500, or 14.6 percent, to $467,500.

So what does all of this mean for 2007 and beyond?

"People want to live in Austin and they'll pay the price to live there," said Jim Gaines, research economist at the Texas A&M Real Estate Center. He added that strong job growth is sure to attract even more new residents.

In December, job growth hit a six-month-high, at 3.1 percent. That means the Central Texas region added 21,600 new jobs in December compared with the same month a year earlier. The total workforce reached a record high of 728,300 nonfarm jobs. The jobless rate also is at nearly a six-year low, with 3.2 percent unemployment. This equates to a market that is good for job seekers, which might add to the draw of new home buyers.

Overall, the housing market continues to defy the cooling on the East and West coasts. The market in Central Texas ended the year with record sales of 26,958, a 10 percent increase from 2005. The year's median home price also rose 6 percent to $174,500. Builders started construction on a record number of homes in Central Texas, jumping nearly 15 percent from 2005 to 17,782, according to Metro- study, a real estate research firm. The threat of overbuilding in the Austin market from national homebuilders is pretty low, economists said.

"The pace of development may even slow down in 2007, as the builders get a little nervous of the inventory they have for sale," Gaines said. "But nevertheless, it's still moving forward or growing at a pretty good clip. We don't see any reason why that would change."

Eldon Rude, director of the Austin office of Metrostudy, expects a 10 percent decline in new home starts as falling profits in other parts of the country spur publicly traded builders to build fewer speculative homes and raise prices to bolster profit margins. In addition, Rude said fewer investors might buy.

Homes stayed on the market slightly longer in December, at 70 days on average, which reflects the typical seasonal slowdown. The Austin area has enough existing homes on the market to last slightly more than three months at the current rate of sales, keeping it a seller's market.
I
n addition, pending sales in December were up 16 percent, which also indicates that 2007 will be off to a strong start and likely will continue to be a hot year in real estate. Home sales likely will remain brisk. A low inventory of homes and higher land and building costs likely will push prices higher.

Roselind Hejl of Coldwell Banker United, Realtors said she has at times been surprised by how much prices have come up and points to the scarcity of inventory as one culprit. Hejl expects closer-in areas in Central Austin and close-in suburban areas to remain hot, with the scarcity of inventory driving prices up, she said.

"It is the same thing we had last year, and we'll probably see another 6 percent rise in prices," she said.

Look For Our New Listing

2007-01-16T14:11:00.000-08:00

Look for our new listing in the Barton Hills area. It will be on the market soon.

Stenger Homes Still Inspire Mid-Century Modern Passion

2007-01-16T14:02:00.000-08:00

By Amy E. Lemen
SPECIAL TO THE AMERICAN-STATESMAN
Sunday, January 14, 2007

In an age of debate about whether to add 1,000 square feet to a 2,500-square-foot house, there's a refreshing sensibility in the smallness of yesteryear.

Perhaps that's why there's such an interest in mid-century modern homes — those built from about 1945 to 1960 — where everything had its place in about 1,500 square feet, with more than a nod to the sleek design of the age of machines and little regard for excessive ornamentation.

"Mid-century modern is what people want," says Drew Marye, a real estate broker and owner of the Marye Co. in Austin, who specializes in homes from the era. "They're unique living spaces that flow, with no wasted space."

Thanks to Arthur Dallas (A.D.) Stenger, there are about 100 of these special homes in Austin. Perhaps little-known, the city's original mid-century modern developer and architect brought a revolutionary style to houses, using design accents that are in demand today.

Stenger homes stand out. They have low, peaked roofs sheltering angular clerestory windows. There's heavy use of rock, wood, concrete and other organic materials. And the walls are full of windows that bring the outside in. Other features include exposed wood beams, vaulted ceilings, open floor plans and concrete floors pigmented with powder, a feature that now costs $10 or more per square foot.

"He's similar to Eichler, another period architect, and a few of his homes are influenced by Frank Lloyd Wright, though Wright never built tract homes," says Ben Phenix, a fan of mid-century modern design and Stenger whose Web site, www.modernaustin.com, drew more than 40,000 unique visitors in 2006. "This is a person who was basically responsible for mid-century modern in Austin."

Today, those who are lucky enough to own Stengers, and who know what they have, are passionate about the homes, and well-aware of their eccentric limitations. Many people quickly realize when they try to remodel that when they change one thing, they often have to change everything. So they don't.

Marye, who gently updated his own Stenger on Robert E. Lee Road when he and wife Katie bought it in 2003, says they're never moving. The stone fireplace, the kitschy 1950s cabinets and the windows just under the roofline are just a few of the reasons — despite Stenger's often offbeat construction.

"You have to know how to baby them. In our house, the wiring is tricky" because it's run through the roof, he says. "It's crazy, but we love it."

Stenger's influence began in Barton Hills in the 1940s, where he built homes on Arthur Lane, named after his father, the first Arthur Dallas Stenger, who also was an architect.
He wanted to build affordable yet unique homes for returning World War II veterans, who were in desperate need of moderately priced housing in the postwar period. At the time, FHA loans had design restrictions that imposed limitations on the kind of homes Stenger wanted to build, but that didn't faze him.

"He didn't like that, so he got his own land and built his own homes to sell," says Marlene Ciccarelli, Stenger's daughter who lives in one of his home here. "He only built one at a time. He wasn't a mass production kind of guy."

Stenger was also a little different. He'd buy the land, including pockets in Barton Hills off Robert E. Lee Road (Lund Street, Rabb Road, Rundell Place, Bluebonnet Lane, Treadwell Boulevard and others) and 70 acres in Rollingwood, the two most prevalent areas of Stenger homes in Austin.

Then he'd find a buyer, and design and build the house, usually without much input from the buyer.

"He wasn't a believer in contracts and didn't like to speculate," says Ciccarelli. "If the person didn't like the home, they didn't have to buy it, but I don't recall many people who disliked his stuff."

Priced between $18,000 and $22,000, Stenger's custom homes fit the bill. (Today, his houses rarely sell for less than $300,000, and some have sold for up to $600,000.)

Stenger also helped out friends in need, building several homes on Airiole Way for famed radio broadcasters Cactus Pryor and John Henry Faulk. The charge for Faulk? Nothing.

"John Henry had a lawsuit going on because he was blacklisted as a communist in 1957, during the McCarthy era," says Ciccarelli. "He won, but lost lots of money, so Dad financed the house for him — he lived next door to Cactus. That was the beginning of their friendship."

By 1956, Barton Hills was featured in Austin's Parade of Homes as the "world's largest air-conditioned subdivision," though very few of Stenger's houses had that amenity. Instead, the walls of windows he used in his houses opened up, providing valuable cross-breezes during Austin's hot summers.

Stenger had already started building in Rollingwood by the 1950s, buying land from George B. Hatley, its developer. But there was a slight snag. In 1955, the city had yet to be chartered and, with only a 2-inch water main in the area, the city of Austin wouldn't service it.

Again Stenger took matters into his own hands, using groundwater, building a well and founding the Ridgewood Village Water System, a utility that still serves about 90 homes.

The last home Stenger built, in 1999, was for himself and his fourth wife, Jean, in Rollingwood. Constructed 80 percent of concrete, it has cantilevered beams, concrete floors and concrete siding that looks like wood.

A.D. Stenger died in 2002 at 82.

"He designed that home while he was in the hospital for open-heart surgery," says Ciccarelli.
"He was always drawing and calculating, even when I'd go visit him."

Stenger might have been ahead of his time, both in his designs and the way he built his houses. But the homes do have a few drawbacks, and Stenger was first to admit he was no interior designer.

"The kitchens, bathrooms and closets are too small, but he was a specialist in the Navy and was used to the cramped quarters on submarines," says Ciccarelli. "When the owner of one house said she couldn't get her hangers in the closet, he told her to bend them!"

That crazy style doesn't appeal to everyone. On Ridgewood Road and Brady Lane, just off Rollingwood Drive, classic Stenger homes are out of place with the new construction that towers over them. It's one of those areas of Austin where the dirt on a lot alone is worth $300,000 and up, and where many Stengers are being scrapped. And that's exactly his daughter's fear.

"Dad's houses are cute, and they fit in with the neighborhoods, but now people are putting in these McMansions," says Ciccarelli. "He built for the land. It fit the ground and the trees it was on. I've seen homes on the Internet that have been remodeled, but they're not A.D. homes anymore."

Still, there's passion that continues unabated for Stenger homes, and Ciccarelli hopes that will keep them alive.

Chuck Voelter and his wife own a Stenger on Paramount Avenue, close to Arthur Lane. A film production designer in Austin, Voelter grew up in a 1960s modern house in Temple, and when he saw his future house, that was it.

"There was a sign in the yard for our house and the owners were fixing up the house," he says. "We said 'Stop!' and snatched it up. They're unconventional sort of spaces, but they make sense."

Appraisal Changes Proposed For Texas

2007-01-05T20:45:00.000-08:00

By Shonda Novak
AMERICAN-STATESMAN STAFF
Thursday, January 04, 2007

Homeowners could get some property tax relief, and cities and counties would face new restrictions on property tax increases, under proposals from a state task force created to revamp Texas' property tax appraisal system.

The recommendations of the 15-member panel, appointed by Gov. Rick Perry last year and chaired by Dallas lawyer Tom Pauken, will be considered during the legislative session that begins Tuesday.

Supporters say the proposals will create more fair and accurate appraisals, curb local government spending and shift some of the burden from property to sales taxes. Critics say the proposals would reduce local control and fail to address the core issue: Texas' overreliance on property taxes to pay for local government services.

A working draft of the report, obtained by the Austin American-Statesman, includes proposals designed to curb rapid increases in property taxes.

The average bill for an Austin homeowner rose by almost 43 percent between 2000 and 2004, and Houston homeowners saw a 50 percent increase in that period, the report said.

The proposals include capping the annual increase in a home's taxable value to 5 percent — it's 10 percent now — and increasing the local homestead exemption from $3,000 to $6,000.

The 5 percent cap would apply only in areas where voters or local officials pass a half-percent county sales tax that would be dedicated to reduce property taxes by an equal dollar amount.

Pauken said that proposal would ease some of the burden for property owners but not cost local governments any money.

At the same time, the recommendations would curb local spending by requiring governments to get voter approval for tax rate increases above 5 percent. The limit now is 8 percent.

Pauken said many local governments are spending all the money from "skyrocketing appraisals rather than give any of it back to the people in terms of lower property tax rates."

Appraisal district officials across the state have said their ability to value properties accurately, especially commercial properties and high-end homes, is hampered because sales prices are not public in Texas.

The panel proposed a hybrid approach: Within a certain time after buying a property, buyers would have to submit a valuation, with justification, to the appraisal district. If they failed to do that, they would have to disclose the sale price, but only to the appraisal district.

Task force members also called on the state to stop passing laws that require local governments to meet certain mandates, such as legal services for poor criminal defendants, without coming up with the money to pay for them.

State Rep. Fred Hill, a Richardson Republican, said the proposals are a "knee-jerk reaction to the problem of high property taxes without thinking about why are they high."

And that reason is that Texas depends too heavily on property taxes to pay for local government, said Hill, who is a leading critic of efforts to reduce local control of property taxes.
Hill said he supports making sales data public.

Because commercial properties are more severely underappraised, that provision would help insure that businesses pay their fair share and reduce the burden on homeowners, he said.
But he said other recommendations will have harmful effects, including impeding local governments from raising taxes at a time when they're most needed in many fast-growing cities and counties.

"We don't want to go to a system of less local control, which is what this would be," Hill said.
He said the proposed spending cap could cause cities or counties to "increase their budgets automatically every year to avoid automatic and costly elections."

Ultimately, Hill said, "they'll come to the state for more money, and we don't have another untapped revenue source. All of this ultimately will drive the state into a state income tax, and it would be ironic" because Republican leaders have opposed one for years.

Dick Lavine, senior financial analyst with the nonpartisan Center for Public Policy Priorities, said the major problem with the appraisal system is the lack of public confidence in the accuracy of the valuations.

That can be cured, Lavine said, through sales price disclosure, among other measures.
Another underlying complaint is that property tax bills are rising faster than an owner's ability to pay them.

"The answer is to attack the problem directly, through a circuit-breaker program that links tax liability to income, used in most other states, or a state personal income tax, not by distorting the appraisal system," Lavine said.

Art Cory, who heads the Travis Central Appraisal District, long has lobbied the Legislature to make sales data available.

"The document pretty well covers the problems in the system and the things that are perceived as problems," Cory said. "Whether or not the various proposals will cause unintended consequences depends on the details of the legislation."

Austin home market expected to remain strong next year

2007-01-04T06:48:00.000-08:00

By Kate Miller Morton, M. B. Taboada
AMERICAN-STATESMAN STAFF
Thursday, December 28, 2006

Central Texas home builders have been offering plenty of year-end discounts and bonuses to boost sales, but that doesn't mean that the Austin area housing market is cooling or that prices are falling.

Strong job growth, a steady influx of new residents and relatively affordable prices have kept the Austin housing market strong, even as markets on the East and West coasts faltered.
That isn't likely to change in the coming year.

Angelou Economics predicts the Austin area will add about 20,000 jobs and 40,000 residents next year, about as many as were added in 2006. According to Texas Workforce Commission, Central Texas' total work force reached a record 728,100 in 2006.

Home sales will likely remain brisk, while a low supply of houses, combined with rising building material and land costs, will push prices higher.

The Austin housing market could be affected by trends in other markets. Sales to West Coast buyers could slow as investors and people seeking to move to Austin find it harder to sell or take equity out of their homes. Falling profits elsewhere could spur national production builders to raise prices and reduce the number of houses they build here.

But outside forces are not expected to have a significant impact on Central Texas.

"Assuming nothing drastic happens that we don't foresee, I don't know why 2007 won't be just as good a year as 2006 or better," said Jim Gaines, research economist with the Real Estate Center at Texas A&M University.

The price of new and existing houses increased significantly in 2006.

The median sales price of an existing house was $174,000 for the first 11 months of 2006, according to the Austin Board of Realtors, up 7 percent from the year before.

The median price of a new house in the third quarter of this year was $212,527, according to real estate research firm Metrostudy, a nearly 15 percent jump from the same time last year.

Dr. Susan King is counting her blessings. Last spring, the North Austin family practitioner signed a contract to buy a new 4,800-square-foot house in the estates of Bella Vista in Cedar Park. "If we would have signed now, I think it would have been more expensive, because the prices have gone up," she said. She closed just before Christmas.

The base price for the Wilshire Homes model home she chose when she signed was $440,000. Now it's about $460,000, and upgrades are also more costly.

Higher home prices are partly due to a tighter supply.

Several consecutive years of strong sales have reduced the inventory of existing houses on the market to the lowest level since 2001.
The Real Estate Center estimates the Austin area has enough existing homes on the market to last just 3.3 months at the current rate of sales. That's considered a tight supply, putting sellers in the driver's seat on setting prices.

"At (inventory) levels like this, I would expect to see home prices increase pretty dramatically in the next year," said Mark Dotzour, chief economist at the center.

With strong demand and less competition from the resale market, builders have more leeway to raise prices on new homes, to offset the rising cost of materials and land.

Big, publicly traded national production builders such as D.R. Horton, KB Home and Pulte Homes dominate the Central Texas market. They may need to raise prices in strong markets such as Austin as they watch profits decline in many other parts of the country.

"The local builders are facing tremendous pressures to produce because the market is slowing in other parts of the country," said Dick Rathgeber, a longtime local developer. But Austin can't keep taking up the national slack without reducing the supply of houses even further.

"Now that their margins are not as high in those coastal markets, they are looking to the other divisions including Texas to be more profitable and show better margins," said Eldon Rude, director of the Austin office of real estate research firm Metrostudy. "One of the ways the public builders are likely to do that is to carry less speculative inventory. That is one of the reasons that we're seeing them have a strong push to reduce their inventory levels during the end of the year."
Some builders have offered end-of-the-year discounts to spur sales. In mid-December, for example, Pulte was offering discounts as high as $40,000 on every one of its homes in Central Texas.

They also have offered cushy incentives to real estate agents who find buyers for their houses. Beginning in October, some agents received daily e-mails about various incentives — such as 10 percent commission, rather than the typical 3 to 6 percent — on certain houses in communities such as Leander.

Those initiatives likely will enable builders to start 2007 with less inventory and put them in a position to have better margins on homes they do sell next year.

Metrostudy expects builders to sell about as many houses next year as the 16,000 the research firm estimates they will sell by the end of 2006, but they will likely slightly slow the pace of building in an effort to keep inventory tight.

Other national trends could affect the Austin market.

Slowdowns in other once-hot markets, such as the West Coast, could reduce the number of investors buying homes and moving here as it becomes harder to sell or get equity of properties elsewhere.

Mortgage data research firm First American Loan Performance estimates approximately 15 percent of new mortgages in the Austin area last year were for investor homes purchases, while nearly 8 percent were for second homes. That's up from nearly 14 percent and 6 percent, respectively, in 2005.

Working late at the office of Austin-based Streetman Homes recently, founder Randy Streetman fielded three calls from interested California buyers after 8 p.m.
West Coast residents with plenty of cash from selling their homes are still buying in Central Texas, he said. But the recent housing downturn there has led to a spike in contract cancellations here.

Rising prices also could put home ownership out of reach for many buyers.
"Generally speaking, housing prices are growing about twice as fast as wages," said Brian Kelsey, assistant director for the Capital Area Council of Government's Center for Regional Development.

Still, Austin-area home prices remain low compared with those in many other markets. Nationally, the median existing single-family home price was $221,300 in October, according to the National Board of Realtors.

Long-term, Austin won't be immune to the cyclical nature of the U.S. economy. Last month, the White House forecasted that the national economy will grow at a slower pace during the next six years.

"We will be subject to the cycles that impact the overall economy," Rude, of Metrostudy, said. "If the U.S. slows more than is expected by most economists, then, we will feel that in Austin as it related to the demand for housing."

Green alternative for Oak Hill tollway project

2006-11-29T13:28:00.000-08:00

Coalition report calls for widening road but protecting creek, trees.
By Asher Price
AMERICAN-STATESMAN STAFF
Tuesday, November 28, 2006

Politicians, neighborhood groups and urban planners all have had their say on the debate over Texas toll roads.

Now environmentalists are weighing in.

The Fix290 Coalition report, released last month, argues that a proposed highway interchange in Oak Hill at the intersection of U.S. 290 and Texas 71 would destroy too many trees and turn a stretch of Williamson Creek into a drainage ditch.

Parts of the interchange would sit above Williamson Creek, which feeds the Barton Springs portion of the Edwards Aquifer.

"Tolling is not the issue here," said the report, written by civil engineer Bruce Melton and backed by some neighborhood groups and nearly 2,000 people who have signed petitions supporting Fix290's alternative plan. "Responsible use of resources is the message that the Fix290 Coalition wants to convey."

U.S. 290 and Texas 71 would be tolled in the area as part of a state plan, and the Fix290 report appears to be gaining traction: In October, the Capital Area Metropolitan Planning Organization, which decides which roads may be tolled, voted to study the plan.

The state transportation agency's current plan — expansions of the intersection have been batted around since the 1980s — would expand the four lanes of U.S. 290 and Texas 71 to 12 lanes (six toll and six frontage), some of them elevated, on a right of way as much as 400 feet wide. In the process, the state would remove dozens of live oak trees, according to the report.

Don Nyland, an engineer with the Texas Department of Transportation, said the agency would have to remove trees but would try to relocate them.

The department's project is based on estimates that vehicle traffic will grow from 59,000 trips per day in 2004 to nearly 160,000 by 2030. The agency says elevating the lanes is a way to keep local traffic separate from through traffic.

The project "is designed to move traffic efficiently from the Oak Hill area out 71 and into the Hays County area heading south," said Marcus Cooper, a Transportation Department spokesman.

The Fix290 coalition calls the traffic projections the department uses very aggressive and claims that the nearly milelong portion of elevated highway the state plans to build would create an aesthetic barrier that would block views of the bluffs of Oak Hill. Its report also cites a 2001 article in the Journal of Planning that found that elevated highways increase noise levels at least 77 percent.

Fix290 has proposed what it says is a less expensive alternative project that would be less than 150 feet wide with six ground-level freeway lanes and two more for bicycles that eventually could become freeway lanes. Melton said the eight lanes could accommodate the traffic projections of nearly 160,000 trips per day.

The group says its plan would preserve the creek in its natural state, save at least 90 percent of the remaining Oak Hill oaks and decrease light and noise pollution. The Fix290 report comes as the interchange project is under new scrutiny for environmental reasons. Cooper said the Transportation Department last filed updates with the U.S. Environmental Protection Agency in 2002 and is working on another update.

Because the state plan would increase impervious cover — asphalt that doesn't let rainwater seep into the ground — it requires that more than a mile of Williamson Creek be transformed to accommodate runoff and fend off flooding.

The 20-foot-wide creek would become a grass-lined channel as wide as 80 feet, said Melton, a resident of Oak Hill. About 1,500 feet of the creek will be directly under the project's elevated lanes, the Transportation Department says.

That part of the project sparked a concerned e-mail from the Army Corps of Engineers, which is responsible for reviewing the project's potential effects on waterways. The project might need an additional permit to go forward "based on the more than minimal adverse impacts to the aquatic environment," Jennifer Knowles, a member of the Army Corps' Forth Worth office, wrote in September to Dennis Nielsen, a water quality specialist with the state Transportation Department. (The e-mail was provided to the American-Statesman by the Save Our Springs Alliance, a group that works to protect Barton Springs.)

Nyland said that despite the asphalt that would be added, the department's plans include techniques to protect the creek's water quality, such as detention ponds that keep downstream water from being polluted. He also said the agency is considering "benching" the Williamson Creek channel, or creating a stepped slope on which it can replant trees.

"Technically, we're improving water quality in the 290 corridor," Nyland said.

Ed Peacock, an engineer with the City of Austin's watershed protection department, said the city is concerned about water quality in the creek and is trying to work with the Transportation Department to improve the plan for the interchange.

"It's in a state of flux," he said.

A Home Tour For Every Taste

2006-11-29T13:26:00.000-08:00

Homeowners, buyers and the merely curious have turned annual tours in a booming business.
By Sarah Frank
SPECIAL TO THE AMERICAN-STATESMAN
Sunday, November 26, 2006

You've just spent more than $100,000 remodeling your home. You have your dream kitchen, a new deck and a media room. Fresh carpet, too.

Maybe it's time to show off the house to a few friends.
How about 1,000 strangers?

Many Central Texans are actually answering "yes" to that question when asked by their architects or remodelers.

At a time when the Central Texas real estate market is thriving and home building and design shows dominate entire cable TV networks, home tours have become an increasingly popular activity among builders, homeowners and buyers.

"People are beginning to realize what an impact design has on their lives," says Sally Fly, executive director of Austin's chapter of the American Institute of Architects, which runs a tour each October featuring about 10 homes with creative architecture and design.

"They see it is so critical for the way you feel, they way you work and how efficient you are, that these tours are a great way to put what we do out on the streets for people to see and understand what design is and what it can be."

For architects and remodelers, letting prospective customers inside a home they've worked on can be an incredibly effective form of advertising. For the people who tour the homes, they're able to get ideas, see how certain projects — such as raised ceilings or skylights — might work in their homes and sometimes talk with builders face-to-face.

For the owners of the home being shown off, it's a chance to be proud of the money spent and give a little thank-you to the builders by helping them drum up extra business.
Every home-tour organizer interviewed for this story said they've seen interest in the tours at least double in recent years.

"There were years, early on in the life of these home tours, when it was not competitive like it is today," says Fly, who's planned the architects' association's home tours for 15 years. "We had to go out and beg architects to beg homeowners to be in the show. But now, these tours have such a reputation, it means a lot to be featured."

These tours are no easy feat to organize. Aside from persuading homeowners to give up their house for a weekend and allow hundreds of strangers to explore it, organizers work to find weekends that don't overlap with holidays, University of Texas home football games or, naturally, other local home tours.

"We've noticed some inadvertent competition with other home tours," says Jacqui Schraad, executive director of the Heritage Society of Austin. That organization runs the annual Heritage Homes Tour, which showcases Austin neighborhoods with homes that were built at least 50 years ago but often date back to the late 1800s.

"The public gets confused with all the tours," Schraad says. "They think they've been on our tour, that it's a repeat from last week or the same one as next week's. We try to differentiate ourselves to show we're one of the only tours that showcases historic Austin homes."

The 15-year-old tour takes six months to a year to organize, Schraad said, because of the research that goes into learning the history of each home, with intense research focused on past owners, special rooms and antique pieces, and training about 40 volunteer docents who lead patrons through homes.

The naturally eclectic Austin-area market also has led to niche home tours. Only one of the main local tours — the Home Builders Association of Greater Austin's Parade of Homes — shows houses for sale. They've been taking patrons through high-end homes (now $1 million and up) for about 50 years.

Other Austin-area tours feature work by local builders and architects.

About 20 years ago, the architects' tours featuring impeccable design popped up. Later came the Texas Solar Energy Society's Cool House Tour of houses with advanced energy-saving features and tours by Austin's chapter of the National Association of the Remodeling Industry, featuring homes with additions and substantial renovations.

This time of year, some home tours feature extravagant holiday decorations. Each tour comes with a special set of tasks for organizers, some of which take months to complete.

"When looking for homes to show on the tour, we have to approach and sometimes persuade the homeowners to let us bring 200, 300 people through their house," says Barbara Vana, who organizes Bastrop's Holiday Historic Homes Tour, Dec. 9, which highlights eight historic homes and buildings decorated for the holidays.

"Sometimes they are real willing; other times it takes a little more persuasion. But most are excited. They spend all year getting their home in tip-top shape and decorating, putting Christmas trees in every room sometimes. It's just gorgeous."

"We really work to keep homeowners interested in showing their house," says Rick Dowden, a board member with the Austin chapter of the National Association of the Remodeling Industry, who plans the October tours. "Last year, we had a couple homeowners who agreed, but by the time it got close to securing the date, they decided they didn't want to do it. They're just more private than that; it wasn't a reflection on the builders."

Sometimes, there can be a small incentive to showing your house in a tour. With a strict tour date in place, Dowden says, it can speed up the remodeling process and guarantee renovations will be complete (sometimes with a few small touches thrown in for free).

And occasionally, homeowners featured in Austin's remodeling tour receive a complimentary hotel room from their contractors for the tour weekend so they won't be bothered by the touring guests.

"It's a real privilege for us as remodelers for homeowners to let us do this," says Dowden, who also owns Masterpiece Remodeling & Design, showcased on the tour. "We saw a response within two weeks of the tour. I've already had at least 10 calls from serious clients, not people just shopping around."

The NARI tour wrapped up last month, but the group already has begun planning for the 2007 tour. The first step, Dowden says, is snatching up precious billboard and banner space around the city that can disappear quickly between a few fall home tours.

For now, most home tours do not fall on the same weekend. This could change if more tours are created, which worries some organizers.

One thing that doesn't worry organizers is ticket sales. Many say they are surprised at the range and diversity of people who attend the tours, including students, people who have yet to own a home and out-of-towners.

For the cost of a tour ticket, often ranging from $5 to $25, anyone can become a design or remodeling or architecture enthusiast for a day. And with so many choices in the Austin area, there's clearly a tour for any kind of home style groupie.

"We try to have a variety of size and style for every kind of person on the tour," says Mary McLeod, residential coordinator for the Austin Green Building Program, which helps put on the Cool House Tour.

"Sure, most people are maybe thinking of building or buying a new home and they want to incorporate elements from the houses they see on our tour. But some people just enjoy the tour even if they might not be able to modify their home right now.

"Some people are just really into it."