The Velocity of Money and What it means to the Economy

This is a big topic for an Austin investment real estate agent to take on. So…… I won’t. But I do find the topic fascinating. Most of us get our economic news from Cable News.

During the build up to the Iraq war– I lost all faith in our “cheer leading” media. I believe that with economic news — the media has their “talking points”.

I found this article By John Mauldin — it is a cohesive argument that is written in terms we can all understand. John put this article together with input from Dr. Lacy Hunt of Hoisington Investment Management in Austin, Texas. It is an overview of the risks that we face in the US Economy. I am covering it here because investors always want to be able to predict how their investments will fare with the upcoming economic woes.

What does this article mean to the Austin Real Estate Investor:

1. Sellers– if you really want to sell a property, be reasonable now. You don’t need to sell good properties but if you are trying to dump a “dog” -- dump it now or prepare to hold it for another 2 or 3 years.

2. Buyers: — Austin is one of the best real estate markets in the country. There will be plenty of bargains out there. Spend your investment dollars here.  The following photo shows the areas of the country with the highest loan default rate.  As you can see, Texas is faring well compared to most of the country.  The Texas market is stronger than the markets making headlines.

http://www.tradingurus.com/the-velocity-of-money-john-mauldins-weekly-e-letter.html

It’s something to ponder.

 

Travis County Tax Appraisals for 2008 have gone up 12.5%

That is good news for investors worried about the potential of declining values but bad news for taxpayers. 

 Austin real estate is appraised by the Travis County Aprraisal district by a flawed method of appraisal called the “mass appraisal method”.  This has a lot of twists and turns.  I once read a 30 paige pdf on it– It really put me to sleep.  I say a flawed method because texas is a privacy state.  The price that you paid for a property is not a matter of public record. 

When your deed is recorded the appraisal district will  politely send out a notice asking what you paid for the property.  When you recieve it— THROW IT AWAY.  Sometimes new proud homeowners report values to the appraisal district — that then get applied to all the properties within the same section code.  This is far different from a Comparitave Market Analysis  (CMA) that an Austin Realtor will give you.  A CMA takes into consideration the condition of the property, upgrades and other factors. 

If you do not agree with the appraised value– before you protest– call a realtor ( namely Dena Davis) and let me take a quick look at the value.  I will let you know if you have an adequate chance of winning a protest.  You will have to bring in comparables– that support your claim of value. 

One other thing to know.  Some if not all  appraisals that work for the district have real estate licenses.  One time– during a protest– I brought my comps pointing to the lower value and Karlton Sneed, an appraiser for the district sat on his computer and pulled comps that he saw from a higher value. 

So this privacy issue only goes so far.  I dont know if they are supposed to be doing that.  — I doubt it.  But it happens. 

We are always here to serve the Austin investment real estate community in any way we can.  If you are wondering whether or not a property is really worth the appraised value.  Call me 512-473-2444 ext. 2. 

 To read the entire statesman article http://www.statesman.com/business/content/business/stories/realestate/04/16/0416appraisals.html

 

 

 

 

 

Homeless RV Park planned for East Austin

Some of you may have read my letter to the editor in the  Austin American Stateman.  It was a condensed version of this letter I posted on the statesman blog.

http://denadavis.statesmanblogs.com

Let me just be clear– the city council passed this thing quicker than a “Bear Sterns Bailout”.  This was practically done under the cover of nightfall.  The only difference was that the council meeting was unexpectantly changed to a daytime meeting– where the  majority working  residents could not take off work to protest. 

At issue here is the complete lack of transparency by the Austin City Council.   Austin is a progressive city.  I applaud that.  I also applaud the fact that the city council is attempting to do something progressive about the homeless in Austin. 

What bothers me is that they are relocating them away from the newly minted wealthy downtown condo buyers and transfering them to the backyard of lower income working families that live close to Harold Court in East Austin.  All with very little notice.    Try doing that in Travis Heights.  Or close to Circle C.  Or Shady Hollow.

I am not against the homeless.  I am not against Mobile Loaves and Fishes.  The homeless is a community that needs to be served.  Mobile Loves and Fishes is a fine organization who did what they needed to do serve the homeless.  I take issue with the City Council and thier lack of regard for the input of a disadvantaged citizenry.

http://www.mlfnow.org/site/DocServer/Land_Design_Partners_Preliminary_Site_Plan_March_2008.pdf?docID=1841 

 

 

 

$7,000 Tax credit to encourage buyers to buy foreclosures

Apparently, there is a bill before the senate (substitute amendment to H.R. 3221)    that would issue a $7,000 tax credit to those who purchase a home in foreclosure.  This is a $15 to $20 Billion Dollar package is more or less a down payment on what would become a housing bill costing hundreds of billions of dollars. 

The theory here is that the volume of foreclosure homes on the market is hurting the overall market.  As I mentioned in another post, it is estimated that for every foreclosure home in a neighborhood, neighborhood property values decline by 1.5%.

This is an effort to spur on the citizenry to take risks and absorb those units.  This sounds like a prime opportunity for investors. In a market like Austin, where there are relatively few foreclosures – one can hardly claim this is for the public good.  I can see where the tax credit could create an unfair advantage for the foreclosure home vs. the homeowner down the street just trying to sell his home. 

This bill also includes a bailout to builders to allow them to write off their 2008 and 2009 losses against the more profitable past 4 years.  How this helps the general public, I am not sure.  It sounds more like government taking care of big business.  Then of course, Cesar is going to throw the 600.00 tax rebate down to the peasants. That should keep them quiet.

I am wondering how this bill helps homeowners facing foreclosure at all. To read more about the bill http://www.opencongress.org/bill/upcoming/2-Housing-Stimulus-Package 

The purpose of this blog is to report on opportunities for investors interested in the Austin Market.  So whether or not this bail out is fair or not really isn’t the point.  There is clearly an opportunity for the Austin real estate investor to benefit from this bill — if it passes.