There is more good news for Austin Texas.  Computer company Dell Inc. has announced that it will be hiring a large number of employees, 5,000 new sales positions in fact.  While not all of these new jobs will be in the Austin area, Austin will benefit from the added impact it should have on local operations.  At the moment Dell Inc. is a large employer in Austin, with roughly 16,000 employees from the Central Texas area.

Dell has also recently agreed to purchase a software company from California called Scalent Systems Inc., expanding its scope of services.  According to a recent article in the Austin Business Journal, Dell Inc. “posted a $1.43 billion profit on $52.9 billion in revenue for fiscal 2010.”  Dell’s success is always going to be good for Austin Texas.

Click here to read a recent article in the Austin Business Journal about Dell’s hiring of new employees.

Contact Todd Smith today for up to date information about Austin Texas real estate as well as free access to the Austin Texas MLS and all properties currently for sale in the Austin area.

There is a distinct possibility that Austin real estate will get a boost from the state of Texas.  The home buyer tax credit has expired, a program designed to spur real estate sales nationwide, and the state of Texas has stepped in to help keep real estate sales on the upswing.

The Texas Department of Housing and Community Affairs has created a new program, titled Bond 77, that is making $500 million available for mortgage help.   For those looking to buy Austin real estate the money can be used two ways, as down payment assistance or for acquiring a lower interest rate.

Historically low interest rates, low home values, and now the financial help available from the state of Texas, combine to make it an ideal time to look at homes for sale in Austin.

Click here to learn more about Bond 77.

Contact Todd Smith today for up to date information about Austin Texas real estate as well as free access to the Austin Texas MLS and all properties currently for sale in the Austin area.

Congratulations to all the graduates!

There was a great article recently on The Columbus (Ohio) Dispatch’s website about an 18-year-old named Lindsay Binegar who pulled the trigger on a purchase many people older than her can’t manage.

She bought a house. And paid cash. The lessons from her story are priceless.

I can’t do the article justice, so I recommend reading it when you get a chance, but the gist of it is that Lindsay started earning money for showing pigs beginning when she was 4 years old. She saved and saved her money, planning on using it for college.

When she started looking at schools, however, her parents offered to pay for college if she stayed near home. So she had her college fund now available to invest. Her father, who runs an auction house, suggested she buy a house at auction.

She paid $40,000 cash for a house, according to the Dispatch article. She spent a little more on new paint and carpet and rented it out to an aunt and uncle.

The first big lesson Lindsay showed is that frugality pays off. How many adults would like to be able to save $40,000 in 14 years? The power of compounding interest – earning interest on your interest – over the years, along with Lindsay’s resisting temptation to spend the money, gave her quite a bit to invest.

Which brings us to the second lesson: Once college was paid for, she didn’t take the money out to buy a new car or a new wardrobe, she invested it. Turning it into a rental property and assuming, conservatively, that she can earn $8,000 a year in cash flow (after taxes and maintenance), she could have her original investment back in just five years.

The last big thing to take away from the story is the fact she took advantage of today’s market, buying a house at auction at a low price and only having to add paint and carpet. Paying cash removes any debt obligation. There are plenty of deals to be had in today’s real estate climate, and she found one PLUS bought it the most ideal way.

If you think about it, this is the way our parents and grandparents became homeowners – they saved and saved and didn’t get in over their heads when they purchased a home. It was the smart, responsible way to own a home.

There’s plenty we can learn from the teenager who did the same thing.

To all the teenagers out there graduating from their respective schools, including my youngest son Wyatt who is graduating from high school, I hope you will glean inspiration from this tale and nurture it for your own measure of success!

Nationwide, April sales of existing homes were up 22.8 percent compared to April 2009, and were up 7.6 percent from March of this year. The driving force behind the jump, of course, was the now-expired tax credits. But another reason to buy is still here: historically low interest rates.

Bankrate.com reported on May 24 that the average for a 30-year, fixed-rate mortgage was 4.87 percent, which is the lowest it’s been in the 30 years that Bankrate has been tracking the figure.

Mortgage rates are tied to U.S. Treasury bond yields, which are low right now because of the financial crisis in Europe.

It’s the best time in our generation to buy,” Moody’s chief economist Mark Zandi told CNBC. “It may be the best time in any generation. Mortgage rates are so low and with homes prices down and lots of inventory, you couldn’t pick a better time to buy or re-finance.”

The extremely low rates won’t last forever – some experts expect about a month, as worries over Europe diminish. Most experts are also calling for strong sales figures for May and June as tax-credit purchases close by the June deadline, then a slowdown in sales as the bump from the credits disappears.

OK, so the deadline for the homebuyer tax credit has come and gone. The passing of the deadline has gotten me thinking about a real estate phenomenon that has become more widespread in the past year or two.

It’s probable that many of the homebuyers who purchased homes before the deadline did so because of the tax credit. Generally, that’s fine. Ten percent of the home’s price, up to $8,000, is certainly an attractive offer.

But how many people bought homes JUST because of the tax credit? We’ll never really know, of course, but let’s hope the number was low. Because no matter how attractive the incentives are to buy a home – tax credits, low prices, low interest rates – it still comes down to the home making sense for you.

I have a feeling that those who have been out home shopping and missed the tax credit deadline because they didn’t come across the perfect home for them in time will be happier in the long run than those who rushed to buy a home because of the credit.

Whether it’s a home you’re going to live in, or it’s an investment property or vacation home, your purchase has to “feel” right to you. In this day and age of foreclosures and short sales, many people seem out to simply find a “deal.” Remember, you’re not going to live in a deal – you’re going to live in a home!

A tax credit or extremely low price shouldn’t be the deal-maker, or breaker, when you buy a home.

If your home is a primary residence, you have to be able to see yourself living there for some time. An $8,000 tax credit or buying 15-percent below market value isn’t going to make living in a house more comfortable.

If the home in question is an investment, buying the “best deal” – the cheapest house – doesn’t make much sense, either. Can you afford to put money into it? Will it be an attractive property to prospective tenants? Is it in an area of demand so that it will re-sell easily?

The bottom line is that, yes, the tax credit was great. But it should be icing on the cake. The reason to be happy about buying a home should be the home, and the tax credit just a bonus.

According to a new article published in Forbes Magazine, Austin is ranked in the Top Ten as one of the best places for business and careers, and picked to recover quicvkly from the economic recession.

Austin was ranked #2 on the list for projected overall economic growth, #2 for projected job growth over the coming year, and #6 for “net migration”, which refers to the net impact of residents moving in and out of the city over the coming year.

This further validates what we already know about Austin:  it’s a great place to live, work and stay!

See the full article in Forbes magazine here.

There’s no doubt that some folks have been “on the fence” when it comes to buying a house – despite the first-time home buyer tax credits, bargain prices and rock-bottom interest rates.

A recently released report, however, shows that getting off that fence might be the best move. 

According to a national study conducted by the Associated Press, the gap between the cost of monthly rent payments and monthly mortgage payments is at its lowest point in 20 years. Which means, depending on your perspective, it’s never been more expensive to rent or never been less expensive to own a home in the past two decades.

According to the AP article on the study, the difference between median rent and median house payment in the 45 metropolitan areas surveyed was just $256, the lowest since it sat at $264 in 1993.

In metro areas harder hit by foreclosure, it’s even less of a gap. For instance, owning a home in Detroit might only cost $75 more per month than renting a comparable place. And the gap between renting and buying is closer to $200 in cities such as Cleveland, Orlando, Las Vegas and Atlanta.

When you calculate equity build-up and the tax benefits of owning, it makes you wonder why more people don’t get off the fence.

Of course, this buyer’s market won’t last forever. Prices are showing signs of recovery and interest rates are on the rise. Another interesting tidbit from the AP article: Home prices will rise before rents in most markets, meaning the gap will only be this close for so long.

Austin home builders show signs of increased housing starts

Everyone seems to have their eye on real estate markets these days. There’s pretty solid agreement that before a true economic recovery is sustained, the housing market needs to recover.

There have been some interesting statistics regarding that lately.

First, RealtyTrac Inc., a firm that tracks foreclosure statistics, reported that bank repossessions of foreclosed homes were up 35 percent in the first quarter of this year compared to last year. This sounds like bad news, yes, but I have said all along that this was going to happen.

Federal government efforts to modify mortgages largely served only to stall the process in many cases, and experts have long discussed a “shadow” inventory of foreclosed homes that could flood the market when temporary solutions expired. This increase in bank repossessions could be a sign of that.  Frankly, it’s probably better to have this happen sooner rather than later.

The second interesting statistic that gives us an idea of the future of the national real estate market is housing starts. In March, housing starts rose to their highest level in a year-and-a-half. Permits to build new homes were up 34 percent compared to March 2009.

Building permits are usually a good indicator of future growth. In this instance, the data are particularly good news because homes that are started now will most likely close after the home buyer tax credit deadlines – which means that there seems to be a demand for new homes outside of just the appeal of the credits.

Austin TX and USA home sales data drops

Existing-home sales fell from December to January but were still above year-ago levels, the National Association of Realtors (NAR) reported Friday. NAR’s chief economist, Lawrence Yun said the monthly decline was discouraging and raises concern about the strength of a recovery. According to NAR, existing-home sales declined 7.2 percent to a seasonally-adjusted annual rate of 5.05 million units last month.

Lawrence Yun, NAR chief economist, said most of January’s sales were based on contracts from November and December. He explained that potential buyers who got into the market after the homebuyer tax credit was extended in November have only recently started to offer contracts, and due to the delay between shopping and closing, it will take a couple of months to complete those deals.

“Still, the latest monthly sales decline is not encouraging and raises concern about the strength of a recovery,” Yun said.

NAR reported that existing-home sales varied by region. The smallest month-to-month decrease was seen in the West, where sales declined 5.2 percent to an annual rate of 1.28 million. The most notable monthly drop was in the Northeast, where sales plummeted 10.9 percent to an annual pace of 820,000. However, sales in this region were 22.4 percent above January 2009 levels, marking the largest year-over-year increase.

You might have noticed last week that the Federal Reserve raised the discount rate on loans to banks. To the uninitiated, this might seem like a move that will push mortgage interest rates higher. However, it is not.

Yes, mortgage rates crept up a bit after the announcement, but that was largely a knee-jerk reaction to the news by the mortgage-backed securities market. The discount rate is the rate the Fed charges banks to borrow directly from it. The federal funds rate – which is what banks charge each other and is the real driver of mortgage rates – remains unchanged.

This is does not mean interest rates on home loans will not rise. As part of the federal stimulus package, the Fed has been buying mortgage-backed securities, which has helped keep rates down. But the Fed has warned that it is almost done with the program, and the purchases of mortgage-backed securities could end in March. This means rates could start to rise then.

The Mortgage Bankers Association, in fact, predicts that by June, rates could be a half-a-point higher, and a year from now, rates could be a full percentage point above their current levels.

The bottom line is that rates are at or near historic lows, and are probably set to rise in the next 12 months. But not because of the Fed’s largely symbolic move last week.