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Monthly Archives: February 2017

What Do Rising Home Prices Mean for First-time Home Buyers?

Young boy with shocked expression

This is not an uncommon reaction when first-time buyers realize how much their dream home really costs. In many cases, taxes in the Austin area comprise more than half the total payment.

We’ve already established that home prices are likely to rise for the foreseeable future. Too many factors are driving them up. So any corrections will likely be short-term.

But what does this mean for the average person who wants to buy a home? The answer depends on whether or not you already own a home.

First-time Buyers

First-time buyers are in for some challenges ahead. The median price of a home sold in the greater Austin area in January 2017 was $279,990, according to the Austin Board of Realtors®. I’ve even heard people talk of $250,000 starter homes with a straight face. Seriously? Who can afford a $250,000 starter home?

Lendingtree has some good advice to help you determine how much home you can afford, but let’s just look at one of the qualifications. Your total outlay for your mortgage (principal, interest, taxes, and insurance) should not exceed 28% of your income, according to Bankrate. So if you make the median income for Texas ($55,653), your total mortgage payment cannot exceed $1,298.57, and half of the people in the state can’t afford that payment. At today’s interest rates and Austin’s taxes, you might be able to qualify with only a $10,000 down payment plus closing costs.

Continue reading →

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Are Austin Area Home Prices Starting To Plateau?

ABOR Median Home Prices continue to rise

This graph shows the median home price in the greater Austin metroplex as of December 2004-2016. The 2017 data is for January, which is the latest available at this writing. Future prices are guesses based on the average year-over year change.
Source: Austin Board of Realtors®

In October, I published an earlier edition of the infographic shown to the right. It lists the median price of houses in the Austin market at the end of the year from 2004 through 2016. That article focused on the dangers of trying to time the market. Although real estate prices generally rise over time, that price growth is never a straight line. Like all markets, there are ups and downs along the way.

Definition
Median Price is a statistical measurement that is useful in identifying and tracking trends. The median price is the price at which the number of houses selling above that point is equal to the number of houses selling below that point. Median price is usually a more stable number that average price, which can show wild swings due to extreme outliers—extremely high or low priced sales.

Today I added December 2016 and January 2017. This post was inspired buy the drop of just over $10,000 between December 2016 and January 2017. What could that mean? Are home prices in the Austin area starting to stabilize or maybe even fall?

It’s impossible to say from just one month’s performance. Housing sales always slow over the winter. This slowdown results from a number of factors, including the holiday season and bad weather (although bad weather is the best time to look at a house). These factors form the “seasonal differences” you hear so much about.

There are other factors at play, too. Inventory (the number of houses available to sell) in the Austin area remains extremely low. The February inventory held only a two month supply. In contrast, a stable market usually has about a six month supply. The inventory alone will ensure prices don’t go down to far and will probably keep pushing them upward.

Then there’s the national debt. The national debt lowers the value of money, which causes the price of everything to rise. General inflation bleeds into the housing market, too. Higher prices create higher prices.

And look at the trend line in that graphic. During the Great Recession, the trend line went up, even when we experienced a temporary drop in housing prices. And now, even with the drop between December and January, prices continue to increase apace.  I projected that trend into the future by adding the 10-year average year-over-year change in price to SWAG future prices.

It looks like homes will only get more expensive as time goes on.

Next time, I’ll talk about what I think that means for individual homeowners.

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Sell! Sell! Sell!

I’m back, and still sharing lessons in sales and negotiation I learned from Than Merrill and Andy Tanner. There’s one more exercise we did that I’d like to share. This one is about working with a skill that comes in really handy when we are trying to convince others to buy a house we have for sale, become a private money lender to our company, work with us as a contractor, or any other time we need to persuade others.

FABE

Easy to remember, important to do!

It’s based on FABE (fay-bee is how they counter-intuitively pronounced it). It came from Susan Williamson, originally. The idea is that you need to share these things to convince someone of the benefit of a product or service:

  • Features: What does the item have or do? This item has…
  • Advantages: How this differentiates the item. What that means is…
  • Benefits: How the item can help YOU. What that does for you is…
  • Evidence: Proof that your claim is true. This is true, because…

It’s a good idea to practice this with your elevator speech you give to potential buyers, sellers, or lenders.

In our case, everyone at the table had a bag with an object in it. The objects were fairly hilarious, including wax lips, Preparation H, a pair of clean white men’s undies, etc. You had just three seconds to look at your object, then present the FABE for your item. It goes without saying that this required creativity, especially in finding evidence for some of the items. But everyone gave it a good shot.

I did better on this one. I was rather excited to discover a clear, flat glass “stone” in my bag. Well, as a crafter, I knew of so many uses for that! I conveyed my genuine excitement about my item in listing its transparent, smooth features, the advantage that it has no sharp edges to injure children or pets, and the benefits that it is a blank slate for whatever you want to do with it—cover it with sparkles, make it into a magnet, put it in your terrarium, or skim it across a pond. As evidence, I pointed out how many have already been sold in stores.

The winner on our team was, of course, my dear partner Russell, who sold the heck out of a Pez dispenser. He just whipped through the FABE, then went back in for more. At the end, he said, but wait, there’s more! There are TWO candy containers with the dispenser! It was too perfect. I did come in second, though! Both Russ and I conveyed genuine enthusiasm for our product, which helped. We didn’t just list advantages and features, we acted as if they were amazing new discoveries.

Naturally, we don’t want to “over-act” in our businesses, whatever we are doing. But it IS important to not only share the features, advantages, benefits, and evidence pertaining to your product or service, but to sincerely believe in it. If you don’t, maybe you need to rework your offering to where you really are proud of all it can do for someone.

I hope that by sharing some of the things I’ve learned with you, I’ve helped you make some positive changes to your own business practices, or at least got you thinking about it. Call us at 512-807-8777 if you want to chat more. You can always contact me on Facebook, too (Sue Ann Kendall).

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Walls for Bobcat

While we were off in California getting smarter, the workers were busy over at the Bobcat Lair. It was drywall time! Anita and I were pretty anxious to head over there and see what the rooms look like with walls, so as soon as I finished work and went to the doctor for some antibiotics, we headed on over.

The new roof parts shine in the afternoon sun!

The first thing I noticed was that all the roof vents are done. They are so shiny! That was the only exterior change, though we did get a promise that the broken gutters will get fixed soon, and maybe the upside down light fixture will get put to right.

Inside it was so much fun to go through the rooms and see what they will really look like. No more studs and pink insulation! All the walls that will be near water got the green backing, while everything else got regular drywall. The taping and floating should happen in the next couple of days, as soon as it passes ANOTHER inspection.

It’s funny about how the rooms came out. The laundry room seems MUCH smaller than I’d imagined, but the office seemed bigger. Ruben said he can now put one of those barn doors leading into the office, so there will be more usable space. The inspector nixed the pocket door, which is fine by me, since I wanted one of those barn doors, anyway.

The wine room is pretty teensy, so I am thinking we may not be able to get a “tasting station” in there. Then I have to find more wine to put in it, too. The light fixtures weren’t working yet, so I didn’t get a photo.

closet

The big closet in the new bedroom.

The new “bedroom” and bath are very nice. The closet is so tall! There will be a lot of storage in it, as long as we don’t lose our step-stools. The lighting helps, too. The place no longer seems like a cave.

Most of the stuff from the Braesgate house has to be brought over in just a week or two. Ruben seems confident that it will be ready to receive my things.  The back-up plan is still to put it in the rooms that ARE finished. Luckily, most of my furniture is in one of the Villa Park houses, so it will be fine.

It really does look like we will live there some time this spring, though! Enjoy the photo gallery below. Click any of the photos to see them enlarged.

Don’t forget to give us a call if there’s anything we can do to help you out. What helps US out is clicks on our pages, and “likes” on our Facebook posts. That helps more new people see us. You will find the Hermits at 512-807-8777!

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Learning from Losing

We did a lot of interesting exercises in the two-day intensive sales and negotiation class I just took. I liked them, because not only were they fun, they provided good insights into our strengths and weaknesses as communicators. I already wrote about the “sell a book to a stranger” challenge, as did Russell. Another member of the class also has promised to share her story soon. Today I’ll share what I learned in the “who gets voted off the boat” exercise.

lifeboat

Only six people fit on a boat!

For this one, each of the eight people at our table was assigned a profession. We were given a scenario where we were in a plane crash and had a lifeboat that only held six people. Each of us had to make a short presentation on why someone with our profession should make it on the lifeboat. There were landscapers, lawyers, janitors, an airline pilot, and such. I was the librarian.

I figured the librarian, with the ability to research anything, and all the knowledge of books she had read, would be a cinch to get on the boat, so I wasn’t really worried. When my turn came, I said that with me on board (with my trusty solar-powered cell phone), anything we needed to figure out I could help with. I also made the point that, on those long and lonely days and nights floating around in the ocean, I could tell stories to distract the others, pass the time, and preserve their mental state.

Others made very good cases for themselves, as well, some better than others. Some resorted to making up new skills, like the lawyer who happened to be a former Navy SEAL. Convenient. When we voted, we voted for one to be sure to keep, and one to vote off. I voted to keep my partner, Russell, who, in his trainer presentation mode, had made a very good case for his profession of teacher, and I voted to leave the landscaper, whose skills I just didn’t see were helpful.

I was surprised at the results. It turned out that the airline pilot won. Apparently, they have leadership skills and survival training. The pilot won in lots of groups, but almost every profession (other than lawyer) won at least one competition.

books

All this knowledge was not enough.

As for me I was left off the boat. One of the team members said I did a great job, but that they thought the bit about telling stories was not helpful at all. A couple others agreed. After we talked about some of the others, another team member piped up that they thought I was right, that the psychological needs of people stranded in the ocean were important, and that the stories could be very useful for maintaining sanity. Well, yeah, that’s why I said that. But, I was shivering on the shore by that point.

What did I learn from this? The experience really drove home something that was mentioned often in the training. When you are trying to sell something to someone, you need to focus on what they believe they need, not what you think is a selling point of a product. In selling a house, a great playscape in the back yard is not a desired feature to a retired couple, so you’d focus on the lack of stairs, instead. It’s really important to figure out what the other person desires BEFORE launching into any sales pitch.

If I’d been able to talk to the team about what they felt was important about someone to include on the boat, I’d have focused more on my data retrieval skills and less on story-telling. Just because I was right didn’t mean the others were interested in that set of skills.

This is why it’s important to build rapport with the person you are selling to or negotiating with. You need to find out what they are interested in or care about, and most important, what THEIR desired outcome for the transaction is. Then you figure out how to make getting them what they want fit in with what YOU want, so you both win.

I felt better knowing that our instructor, Than, had been voted off the first time he did the exercise. He and I agree that you can learn more from being voted off than from being voted on. I was persuasive, but I didn’t meet the needs of my audience. Lesson learned!

I have another exercise that I learned from to share in the next few days, so check back in soon, or subscribe via email, so you won’t miss a post. Want to chat more? Phone 512-807-8777!


 

 

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