Original Series on Downtown Austin TV

First there was Austin City Limits. Then came the Real World: Austin. Now there is DOWNTOWN (The all caps effect is actually part of the name).

While not widely known, Austin public TV station KLRU produces a great original TV show on life in downtown Austin. The award-winning show, called “DOWNTOWN” promotes itself as covering diverse issues “such as dense urban cores, downtown living, transportation, accessibility, arts and cultural vitality, retail development... zombie walks... pillow fights... and more!” The whole series is focused on life in downtown Austin.

Over the last three years, the show has included segments on the Seaholm power plant redevelopment (shown below), high rise elevators, downtown films, popular restaurants, and the downtown fashion scene.

DOWNTOWN is produced by the Downtown Austin Alliance, Action Figure, and KLRU-TV, began airing on KLRU-TV in 2005 as a series of 30-minute programs. In 2008, Seasons 1, 2 and 3 of DOWNTOWN were made available online as individual segments or full programs. Season 4 of the series can be viewed on KLRU-TV, Austin PBS, beginning on October 16, 2008.

The show -- including previously aired episodes -- can be found here: http://www.downtownaustintv.org/

DOWNTOWN TV Images from the
segment on the redevelopment of Seaholm:


New York Times: Downtown Austin is Attractive Second Home Location

An article in yesterday’s New York Times analyzed downtown Austin as a second home location. The enthusiastic article shed light on an important trend in the downtown market: the popularity of downtown condos with out-of-town buyers looking for a weekend getaway. We have heard first-hand from many developers that affluent Houston and Dallas residents, especially this with children attending UT, have been active buyers in the downtown Austin condo market.

The New York Times also indicated that buyers are increasingly able to negotiate with developers and condo owners for price reductions and free upgrades. In this tough market, where too few buyers can get decent loans, developers are increasingly eager to cut deals with prospective buyers.

Here is the full article from the New York Times:

MORE than 200 live music sites, weather with annual temperature averages in the 70s, and thoughtful urban planning make downtown Austin an appealing second-home location.

Beginning in the 1990s, city planners decided to model its urban core on the downtown in Vancouver, British Columbia. The result is an area of high-density housing; vertical mixed-use building; plenty of cafes, restaurants and bars; and pedestrian-friendly public spaces that include biking and hiking trails around Lady Bird Lake (formerly Town Lake).

Buyers of second-home downtown condominiums come from larger cities like Boston, New York, Dallas, Houston and San Francisco. Some choose the area based on their experiences there while attending the University of Texas. Others, like young technology professionals, come to the city while on business, then choose to purchase small units for use on weekends or vacations.

Retirees and those who are about to retire are often attracted by the area’s amenities, real estate agents said. Another group of buyers are people who don’t want to be dependent on cars.

Eric Winkler, owner of E. J. Winkler Realty Company in Austin, said the supply of new construction condominiums now exceeds the demand. “Prices are negotiable,” he said. “I’ve seen $90,000 come off a $490,000 list price.”

Buyers at the Plaza Lofts at Republic Square Park can find one-bedroom units listing for about $329,000. Cory Culpepper, an agent at van Heuven Properties, said that the price is about $100,000 less than a year ago.

Dave van Heuven, owner of van Heuven Properties, said that changes in lending practices, not an excess of building, account for a trend in pricing. “If you look at the 43-story 360 Condominiums, all 432-plus units were sold out, most of them preconstruction,” he said. “Now some of these same units are being offered again because of financing that didn’t go through.”

At the low end, listings range from about $250,000 to $450,000 for an 800-square-foot unit in a new building. At the high end, prices range from about $750,000 to $1 million, with penthouses in luxury buildings listing for up to two-thirds more.

HIGH

Overlooking Republic Square Park, this 12th-floor, 2,900-square-foot penthouse condominium is in a six-year-old building called the Plaza Lofts at Republic Square Park. A staircase inside the unit leads to a private rooftop terrace providing more than 600 square feet of outdoor space. The living area includes floor-to-ceiling windows, custom-made wood cabinets, polished and stained concrete floors and 13-foot-high ceilings. Electronic solar shades cover the windows, and the heating and cooling systems are zoned and computer-controlled. Glass inserts in interior walls allow natural light to pass through. The master suite is 900 square feet, and there are two and a half bathrooms. The building’s amenities include concierge service, a rooftop pool and a fitness center. Fees: $1,040 monthly. Taxes: $21,869. Listing agent: Kumara Wilcoxon, van Heuven Properties, (512) 480-8944; www.downtownaustinliving.com.

LOW

Ten-foot floor-to-ceiling windows and a 64-square-foot balcony face west from this condominium with a view of Lady Bird Lake. It has 812 square feet of living space, which includes oak hardwood floors, granite countertops in both the kitchen and the single bathroom and an area for a stackable washer and dryer. Stainless steel appliances are included. The building provides wireless Internet service in all common areas. Other shared amenities include a ninth-floor activity deck with a lap pool, an outdoor living room with a fireplace, a catering kitchen, a movie theater, a fitness center and 24-hour concierge service. Fees: $247 monthly. Taxes: $5,590. Broker: Taylor Andrews, Andrews Urban LLC, (512) 477-0360; www.lifesurroundsyou.com.

AustinTowers.net Featured in NBC Story on Downtown Austin Rental Market

Austin Towers Editor Paul D’Arcy was featured Thursday in a KXAN NBC Austin News story on the downtown Austin rental market.

As we have reported, Austin has been one of the strongest rental markets in the country. As rents increased while supply grew, developers continued to come to Austin to add new rental capacity. Over the last few months, this trend has reversed. With thousands of new units hitting the market and economic conditions deteriorating, both rents and vacancy have begun to slide.



Watch the full story here or read the transcript below:

Apartment rental prices are going down in Austin. A new report by Dallas-based Axiometrics said Austin's annual rents only grew nearly 1 percent for the third quarter 2008, compared to 5.6 percent in the third quarter of 2007. Rental market experts said they are also seeing huge price drops across the city.

"Some of the big projects have actually gone back to renters with huge price drops as much as 30 percent to keep them in their units without them even asking for it," said austintowers.net Editor Paul D'Arcy.

D'Arcy said supply is going up as well.

"We expect to see thousands of new units for the rest of this year," said D'Arcy. "We expect to see thousands of more units hitting in 2009 and that is only going to put more downward pressure on rental prices."

Renters are already experiencing drops in prices and more incentives offered to get them to sign leases.

"In August, as things started to slow down, at least the prices began to drop a little more and the specials started coming out," said Melvin Bunkley, who moved into the Waters Edge Apartments in North Austin. "They really want the renters."

He said he had plenty of options in apartment choices but decided on Waters Edge because of the amenities.

"Renters have bargaining power, there is no doubt about it," said D'Arcy.

Nationwide, rent increases went from 2.1 percent to 0.8 percent. Vacancies in Austin are at 6 percent compared to 5 percent in the third quarter of 2007.

September Update: Prices Hold Steady

The September MLS statistics on sales of existing single family homes are out and the news is about as good as can be expected. During the month, sales of existing homes fell by 8 percent while the median price stayed flat. Notably, prices are actually up approximately 10% from September of 2006. While the rest of the country struggles with massive price erosion, the Austin market continues to hold its ground.

The news, in general, was stronger in some of the more central areas and weakest in the more distant high-dollar suburbs. In Area 1B, just west of downtown, prices dropped by 2.8 percent. In far out 8W, just outside the 360 loop South of the bridge, prices dropped by a whopping 26.4 percent.

While downtown condo numbers have not been published, the numbers tend not to be very useful anyway. Most new downtown units are never listed in the Multiple LIsting Service -- they are sold directly by the sales office -- and as a result they never hit the MLS statistics. The inventory of existing downtown condos remains very small and only covers a part of the market (existing buildings). As a result, the market statistics are not always representative of the downtown Austin condo market.

Here is a summary from the Statesman:

Sales of existing homes fell 8 percent in September, but the median price was flat at $182,600 — the first time in months it had not increased, according to the Austin Board of Realtors.

The year-over-year price drops included 2.8 percent in Area 1B, which includes Tarrytown; 7.6 percent in Pflugerville; 26.4 percent in 8W, the affluent suburbs of Southwestern Travis County; and 18.2 percent in west Georgetown.

Local real estate experts had been anticipating that prices would start to drop, as a near-record supply of homes for sale gave buyers plenty to choose from. New-home builders also have been offering aggressive incentives, providing more competition for buyers.

In other parts of the country where prices have been falling for months, sales have picked up sharply. For example, Southern California home sales jumped 65 percent last month as prices fell 33 percent to a five-year low.

In Central Texas, there were 1,670 sales last month. There were 1,520 pending sales — transactions in the pipeline — down 10 percent from a year ago.

There were 10,217 homes on the market, up 2 percent from a year ago.

BartonPlace Video Commercial

You don’t see many commercials for new condo projects on Austin’s major television stations. While this is unlikely to change, BartonPlace recently produced a profile video on the project that is currently posted on youtube. While the video could use more fancy renderings and images of the units, it’s always interesting to hear real people talk about why they chose the project.

Here is the BartonPlace video:

Austin Rental Market Deteriorating

Over the last decade, Austin has been one of the strongest rental markets in the country. As rents increased while supply grew, developers continued to come to Austin to add new rental capacity. Over the last few months, this trend has reversed. With thousands of new units hitting the market and economic conditions deteriorating, both rents and vacancy have begun to slide.

Since the vast majority of Austin rental units are outside of downtown, the recent slide most effects large commodity complexes in the areas surrounding the city. In downtown, where there are few units but where prices are much higher, developers are working equally hard to fill large new projects such as the Monarch & Legacy on Town Lake. For these developers, the hardest units to fill are the most expensive. Demand still remain solid for all sorts of affordably priced downtown housing, whether condos or rental units.

Here is a summary from the Austin Business Journal:

The Austin apartment market experienced one of the biggest drops in annual rent growth in the country during the third quarter, a new report shows.

Austin’s annual rents increased just under 1 percent in the third quarter, down from a 5.6 percent increase in the third quarter 2007, according to the report from Dallas-based Axiometrics.

“We’ve seen a big change in Austin from a year ago,” Axiometrics President Ronald Johnsey says. “Austin had been experiencing incredible job growth, and now that’s fallen off the cliff. The apartment vacancy rate has increased from 5 percent to 6 percent in the last year. Meanwhile, developers are delivering 8,000 new units this year.”

Johnsey predicts the market’s vacancy rate will rise to 8.1 percent in 2009. But developers have recognized the need to curtail new product. New multifamily permits dropped nearly 30 percent in the last year, and that leveling of product against demand should help stabilize the market in coming years, he says.

“That makes me a little more optimistic for Austin going forward,” Johnsey says.

Austin is likely to fare better than the rest of the country in the rental realm. Nationwide, rent growth is the slowest its been since early 2004, the report shows. The apartment vacancy rate increased to 6.5 percent last quarter, up from 5 percent a year ago.

Johnsey attributes both factors to the slowing economy and lack of new jobs. He says the significant inventory of unsold houses and condos has put pressure on housing prices nationwide and made it more difficult for apartment companies to raise rents.

Be it Known: Austin is Very, Very, Very Lucky

An important article in today’s Wall Street Journal exposed how dire the national housing crisis has become. Today, across the country, one in six homeowners is underwater in their mortgage. By this, The Wall Street Journal reports, nearly 16% of U.S. homeowners owe more on their mortgage then their home is worth. In a county where the economy has been fueled during tough times by homeowners drawing upon their home equity to maintain their standard of living, the evaporation of equity is a major contributor to current economic problems.

According to the Journal:

The result of homeowners being "under water" is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.

And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for borrowers in financial trouble to refinance or sell their homes and pay off their mortgage if their debt exceeds the home's value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.

About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody's Economy.com.

The comparable figures were roughly 4% under water in 2006 and 6% last year, says the firm's chief economist, Mark Zandi, who adds that "it is very possible that there will ultimately be more homeowners under water in this period than any time in our history."


In Austin, however, we are very, very, very lucky to have been spared from the worst effects of this emerging crisis. While real estate values across the city have dropped by a percent or two, we have largely avoided the catastrophic drops that have plagued California, Florida, Michigan, Arizona, Nevada, and other parts of the country.

When home values spiked across the country, values in Austin grew at a much more moderate pace. This trend has benefitted Austin on the way down: As the bubble burst across the country, Austin prices have stayed relatively stable.

Wall Street Journal Map: Red Indicated Areas Where Large a % of Homeowners Are Under Water


When home values fall dramatically, homeowners are left without attractive options. In addition to losing their down payments and home equity, buyers across the country have found themselves unable to refinance unattractive mortgages because they lack real equity in their homes. In addition, many buyers are unable to sell their houses because they do not have the cash required to bridge the gap between the homes value and the large mortgage balance that they owe.

While national financial markets continue to deteriorate, the Austin market could always turn negative. So far, however, reasonable prices, a strong local economy, and net inbound migration have kept prices stable. If the current trends continue and Austin real estate values hold, we should count ourselves as incredibly lucky.

October, 2008: Austin Market Analysis

As financial markets retreat, the credit crisis looms, foreclosures spike, and mortgage problems persist, the national housing market is clearly struggling. In this tough environment, even the Austin market has turned negative with a year-over-year pricing decrease of a little less than 1%.

While times may be rough, the truth is that bad times are relative. Despite the year-over-year drop in housing values, it turns out that at least one Austin zip code is doing well. According to Business Week, Austin Zip Code 78749 is the second fastest moving market for houses in the country. With average days on market of 68 days, only Sunnayvale, CA is faster -- at a slightly more impressive 66 days.

78749, in South Austin near Circle C, is definitely doing better than the rest of the local market. While Austin remains one of the strongest real estate markets in the county, the trend is in fact negative. Over the last year, days inventory has grown by 33% to a full 6 month supply. Pricing, however, has remained strong with the both the average and the median increasing year-over-year through August.

The toughest segment of the Austin market seems to be suburban new construction. Here is the full analysis from a recent article in the Austin Business Journal:

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New reports show home construction and closings of recently completed homes in Austin remain depressed, but that’s unlikely to bring prices down any time soon.

Area homebuilders started work on 2,382 new houses in the third quarter, a 37 percent decline from third quarter 2007 starts, according to the latest report from Residential Strategies Inc. Through the first nine months of the year, builders started 7,546 homes, a nearly 30 percent drop compared with the same period in 2007.

Meanwhile, the number of home closings fell to 2,732, a 33 percent decline compared with the same period in 2007. The number of closings so far this year dropped 25 percent from the first nine months of 2007 to 8,643. . .

“While Austin area builders are battling a weak housing market, it is important to recognize that this region remains in much better shape than most other areas of the United States,” Sprague says.

That relative health compared with other markets is helping prevent prices from falling. The latest report from PMI Mortgage Insurance Co. shows that the Austin market is one of the least likely to see a drop in prices in the next two years. Also on that list are the other major Texas markets: Dallas/Fort Worth, Houston and San Antonio. While the housing markets of those cities have been affected by the current economic environment, builders have been able to control their inventory better than in most parts of the country while continued demand in Texas is expected to help the state weather the housing crisis.


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While this sheds little light on the downtown Austin condo market, the broad strength of the Austin housing market is beneficial to developers and owners of downtown condo units. The worse thing for downtown would be a collapse in the broader housing market. If this were to happen, it much more difficult for buyers to sell their units to purchase downtown housing and much harder for developers to justify downtown prices relative to the weakening broader market. With the relative strength of the Austin housing market, downtown developers continue to survive -- and some actually are thriving -- as they wait out the down market.