Downtown Condo Financing: An Interview with Kevin Burns
August 23, 2011 17:54 Filed in: News
While downtown sales continue to gain strength, there are many people who would like to buy but who are renting instead. With record low interest rates and downtown bargains still to be found, it is surprising that more buyers aren't jumping into the market. For many buyers, the issue is the mortgage market and concerns that purchase requirements have become unreasonable. While the financing market isn't as easy as it used to be, it's much better than it was a year ago.
Few people understand downtown financing options like Kevin Burns, the founder of urbanspace Realtors. Kevin is a long-time downtown resident and an expert on the downtown Austin condo market. Kevin sat down with us for an interview on the current realities of the downtown Austin condo market:
How is the downtown Austin condo market right now? Is it a good time to buy?
KB: The Austin condo market is stable. Some projects such as the Shore, Milago, 360 and Austin City Lofts are selling quite well. We saw a bottom of the market in May of 2009. Since then we have seen pricing fluctuate, however their has been a subtle increase in values. With interest rates in the 2.75-4.5% range dependent upon term and product coupled with prices off of their highs as well as soaring rental rates, buying seems to be a wise option. One caveat is that I do not recommend buying unless you intend on staying in the same place for at least 2.5 years.
Many potential buyers are renting now. How is the downtown Austin rental market?
KB: The downtown rental market is on fire right now. We are experiencing double digit rent escalation and scarcity of available units. In many circumstances their will be several offers to lease the same residence.
What are the economics right now of buying vs renting?
KB: At this point buying is making more sense in many circumstances if you intend on being in the same place for more than 2.5 years.
What is the typical down payment that buyers need to be able to make to purchase a unit?
KB: 10%
Is it a good time to buy for investment?
KB: I am very conservative with my investments, with that said I do not recommend buying for an investment unless you are going to occupy the residence.
Is there a downtown market for vacation rentals?
KB: Most buildings downtown do not allow for short term vacation rentals.
How is the mortgage market – who will qualify for a mortgage right now?
KB: In order to qualify, you will need to be able to substantiate your income. The time of stated income loans has come and gone. Furthermore, if you are commission based or self employed, you will need at least 2 years of documented history. To be perfectly frank, loans are much more difficult to come by today compared to years past. This is one reason why the rental market has been so hot. At the same time it has created a real opportunity for those that can qualify.
What about jumbo loans and investor loans? Are they becoming easier to obtain?
KB: Jumbo loans are much more prevalent and have much lower interest rates today than in the recent past. However, they are difficult to qualify for. Same goes for investor loans.
How are resale values in major projects like 360, Milago, Shore, and the Nokonah holding up? Are people that Bought three years ago getting their money back?
KB: These projects are doing relatively well. People that bought 2-3 years ago are seeing a profit in many circumstances. Those that bought 4-5 years ago are at break even. It really depends on how well you did at buying your property. There are many variables to buying downtown. This is where I will shamelessly plug working with a professional, such as an urbanspace agent, to help you in finding the optimal residence to buy both for enjoyment and investment purposes.
How liquid are downtown condo units? Does it vary by building?
KB: If you buy right in the right building, you will see good liquidity. If you purchase a less desirable unit in a less desirable building, you might need to be a bit patient in selling.
What should people look for in a downtown condo unit if they are planning to sell again within 5 years?
KB: Location, quality of building, strength of HOA.
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Few people understand downtown financing options like Kevin Burns, the founder of urbanspace Realtors. Kevin is a long-time downtown resident and an expert on the downtown Austin condo market. Kevin sat down with us for an interview on the current realities of the downtown Austin condo market:
How is the downtown Austin condo market right now? Is it a good time to buy?
KB: The Austin condo market is stable. Some projects such as the Shore, Milago, 360 and Austin City Lofts are selling quite well. We saw a bottom of the market in May of 2009. Since then we have seen pricing fluctuate, however their has been a subtle increase in values. With interest rates in the 2.75-4.5% range dependent upon term and product coupled with prices off of their highs as well as soaring rental rates, buying seems to be a wise option. One caveat is that I do not recommend buying unless you intend on staying in the same place for at least 2.5 years.
Many potential buyers are renting now. How is the downtown Austin rental market?
KB: The downtown rental market is on fire right now. We are experiencing double digit rent escalation and scarcity of available units. In many circumstances their will be several offers to lease the same residence.
What are the economics right now of buying vs renting?
KB: At this point buying is making more sense in many circumstances if you intend on being in the same place for more than 2.5 years.
What is the typical down payment that buyers need to be able to make to purchase a unit?
KB: 10%
Is it a good time to buy for investment?
KB: I am very conservative with my investments, with that said I do not recommend buying for an investment unless you are going to occupy the residence.
Is there a downtown market for vacation rentals?
KB: Most buildings downtown do not allow for short term vacation rentals.
How is the mortgage market – who will qualify for a mortgage right now?
KB: In order to qualify, you will need to be able to substantiate your income. The time of stated income loans has come and gone. Furthermore, if you are commission based or self employed, you will need at least 2 years of documented history. To be perfectly frank, loans are much more difficult to come by today compared to years past. This is one reason why the rental market has been so hot. At the same time it has created a real opportunity for those that can qualify.
What about jumbo loans and investor loans? Are they becoming easier to obtain?
KB: Jumbo loans are much more prevalent and have much lower interest rates today than in the recent past. However, they are difficult to qualify for. Same goes for investor loans.
How are resale values in major projects like 360, Milago, Shore, and the Nokonah holding up? Are people that Bought three years ago getting their money back?
KB: These projects are doing relatively well. People that bought 2-3 years ago are seeing a profit in many circumstances. Those that bought 4-5 years ago are at break even. It really depends on how well you did at buying your property. There are many variables to buying downtown. This is where I will shamelessly plug working with a professional, such as an urbanspace agent, to help you in finding the optimal residence to buy both for enjoyment and investment purposes.
How liquid are downtown condo units? Does it vary by building?
KB: If you buy right in the right building, you will see good liquidity. If you purchase a less desirable unit in a less desirable building, you might need to be a bit patient in selling.
What should people look for in a downtown condo unit if they are planning to sell again within 5 years?
KB: Location, quality of building, strength of HOA.
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