Fredericksburg Texas

Hey buyers, listen up.  If you don’t know this already, you’re in a great position to buy Fredericksburg Texas area real estate.  If you are “pre-approved” for a loan, can pay cash (or a very hefty down payment) you have negotiating leverage that simple did not exist in this market a year ago.

Old news you say.  Perhaps, perhaps not.  The perception being painted by the media has been (and continues to be) that the sky is falling, bankruptcies are rampant and sellers will do just about anything to dump their property.  Buyer’s have been quick to take the hype to heart; however, the reality in Fredericksburg (and the Hill Country, in general) has been somewhat different than what the media would have us believe.

The Fredericksburg area has been “hot” for the last several years.  Buyer were “encouraged” to make quick decisions as properties were moving fast and there weren’t a plethora or alternatives from which to choose.  The roles have reversed in that there is plenty of inventory, sales volume has slowed to a trickle and the time on market for most property classes has increased dramatically. As more properties are listed, competition builds, time on market lengthens and sellers become much more reasonable in their expectations. Factor in the shortage of financing and any qualified buyer has the upper hand.

More properties to choose from, sitting longer on the market waiting for buyers with actual money equals deals that couldn’t be had until very recently.  Don’t get me wrong, buyers are not “stealing” property but they are pushing that spread between “asking price” and “sales price” to new territory. 

Most sellers aren’t that desperate in our fine community. There is; however, ample opportunity for a savvy buyer (with his savvy agent, of course) to make a solid investment in a stable market with healthy fundamentals and very positive prospects for continued growth.  Did I mention that the population of Texas is projected to grow by 13,000,000 within the next 20 years…?  Fredericksburg TX Real Estate

In discussing the evermore pressing need to jump ahead of Fredericksburg’s growing affordable housing “crisis” and the ripple effect it is creating for our local economy, I came across a gentleman from a similar community that had faced similar (though much more pronounced) issues.

Telluride, CO is not terribly dissimilar to Fredericksburg, TX.  Each community has a rich and colorful heritage, each have experienced tremendous growth and each are (to large degree) “tourist supported” communities.

 As have many resort communities, Telluride faced the disconnect between the cost of housing and the ability of average wage earners to afford this housing.  Shop owners, clerks, police officers, firemen, etc. could not afford to live in the community they were so deeply involved in.  Among the solutions was the implementation of a real estate transfer tax.  The revenue generated from this levy was designated to supply affordable housing to those so important to the lifeblood of the community.  Guess what, it works.

While certainly not a proponent of tax increases (I already think we all pay way too much), this is a targeted solution to a very real problem and one that places the burden of a solution onto the very economic factors that are creating the underlying problem.

 Many states and local communities have a real estate transfer tax of one kind or another, all of which are designed and implemented to address very specific problems.  A state-wide real estate transfer tax was discussed in the 2005/2006 Texas legislative session as a way to fix the “school funding crisis” and was quickly shot down by the predictable lobbies (and, I might add, for very good reason).

As a state-wide solution to whatever problem, this tax structure has some serious problems and has created many unintended consequences.  As recently proposed for Texas, it deserved to die.  It is my opinion that such a targeted levy be reserved at the community level to address very specific issues. 

There are ample cases of town and cities throughout the country that have made such a tax work to the benefit of the entire community. Real estate markets didn’t crash, values did not plummet and the sky did not fall.  Do a Google search on “real estate transfer tax” and see what comes up.  After digging through the predictable, negative, knee-jerk reactions, spend some time looking at cases where is has been successful.

Another solution to our affordability dilemma is local government incentives to developers/buyers, etc. of “affordable” housing.  As governments are loath to reduce taxes, the idea of a new one might be easier for them to swallow.

In short, government intervention of some kind will be needed to allow for the creation of housing that is within the reach of more members of our community.  “Market forces” cannot be relied upon to supply that which is (under current conditions) not profitable.  The only way to make it profitable (and therefore attractive) is with tax payer assistance of some kind.  The programs that exist on the state level take way too long to fund and inhibit a developers realistic chances of tying up a property while waiting (gambling) to be approved for subsidies.  A local solution is needed for a local problem.