Fredericksburg Texas

Hold on to your wallets people.  The election, taxes, “the bailout”, interest rates, “the credit crisis”, blah, blah, blah.  It all adds to the disturbing trend in real estate towards higher prices (resulting from higher costs).  Just as prices should be falling,  circumstances seem to be conspiring to prevent just that. This is interestingly opposite of that whole supply and demand thing we’ve all learned about.

The increased cost to borrow and the (rightfully) more stringent underwriting standards have reduced the pool of potential buyers yet sellers have not keyed in on this fact.  Ever optimistic, sellers continue to hold out for last years prices offered to fewer buyers using more expensive money and get upset with their agents because their properties don’t sell.

Seller’s of non-homestead assets are almost certainly facing a higher capital gains rate in the next administration.  What are they waiting for?

This resistance to what should be a natural downward movement on prices (costs) is being further exacerbated by whoever it is that send down the International Residential (Building) Code from on high. Did you know that homes built after 1/1/11 will be required to have fire sprinkler systems?  This new government mandate (largely un-reported I might add) will add an estimated average of $1.61/s.f. of cost to a new home.

Believe me, my years of commercial property management experience (sprinklers are common, and necessary, in commercial structures) shows me that pressurized water pipes installed in ceilings will eventually leak.  Note too that commercial ceilings most often consist of lay-in tiles that provide easy access to MEP systems.  Conventional homes, of course, use sheetrock ceilings that are as inaccessible as they are expensive and time-consuming to repair.

While not mandated for existing homes or remodeling projects, the “safety” argument holds little sway with me.  I suppose a small saving grace could be slightly reduced insurance premiums.  This is clearly another instance of big brother knowing what’s best and shoving it down our throats.  When will we say “enough is enough”?

Fredericksburg, TX real estate is expensive enough as it is yet I still hold out hope that sanity will rule the day and the market will do what markets are supposed to do…adjust and correct. The unabashed capitalist, free-market guy that I am can only pray that big brother (in all its shapes and forms) decides to just stay out of our way.

I’ve been repeatedly asked what it is that real estate agents do when the market is “in the toilet” as it appears to have been/is/will be.  My first response is that things are not as bad here in Fredericksburg as they may first appear.  I tell people not to listen too much to the media and the talk about the “nation real estate market” as there is no such beast.  All real estate markets are local.

While the “credit crisis” may have placed a damper on those buyers with “credit problems” there is no lack of credit for appropriately qualified buyers (e.g. buyers that have a demonstrable ability to pay back the loan).  Those buyers prescient enough to maintain good credit and a store of cash for higher down-payments are also wise enough to wait until the sellers that have to seller (vs. sellers who merely would like to sell) drop their prices to a point that these buyers will interpret to be “the bottom”.  If and when that happens, activity will increase.

My message in this to sellers is that if your truly want to sell (or need to sell) there are plenty of buyers out there…at the right price.  The sooner you get to that price the better off you’ll likely be.

Back to the original question of what we do with our time.  Many agents will opt for vacations or completing that home “honey-do” list or simply sit around and wait for the phone to ring.  Others will cold call and prospect for business and still others may quit the business altogether.

I won’ tell you what I do because then all my competition will do it too.  Suffice to say that I’m not sitting on my hands.  My overall goal is to position myself and the services I provide to stand further and further ahead of what others may be doing.  I’ll be creating opportunities rather than waiting from them to present themselves.

There will be no whining or complaining about the Dow, Lehmann Brothers, the strength of the dollar or the “bailout”, none of that is within my ability to control (though it should be!).  No standing around complaining about the inevitable tax increases and no standing around with my hand out asking Uncle Sam for help.

Improving myself and the services I provide my clients is what will carry me out of the “slump” and afford some nice, juicy returns for savvy buyers looking at opportunities in Fredericksburg TX Real Estate.

As September ends and we begin what all signs point to will be a dismal 4^th quarter, some interesting YTD multiple listing service market indicators (Gillepsie County properties only):

·      There are 852 active listings for sale.  In 2008 we have averaged 33 sales per month which leads to the revelation that we currently have nearly a 26-month supply of inventory on hand.  Recall that previous posts opine that a market “in equilibrium” typically has a 6-month supply of inventory.

·      New listings are up almost 40% from the same time last year.

·      The shear number of price reductions YTD is up a telling 230%! While this may indicate that sellers are finally reading the writing on the wall, it could also mean, given the still anemic sales YTD, that prices are still too high as these decreases have not substantially lured buyers from the sidelines.  A deep look shows that most homes that have sold reveal one or more price reductions in the listing history before a sale was consummated.

·      The number of sold properties has hit a 5 year low.

·      The total dollar volume of sold properties has hit a 4 year low.  Interestingly, the average prices of sold properties have not dropped as much as these figures may indicate (see previous post on 3^rd Qtr. Sales).

Despite the media doom and gloom, election-year uncertainty (yes, taxes are going to increase….you head it here first!) and Wall Street “rescues” all is not lost for the Texas Hill Country.  The Fredericksburg area has long been a desirable option for retirees, second-homers, investors, etc. and the fundamentals of this attraction (location, climate, scenery, etc.) have not changed.

While we all may have enjoyed, profited from and been taxed on our decisions to invest in Fredericksburg TX Real Estate, our run-up in prices was no where near what it had been in other parts of the country.  Prices will level-off, credit will again flow, the sun will rise, etc., etc. Hang in there!