On the 3rd of July at Birds on East Sixth, for one day only, we’re giving each of our first 50 clients a free six pack of Lone Star with purchase of a haircut. Yup, on Independence Day Eve (that’s Independent’s Day if you’re talking about buying local), we’re filling your cooler with half a dozen tall boys. Just add ice and it’s time for toobin’. *Offer available at Birds @ 1107 E. 6th Street only*
downtown austin
Foreclosures in Downtown Austin: Fact, Fallacy, and Analysis
In this article I hope to share some of the knowledge that I’ve gained by researching foreclosure properties for clients. Buyers may believe foreclosures are complicated and out of reach. Generally, I believe this is accurate, but certainly not all of the time. Knowledge is power, so let’s see what we can learn…
Foreclosures are not new. Every community is dealing with them. Austin has escaped the worst of the problem because we didn’t develop to great magnitudes as did Miami, New York City, or all of California. Certainly downtown Austin is not immune to foreclosures. We also tend to receive a greater level of interest from the press. Rather than deny that foreclosures exist in downtown Austin, lets temper misinformation with facts, and if we discover opportunity along the way then all the better.
The facts
In June there were 671 properties posted for foreclosure in Travis County. 155 ended up selling. Approximately 380 were reposted from prior months.
A property can be posted for foreclosure and never end up at auction. This scenario is not uncommon if the borrower and the lender can work out an agreement prior to the auction date. Also, third party investors can negotiate with the lender to purchase the mortgage (not the property), and work out a new agreement with the borrower.
2009 downtown Austin foreclosures
Since January 1st, 2009 there have been five recorded foreclosure sales in downtown Austin. Four have been condos. Two were owned by one person. Two of the foreclosure sales were won by the banks themselves for the balance of the mortgage.
The four downtown Austin condo foreclosure sales:
1) Avenue Lofts #308, 1092sf, $187,302
2) 360 Condos #2210, 770sf + 105sf, $242,909
3) Avenue Lofts #208, 1092sf, $183,274
4) Nokonah #410, 1849sf + 524sf, $555,624
The opportunity
The current asking prices at the Avenue Lofts, 360 Condos, and Nokonah are $274/ft, $410/ft, $403/ft respectively. So we can calculate that the two Avenue Loft foreclosures yielded a discount of 37% and 38%, respectively. The single 360 Condos foreclosure yielded a discount of 23% from the average asking price. The Nokonah foreclosure yielded a discount of 26%.
The foreclosure discounts above are identical to the opportunities we’re seeing in the open market. As I’ve reported before, developers are negotiating 25-30%-off discounts, the Brazos Place auction generated a 29% discount. Buyers are responding en masse: 54 transactions at The Shore since May 1st, and 20 transactions at Brazos Place in one day.
The market is working efficiently and it seems to have found equilibrium. Market and auction clearing discounts for new developments are 25-30%.
Summary
Even though the number of foreclosure sales in downtown Austin is low, it’s difficult to predict what the future holds. It’s the best buyers’ market in the past 20 years, maybe more.
Focusing on downtown Austin condos, the data suggests that there are similar opportunities for discounted pricing outside of foreclosure auctions. The challenges for the majority of buyers interested in foreclosures are limited information, time, and money. Sifting through the foreclosure postings takes time. Choosing a property requires knowledge of the neighborhood and the condition of the property. The most significant hurdle for savvy buyers is the velocity of the all-cash transaction. A pre-approved mortgage will do you no good. Fortunately, in this market buyers have traditional channels for finding similar opportunities.
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As the saying goes, “cash is king.” Interested in pursuing opportunities in Austin’s urban core? Feel free to send me an email.
Jude Galligan, Downtown Austin Realtor
512-226-3414
judegalligan [@] gmail.com
Austin electric use sets record
I think we hit 105 degrees today. The gizmo on my car said 106, but that was sitting on blacktop at an intersection. Posted on the City of Austin website today was a message the June 25th, 2009 set a new record for power consumption.
The new peak demand record of 2,518 megawatts (MW) occurred between 4 and 5 p.m.. This means that during that hour, energy use in Austin reached the highest level ever in the history of Austin Energy. The previous Austin Energy peak demand record was set last summer in August at 2,514 MW.
Neville's Homeless Experiment
Neville Medhora lives off of Riverside. Earlier this month he made the decision to leave his home for five days to better understand what it’s like to be homeless in Austin. He chronicled the entire journey and not surprisingly it ends up being a fascinating story. Apparently, the bums over on Riverside are tame compared to those who reside downtown. One of the most salient points I gleaned from reading his experience was his struggle to find things to do – boredom became a problem for him. He goes on to comment…
On any given day a homeless person whose food/water/shelter are taken care of probably has about 10-12 free hours of the day. That’s a lot of time when you’re doing NOTHING….and doing nothing can be excruciating if you do NOTHING all day long, everyday.
Through the story you learn about Neville, including how he used to live in a loft above Paradise on 6th Street. I give Neville kudos for going through with this and telling the story along the way. From photos of the ARCH accommodations to under the bridge accommodations, you can find the details here.
-Jude
Thanks to Andrew Allemann for the heads up!
Bridges On The Park
For information and to preview Bridges On The Park contact Jude Galligan at 512-226-3414 or jude [@] downtownaustinblog.org.
You might say Bridges On The Park has an identity crisis. Is it part of South Austin? Or, downtown Austin? Geographically it lies in what’s generally considered South Austin. By design and lifestyle it very closely resembles downtown. This makes for strange bed fellows as these two neighborhoods have been portrayed in the media as clashing in recent years over Austin’s growth.
Regardless of how the residents identify themselves, the setting is one of Austin’s most spectacular urban environments: Lady Bird Lake, running trails, Butler Park, pitch n’ put golf, trees, trains, Zach Scott theater, Barton Springs Rd, Zilker park is around the corner… the list goes on. Even the Taco Cabana next door is an Austin institution for anyone who went to high school here in the ’90s.
So, what’s the story with this place? I’m going to attempt to show you why, right now, this Bridges On The Park is one of the best real estate opportunities for downtown Austin buyers.
The raw info
Six stories.
105 units.
Full list of amenities: concierge, pool, fitness, etc.
Storage units.
Underground parking.
Aligned length-wise along Lamar Blvd.
Built by CLB Partners
The finish quality is high
CLB Partners is the same developer as the Austin City Lofts, which provides an example of CLB’s high quality construction and finish outs. Bridges On The Park takes on much of the same philosophy: copious amounts of Texas limestone, with metal and wood accents. The lobby, building decor, art work, and interior finishes are tastefully executed.
The bathrooms have a floating (I suppose cantilevered) cabinet design which allows lighting to come from below. Wherever possible a double vanity is used.
Mixed Use
Pedestrian friendly retail on the ground floor, combined with the proximity to the parks and running trails make Bridges On The Park truly mixed use. The setting of the development surrounds the historical Paggi House.
The economy has been hard on this development
Completed in 2008, of the 105 units, 32 remain unsold [and one resident is furious about a new billboard]. Many buyers could not find mortgages when it came time to close. Originally prices were characteristic of 2007 at $400+per foot. Many new buyers are skeptical about prices that are still high compared to the deals which have been clearing the inventory downtown condos this past Spring.
The Opportunity
A marketing blitz earlier this year carried an opportunity for 20% off – a deal that generated roughly a dozen sales for CLB Partners. From the perspective of my clients, interest in Bridges On The park started to wane in April, as the anticipation for the Brazos Place auction grew and other developers began to negotiate attractive discounts.
The remaining 32 units are priced at an asking price of $324/ft on average. Like most buildings, each has its own micro-economy of views and floor plans. The east view towards the trees is priced at a premium to the west view over Lamar Blvd.
Summary
The market is buyer friendly and this is not CLB Partners’ first rodeo. I predict that Bridges on the Park will begin to discretely entertain offers in the neighborhood of $240 per foot, on average, or about 30% off of the asking price. [See update below] The data at Brazos Place and the Shore provide evidence that this program of discounting works to quickly sell units. Add to that the superior location of Bridges On The Park, and I expect there will be some very happy buyers over the next few weeks.
[UPDATE 09/08/2009 –
The most recent inventory I have from August 17th for Bridges On The Park shows:
min price per foot = $234
max price per foot = $312
average price per foot = $278
*numbers reflect discount]
Jude Galligan, Downtown Austin Realtor
512-226-3414
judegalligan [@] gmail.com
Complete Bridges On The Park photo set on Flickr!