Market Recap

MARKET RECAPIs news really news if it had already been anticipated? We’re referring to April’s housing numbers, which everyone anticipated and which surprised few. Existing home sales rose 7.6 percent compared to March’s numbers to a seasonally adjusted annual rate of 5.77 million units while sales of new homes soared 14.8 percent to a seasonally adjusted annual rate of 504,000 units.

Under more conventional circumstances we’d be tempted to break out the bubbly on such a bullish report, but we all know why sales spiked in April – impending expiration of the federal homebuyer tax credits. The credits were a useful band-aid, to be sure, but they were no panacea. As we’ve stated in past editions, they simply moved demand forward without aggregately increasing it, and they really moved it forward in April.

We’re even less tempted to break out the bubbly when vetting the latest pricing data. On that front, the Standard & Poor’s/Case-Shiller home price index showed that prices of single-family homes were down 0.5 percent between February and March, the sixth consecutive month-over-month decline. Year-over-year prices are up 2.3 percent nationally. Meanwhile, the median price on existing homes increased 4 percent to $173,100 in April while the median price on new homes tumbled 9.6% to $198,400, as those who took advantage of the tax credits did so with cheaper homes.

This isn’t to say that we are discouraged. We think the market is simply in a holding pattern at the moment, with inventory levels holding relatively steady at an 8.4-month supply on existing homes and at a 6.2-month supply on new homes. Some reservation is understandable; no one is really sure how the housing market will react to standing on its own heading into the prime buying season. We remain optimistic, because we think the data suggest it will keep moving forward.

Meanwhile, the refinance market remains robust, and why shouldn’t it with rates on 30-year-fixed rate loans regularly found below 5 percent and rates on 15-year fixed-rate loans regularly found below 4.5 percent? For many borrowers, it’s an opportune time to save a lot of money over the long haul by refinancing to a 15-year loan from a 30-year loan.

Of course we’ll warn once again that good deals don’t last forever. The turmoil in Europe has helped push rates down a few basis points, but rumblings for change are emanating from the Federal Reserve. Recent minutes of the latest Fed meeting show a growing number of its banks want to raise the rate charged to banks on emergency loans, which is a sign of confidence in the economic recovery. It’s worth remembering that as the economy improves, the opportunity to get a bargain-basement mortgage rate decreases.

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Economic
Indicator
Release
Date and Time
Consensus
Estimate
Analysis
Construction Spending
(April)
Tues, June 1,
10:00 am, et
0.1%
(Decrease)
Important. Improvements are being driven by residential spending.
Mortgage Applications Wed, June 2,
7:00 am, et
None Important. Purchase applications tumble on a stimulus-induced hangover.
Pending Home Sales
(April)
Wed, June 2,
10:00 am et
106.2 Index Important. Markets are expecting a sustained sales trend after the tax-credit expiration.
Productivity
& Costs
(1st Quarter 2010)
Thurs, June 3,
8:30 am, et
Productivity: 3.6% (Increase)
Costs: 1.7%
(Decrease)
Moderately Important. Productivity continues to hold inflation at bay.
Factory Orders
(April)
Thurs, June 3,
10:00 am, et
1.0%
(Increase)
Moderately Important. Orders are reflecting greater capital investment.
Employment Situation
(May)
Fri, June 4,
8:30 am, et
Unemployment Rate: 9.8%
Payroll: 425,000 (Increase)
Very Important. Employment continues to improve, but markets are expecting additional improvement in the private sector.

 

An Alternative Take on Mortgage RatesGiven further easing of mortgage rates over the past two weeks, we obviously think it’s an opportune time to refinance. Rates have maintained record lows as investors seek safe-haven assets such as US Treasuries, to which rates on long-term mortgages are closely tied, and securities backed by mortgages that are guaranteed by the government.

While low rates are sending refinance applications up, many borrowers who would normally refinance already have. What’s less clear is the impact low rates will have on home purchases going forward. Yes, they’ll allow more borrowers to qualify for loans, and some potential buyers will find they are able to afford slightly larger loans at lower rates, but low interest rates by themselves aren’t a primary demand driver.

In fact, we have a contrarian view on low rates, believing they are actually harming sales more than helping them. Rising rates would not only be reflective of greater economic activity, they would spur more people into action. As it is now, too many people remain on the sidelines who shouldn’t be there. A nudge from the prospect of higher mortgage rates would spur them into action. We still expect that nudge to occur.

Developments Breaking Ground in Leander

Business Park 2243

The multiple warehouse buildings that were once home to Aquatic Industries is becoming a popular hub for commercial development in Leander.

The campus stood empty after Aquatic Industries relocated in June 2009 until Mike Elmore, owner of the development group MPE Realty and president of Austin Capital Concrete, came up with an idea.

“I saw the business and thought, ‘I wonder if I can take the warehouses and break this thing down into smaller businesses,’” he said.

Elmore started renovating the seven buildings in October 2009 and planned to offer retail space in the front portion and office warehouses in the back part of the 80,000-sq.-ft. development.

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Instead, Business Park 2243 is becoming home to a diverse group, as retail, offices, a school and a theater company are committed to locating in the park. A skating rink is also a possibility for the back 10 acres, which is zoned heavy industry.

“This is becoming more than what I had envisioned, and I think it’s coming together great,” Elmore said. “There’s not a lot of office and warehouse space in Leander for smaller businesses and there’s a need for that.”

The overall value of the development is expected to be about $5 million to $6 million.

Crystal Falls

The idea for the Crystal Falls development was born 15 years ago when Hinckley, while horseback riding, discovered rolling hills in the middle of nowhere.

“I knew we had to have it,” said Hinckley, president of The Lookout Group Inc. “This 1,500 acres surrounding the Golf Club at Crystal Falls was the start of the complicated assemblage of ranches and small tracts that now comprise the Crystal Falls Master Plan.”

The Crystal Falls development began in 1997 with 1,500 acres and has grown to 5,000 acres spanning from Bagdad Road west to Nameless Road between RM 1431 and FM 2243.

The project is 10–15 percent complete with 1,300 homes built and about 3,500 acres left to develop, Hinckley said. The homes will range from the traditional 60-foot-wide lot to 5 acres—and everything in between.

“We have everything except starter homes below $200,000,” he said. “Our hope is to have a vertical move-up market within the community, so folks can move up or down within the community as their lives and incomes change.”

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The award-winning master planned community boasts five subdivisions, churches, three elementary schools and a Walgreens, but Hinckley’s plan includes more commercial in the future.

“We are holding out for commercial business partners who raise the bar, and we have resisted the temptation to sell to convenience stores and gas stations,” Hinckley said. “We have serious interests from a grocery chain, upscale retailers, restaurants and a host of medical and wellness providers.”

The Vision of Leander

The southeast corner of Crystal Falls Parkway and Toll 183A is just farmland and trees today, but it will soon house The Vision, a commercial mixed-use development.

Rick Castleberry, principal of Paladin Cres Commercial Real Estate, conceived the idea with partners Doug Devine and Tucker Lewis. Castleberry owns 69 acres along the intersection and has another 6 acres under contract with additional acreage in the works.

Depending on market conditions, Castleberry hopes to start building infrastructure by the end of the year for phase one, which will include pad sites for restaurants, banks, drug stores and other retail along Toll 183A and Crystal Falls Parkway.

Phase one is just the beginning of a larger, more diverse project.

“We’re trying to develop a live, work and play atmosphere with mixed-use commercial, retail, office and with some dense residential community,” Castleberry said. “There is a lot of potential for this corner and with good planning it can be developed well.”

Transit-oriented development

The City of Leander’s plan to have a 2,300-acre transit-oriented development between US 183 and Toll 183A is still in the works, despite tough economic times.

“The economy has really had an impact. Realistically, it will probably be 2012 before we see any vertical build,” said Pix Howell, Leander’s urban design officer. “We’re going to position ourselves for growth and we’re going to be ready for it when the economy turns.”

Some of the transportation aspects of the TOD are falling into place, with Capital Metro’s Red Line commuter rail opening in March and the beginning of the Toll 183A expansion in March.

The TOD will have an estimated population of 30,000 at build-out and feature single-family and multifamily residential units, commercial and retail.

“There has to be a mix of those elements in all parts of the plan,” Howell said.

Developments Breaking Ground in Leander

Developments breaking ground in Leander
Click here for article source and larger images!

LEANDER — Leander’s plan for economic development centers on sustainable prosperity, or creating a place where residents can live, work and play.

“We want everyone to work in Leander, regardless of their education level,” said Kirk Clennan, Leander’s economic development director. “To do that we must have a variety of manufacturing, office, service, retail and public employment options available to residents.”

The plan has been years in the making, but businesses are dotting the horizon of Leander. Business complexes opening along Crystal Falls Parkway, the upcoming groundbreaking of Joule Biotechnologies and the popularity of Business Park 2243 are helping to make the plan a reality.

Other projects, such as Bill Hinckley’s Crystal Falls development, the transit-oriented development (TOD) and The Vision of Leander, will continue development trends in the city.

Click for larger image

“All of the public and private investment that is taking place in Leander is contributing to sustainable prosperity by diversifying our tax base,” Clennan said. “These are incremental steps in our overall endeavor to increase the employment and service opportunities to the community.”

Implementing the city’s economic plan takes a lot of work and planning. Clennan said several ways Leander is working to achieve its goal is through fostering entrepreneurism, undertaking a significant business retention and expansion program, attracting businesses to relocate to the city and trying to pursue destination tourism.

Despite the economy taking a toll on Central Texas, developments—residential and commercial—are still taking shape in Leander. Catering to small businesses and warehouses, Business Park 2243 is filling up fast with the potential to be full by October, a year after renovations started.

Hinckley’s Crystal Falls development, which will feature residential and commercial elements when complete, continues to build new homes and attract residents.

New developments are underway in Leander, but there is still more to come in the future. The Vision of Leander and the transit-oriented development are just two big projects that will shape the scenery of the city in future years.

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Aquapalooza

Aquapalooza is coming July 10,2010 on Lake Travis. If you are in town for this special event and have the desire to look at some property I would be Happy to help you out. Give me (Pamela Ratfield) a call 512-663-2660.