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2013 Was a Good Year

2013 Was a Good Year! But don’t compare everything to it……

• Near record year for Austin home resale’s. Commercial began recovery – Commercial continues to expand in all channels through 2015

• 2013 was the year Austin felt and saw the recovery – Consumer’s psychology changed. Much more positive.

• The Austin economy is in an expansion mode

• More demand than inventory in most channels

• Austin residential investment properties as well commercial, retail, industrial at 94+% occupancy

• Austin job growth has been one of nations top job markets 2003 - 2013

• Austin rated 1 economic momentum 2014 rated on; – GDP growth, job growth, real median household income growth and current unemployment. To measure demographic strength we looked at population growth, birth rate, domestic migration and the change in educational attainment. (source: Praxis Strategy Group)

• Numerous ‘best’ lists. Why don't people sell? Nothing to buy, refi boom, employment insecurity, mortgage and lending hassles, people are coming here not leaving here.

• Significant change in consumers psychology – Fear of losing job has decreased dramatically, particularly in Texas. Labor shortage is a bigger issue – Low inventory levels across all channels with increased demand = higher prices – Increased demand + low inventory + constrained supply = higher prices – Homebuilders / developers constrained to respond

• 2013 was near the best year ever in resale's in Austin. 2014 looks to beat those numbers

• Why doesn't it feel that way? Sales volume went up 19%, increased only 2% this year.

• Median prices up 8% for 2014 However do not compare everything to last year!  Luxury sales (above $2 million) are off 30+/-% in Austin, SA and Dallas / Fort Worth 2014 compared to 2013.

-Values are still strong. No softening of values.

-Demand is still strong as evidenced by lack of luxury rentals

-Lack of ‘new’ offerings in downtown Austin condos, may be affecting luxury volume. Biggest challenges; Last 10 years - rents have appreciated 68% Homes have appreciated 35+/- % (commercial a little better.) Wages 10%. This is not just an Austin problem, Texas problem. Nationally wages have not kept up with living costs. With the state doubling in population in the next 15 years, municipalities need to look at changing regulations and allowing higher density. Heavy regulation has shown that it drives values up, as evidenced by Austin’s prices vs. Houston, etc. California is another good example. You notice I did not put down, water or roadways. Non issues other than to the people who have lived here…….

Opportunities; Lenders are lending at the highest volume rate since the recession. Rates are at their second lowest in the last 100 - 5000 years With QE ending, rates should begin to creep up. Remember for every 1% change in lending rates, buyers lose 12% buying power. Not a better time to buy. Historically when rates begin creeping up, it happens rapidly. Consumers wait a couple of months, and then jump in trying to get the lower rates. Demand continues to outstrip supply and should continue through 2016+, barring a catastrophic event.

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