Real Estate Investing

CNN Money had an interesting article speculating that the residential real estate market will finally begin correcting itself toward the end of next year. While this bit of info may seem a bit depressing, there are some bright spots around the country.

Mobile, Alabama is an unexpected leader in the up-and-comers, with a boon of new construction “mega-projects,” according to the article. Austin, Texas is another city that is thriving in the midst of the surrounding storm. Texas as a whole is faring relatively well, thanks in large part to its developing reputation as the vacation/retirement spot d’jour. But Austin is faring particularly well, with a large white-collar, high-tech, well-educated population minus the astronomical housing prices that typically go hand-in-hand with such a culture. Austin’s median single family home prices are expected to increase 4.7 percent over the next two years, however, from about $185,000 to $195,000.

And of course, Austin and Mobile were both on the list we recently featured of 10 U.S. Cities People are Watching. So if you live in one of these cities, don’t hang your head, but jump for joy. Or consider investing in real estate in some up and coming areas of town now and capitalize in a few years. You can also invest farther away from the city with the expectation that commuters and commerce will migrate outward.

Negative appreciation is a bummer and can make it seem like you will never sell your home. However, homeowners in 10 cities fortunate enough to make it on a recent list will see a brighter day if they can only hold on a little longer. These are the cities that, in terms of median single-family home prices, have “just about hit rock bottom and are on the way up,” according to The Creative Investor blog. In two years or less, it should be easy to sell your home in these markets and realize a profit. The list also might act as a cue to investors.

Not surprisingly, Texas is mentioned three times on the list - Austin, Houston and Dallas-Fort Worth. Texas real estate has been extremely affordable, though the market has been relatively liquid - particularly in Austin. There, tremendous population growth has kept home prices slightly above that of other Texas towns. At any rate, it is small wonder that home prices are expected to rise in Texas. You can hardly sell your home for less than current market conditions dictate. Prices have to go up in Texas!

The following list of projected median prices for single-family homes in 10 markets was compiled by Business 2.0 and Moody’s Economy.com:

Dallas-Fort Worth

Q1 2008: $151,930

Q4 2009: $161,690

Growth rate: 6.4 percent

Indianapolis

Projected median price of single-family homes:

Q1 2008: $122,940

Q4 2009: $130,630

Growth rate: 6.3 percent

New Orleans

Projected median price of single-family homes:

Q1 2008: $153,850

Q4 2009: $162,600

Growth rate: 5.7 percent

Atlanta

Projected median price of single-family homes:

Q1 2008: $177,750

Q4 2009: $187,640

Growth: 5.6 percent

Montgomery

Q1 2008: $140,020

Q4 2009: $147,690

Growth rate: 5.5 percent

Memphis

Projected median price of single-family homes:

Q1 2008: $143,550

Q4 2009: $150,730

Growth rate: 5.0 percent

Mobile

Q1 2008: $134,580

Q4 2009: $140,920

Growth rate: 4.7 percent

Austin

Q1 2008: $186,350

Q4 2009: $195,060

Growth rate: 4.7 percent

Houston

Q1 2008: $154,850

Q4 2009: $161,910

Growth rate: 4.6 percent

St. Louis

Q1 2008: $143,920

Q4 2009: $149,710

Growth rate: 4.0 percent

So if you are a builder, it can be difficult to sell a house right now. That’s a given. Any seasoned veteran is familiar with the old tricks like price reduction or perks like interior design consultation to help move houses. However, the trend of green building has caught on tremendously in California and is rapidly making its way eastward - even into states like Texas, where green building has been embraces with a fairly apathetic attitude.

Simple green building concepts like thicker wallboards, better insulation, more “energy efficient windows” and EnergyStar appliances are being hawked as the new eco-friendly standard. Some home builders even charge extra for this green building package on the basis that it will reduce long-term energy costs. Any extra upfront costs will be recovered within a couple months through drastically lower energy bills, they say.

It’s an interesting concept, one that tends to sit easier with the upper-level homebuyers. Those with good credit and more money can secure extra financing (or any financing at all, for that matter) to be able to pay for energy saving packages. Green building is red hot right now. Some purists would argue whether thicker walls and energy efficient windows truly encompasses green building, as there are countless ways to make a home eco-friendly. However, these simple steps are just one more tool in the homebuilders’ arsenal to try and move houses in a slow market. It may even be worth throwing in for free at this point as a deal closer, depending on the market.

From a homebuyer’s perspective, these simple steps have been getting very good reviews for their energy savings. Don’t be afraid to ask for the energy savings package at no extra cost or a reduced cost. After all, the power is most certainly in the buyer’s hands and the energy savings package should be available to more than just upper level homebuyers for the present time. Helping the earth and lowering your monthly energy costs is certainly a good thing, but ask questions and know what the energy savings package entails. If you are trying to sell an existing home, Energy Star appliances and energy efficient windows can be a selling point. Tomorrow, we will look more closely at this and some other top tips for selling your home in a slow market.