Posts Tagged ‘austin real estate’

The Greater Austin Chamber of Commerce posted an analysis of jobs and the Austin economy today.  Here are some highlights:

  • Austin has the fastest rate of job growth and the second lowest unemployment rate among large U.S. metros
  • Even though the Austin MSA is the 35th in size, it created one of the largest increases in number of jobs with 37,700 new jobs created in the last 12 months, beating San Francisco and Orlando
  • Among the 100 largest metros, Austin also has the fastest rate of job growth over the last 5 years (15%) and the last 10 years (35%)
  • In Austin, two industries, professional and business services and leisure and hospitality, have seen the fastest rates of job growth (7.0% and 10.1% respectively), and together account for half of the 37,700 jobs created in Austin in the last 12 months
  • Austin’s unemployment rate, at 4.7% in January, is the second lowest among the top 50 metros 
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Interest rates on mortgages for pricey homes have dropped below those on smaller mortgages, an event that lending executives say has never happened before.

Borrowing rates for so-called jumbo mortgages, which are too big for government backing, historically have been set higher than rates on what are known as conforming loans, which are backed by Fannie Mae, FNMA -3.70%Freddie MacFMCC -2.70% or government agencies.

But in the past two weeks, the relationship has flipped, a combination of interest-rate volatility, government policy and banks flush with cash that are enjoying lower funding costs, making jumbo mortgages an attractive investment for them.

The average 30-year fixed-rate conforming mortgage was at 4.73% last week, according the Mortgage Bankers Association, compared with 4.71% for the average jumbo 30-year fixed-rate mortgage.

Executives say the inversion in the so-called spread, or difference, between jumbo and conforming loans is unprecedented. “In my 30-year career, I’ve never seen nonconforming loans priced below conforming loans,” said Brad Blackwell, executive vice president of Wells FargoWFC -0.18% Home Mortgage, the nation’s largest mortgage company.

Jumbo mortgages are those that exceed the $417,000 limit for loans eligible for backing by mortgage companies Fannie Mae and Freddie Mac, though the limits rise to as high as $625,500 in more-expensive markets such as Los Angeles, New York and Washington.

Before the housing bubble burst six years ago, jumbo mortgages over the past two decades typically had rates at least 0.25 percentage point above conforming loans, but that widened sharply after 2007, reaching a peak of 1.8 percentage points in 2008, according to HSH.com, a financial publisher. The rate difference between the two stood at 0.5 percentage point as recently as last November.

For adjustable-rate mortgages, the disparity between jumbo and conforming loans is even starker. Rates on certain “hybrid” adjustable-rate jumbo mortgages that have a fixed rate for five or seven years are as low as 0.75 percentage point below conforming loans.

“I’ve had situations where I’ve told clients, ‘You don’t need to borrow within the [conforming] limit. I can get you a lower rate if you borrow a little more,’ ” said Rolan Shnayder, director of new-development lending at H.O.M.E. Mortgage Bankers in New York.

Conforming loans have become more expensive because federal officials, in a bid to reduce the outsize footprint of Fannie and Freddie, have raised the fees those companies charge to lenders, which translates into higher mortgage rates.

Meanwhile, interest-rate volatility has driven up yields on mortgage bonds issued by Fannie and Freddie as investors brace for a slowdown in the Federal Reserve’s bond-buying program, which has included those mortgage bonds. That has boosted rates on conforming loans.

Jumbo mortgages, meanwhile, are increasingly kept on banks’ balance sheets, which means prices aren’t usually set by bond markets. “Banks have more deposits than loans today, so the desire to put that money to work, as well as the fact that it’s at a very low cost, allows us to make [jumbo] loans at a very good interest rate,” said Mr. Blackwell.

Mark Cunningham, 39 years old, who works as a program manager for an aerospace company, received a fixed rate of around 4.6% for a 30-year jumbo mortgage in late July through Navy Federal Credit Union for a newly built four-bedroom home in Ashburn, Va. The loan required just a 10% down payment.

“We were very happy. We still haven’t seen anything that competes with what we’ve got,” said Mr. Cunningham.

Navy Federal, which said it is currently offering jumbo loans at the same rate as conforming loans, said jumbos account for around 3% of its mortgages.

Banks have long courted jumbo borrowers because they tend to have deeper pockets. Banks use their relationship with better-off clients to sell them other products, such as brokerage accounts and credit cards.

“These are superpremium borrowers. They represent great cross-sell opportunities,” said Keith Gumbinger, vice president of HSH.com.

But recent interest-rate turmoil is making it easier for large banks such as Wells Fargo & Co. and J.P. Morgan Chase & Co. to woo those borrowers. “We’re in a world where their cost of funds is still very, very low,” said Bob Walters, chief economist at Quicken Loans.

Lou Barnes, a mortgage banker in Boulder, Colo., was competing Tuesday to keep a client from going to Wells Fargo, which was offering a fixed rate of 4.625% on a 30-year mortgage with a $750,000 balance.

“Commercial banks are just desperate to book an asset that will pay something,” said Mr. Barnes. He had offered a rate of 4.75%, which was roughly the same as the conforming rate Tuesday.

When rates stood below 4.5%, banks weren’t as likely to bid aggressively for jumbo mortgages because they weren’t eager to hold those loans on their books, said Paul Miller, banking analyst with FBR Capital Markets.

But he says the current trend could hold as long as rates stay at current levels or rise even higher.

Mr. Blackwell, the Wells Fargo executive, said the current inversion between jumbo and conforming rates could last “for the foreseeable future” so long as banks’ cost of funds stays at its current level and loan demand doesn’t rise sharply.

Jumbo loans with the lowest rates are available only to a relatively exclusive slice of borrowers who have pristine credit, large down payments, lots of assets and low debt loads relative to their incomes.

Banks also are getting more comfortable because housing prices have been rising. “On a risk-adjusted basis, this is a decent return. The quality of loans being originated today is very high,” said Stew Larsen, who runs the mortgage banking division of Bank of the West.

Some $8.3 billion in jumbo mortgages were packaged into securities during the first half of 2013, more than in the previous three years combined but just a sliver of the $281 billion in jumbo securitizations in 2005, according to Inside Mortgage Finance.

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Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

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As Austin invests locally while thinking regionally, it can solve part of the puzzle by adding new road capacity and creating attractive alternatives to driving alone, or – as it is in rush hour – sitting in a car alone and pulling forward every few minutes. Urban Rail is an important part of a much larger, highly networked road and transit system developing throughout the Austin region.

Urban Rail expands the successful MetroRail passenger rail and will connect people to where they live, work and play in the City of Austin, with electric-powered, fixed-rail cars.

It can take the stress out of getting to major employment and entertainment destinations, with service expected every 10 to 15 minutes during rush hour.

Read more from a recent article posted May 2013.

Urban rail coming to Austin? Plan could finish as early as 2014

Austinites shouldn’t expect to be boarding a bullet train to Barton Springs anytime soon, but urban rail took a big step forward this past week.

Community Impact News reported that members of the Transit Working Group met with Austin mayor Lee Leffingwell on May 10 to discuss the prospect of bringing a sophisticated, efficient urban rail system to the capital city. In the meeting, Leffingwell described the plan as having the potential for completion by early 2014. He also indicated that the plan may surface for voter approval on the first 2014 city-wide ballot.

“We talked about setting a tentative wrap-up date of mid-February, which would enable the City of Austin, if it chooses to do so, to put this on the ballot in May election,” the mayor told TWG members. “It’s not necessarily my preference. November is the other option, and I know that gives us a lot more flexibility. I think it would be good to set that target and timetable to achieve that target.”

Working in conjunction with Project Connect – an organization that works with transportation companies to help develop urban transit plans throughout Central Texas – the Transit Working Group is a subsidiary of the Capital Area Metropolitan Planning Organization, and was created to explore the prospect of implementing regional rail in Austin. Securing financing for Project Connect’s $4 billion plan is the next step in the process, and detailed blueprints for segmenting city corridors to accommodate region-specific rail lines are already under way.

“We’ve got a lot of work to do in a short amount of time,” said Kyle Keahey, Project Connect’s urban rail lead, to Community Impact News. “We don’t have the time to be distracted, and so you’re going to see in our project efforts a very clear focus on the objectives moving forward.”

Orginal Article By: Emma Kat Richardson

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

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Silicon Valley is still the gold standard for tech entrepreneurship. However, Austin is now emerging as a new destination of choice for tech startups as well as larger enterprise companies — for a variety of economic and cultural reasons.

Companies like Apple, Google, Facebook and Oracle are headquartered in Silicon Valley and there’s no question it’s is a hotbed of skilled labor; both workers and entrepreneurs from around the world migrate to the Valley to pursue their dreams and careers. It’s not unusual for startups to land funding rounds in the neighborhood of $50 million.

Austin is doing the same thing, just in a more organic, sustainable manner. Austin now hosts a healthy mix of larger companies and savvy entrepreneurs coming in droves from California, New York and other tech hotbeds. Private investors are often surprised at the number of seasoned executives operating here, but the truth is that Austin has grown into one of the nation’s go-to spots for startups and large players alike, and a market for high-growth companies to thrive.

A year-round ecosystem for success

One estimate has it that one-third of the companies that are moving to Texas originated in California, where the high cost of doing business often sends companies looking for alternate options. In addition to homegrown companies like Dell, established tech companies that employ more than 2,000 people in Austin include Apple, Microsoft, AT&T, Flextronics and Samsung.

We’re also home to an ecosystem of hot startups spanning across numerous industry sectors: OutboundEngine (DIY marketing), Taskbox (social task management), Macheen and Mutual Mobile (mobile), Zilliant (pricing optimization), WP Engine (site hosting) Bazaarvoice (social commerce) and GameSalad (gaming) and numerous other exciting and rapidly growing startups.

Austin’s economy is diversified outside of hardware and software, too. We’re a biotech hub with more than 160 companies and 8,200 employees. Whole Foods, Keller Williams, Sweet Leaf Tea and many other major brands are also headquartered in Austin.

Incentives for growth

One of the most unique draws for companies is the incentives structure propagated by the state of Texas. The state offers companies about $19 billion per year in incentives, the highest amount of any state in the union. The Emerging Technology Fund in particular reflects Texas’s commitment to growth within the tech sector. This fund awards grants that help product development, public-private partnerships and the recruitment of research talent. So far, more than $410 million in awards have been given, with an estimated 54,000 jobs created.

Austin has arranged an ecosystem that welcomes early-stage companies in particular. Our incubators, notably the Austin Technology Incubator, and Capital Factory, nourish young companies. Our universities, which include the University of Texas and Texas A&M, feed our talent pool, as do colleges from the southeast and Midwest. A recent Jones Lang LaSalle (JLL) reportranked Austin as the fifth major U.S. technology market out of 20 surveyed. Austin’s nearly 2,600 tech companies provide 50,000 jobs; the sector grew by 8.1 percent in 2012. When you consider that each innovation job creates an additional five jobs in the local economy, it’s no wonder that Austin continues to see net growth, even during the national recession.

Low Taxes, low cost of living

Greater Austin is one of the nation’s fastest-growing metropolitan area according to the most recent available statistics; 65 percent of the population migrated here.

In addition to a favorable funding, regulatory and legal environment for businesses, Austin boasts housing costs, utility expenses and tax burdens that are lower than most of the rest of the country. Texans don’t have to pay corporate or personal income tax. It is 47th of the 50 states in terms of taxes paid per $1,000 of personal income, according to the local chamber of commerce.

Compare that to Silicon Valley, where housing prices are more than three times higher than in Austin, and hefty taxes and regulations challenge the ability for companies to compete on securing the best talent.

Bigger Doesn’t Mean Better

Like Austin, Silicon Valley started organically. Back in the 1980s, it used to be the Valley against Boston. The Valley won because of its casual culture, freedom to experiment, and collaborative environment . People flocked from the Midwest and elsewhere to pursue their entrepreneurship and innovation dreams.

That’s akin to where Austin is today. The JLL report termed Austin a rising market, whereas Silicon Valley and San Francisco are closer to being peaking markets. Investors love our open landscape, literally and figuratively: information sharing and collaboration are standard practice here in Austin. Our seed rounds may be smaller, but we focus on organic growth to scale our companies, cultivating a sustainable environment in the process.

Everything Silicon Valley is doing, we’re doing, too — just on a smaller scale. And that comes with its own unique benefits.

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Orginal Article By: Julie Huls, President and CEO of the Austin Technology Council
Read more at http://venturebeat.com/2013/03/05/why-austin-is-techs-new-destination-of-choice/#rbmlY2vjPysqt7Me.99

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

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