Scotsman Guide - September 2009 Residential Edition

By Tony Stasiek
AUSTIN, TEXAS

Photo: Austin Convention and Visitors Bureau – Dan Herron

Try this on for an endorsement: In mid-June, Forbes.com ranked Austin, Texas, the U.S. city best poised to bounce back from the recession.

As home to the nation’s sixth-largest university and to government offices for the nation’s second-largest state — not to mention corporations such as Dell Inc. and Whole Foods Market — the Austin area does in fact rest its laurels on a fairly stable job base. That base grew monthly between this past February and May, something similar tech hubs such as San Jose, Calif., and Portland, Ore., couldn’t boast.

“The really good thing about Austin is that it seems the majority of people are young with high-paying jobs, and the median home price is just under $200,000. So it’s affordable for people to buy a decent-size home within [Federal Housing Administration (FHA)]-financing limits.”

— Nicole Lahti, mortgage adviser, Real Mortgage Partners

What the Locals Say

Residents also have seen a three-year housing-equity gain of $15,100, comparing favorably to the nationwide average equity loss of $49,267 for the same period, according to the National Association of Realtors’ data for the first quarter of this year. They also have less subprime (aka, nonprime) exposure than average, with subprime and Alt-A loans comprising 13 percent of market share for the area compared to 15. 5 percent nationally, according to LoanPerformance statistics. And low building volume has kept oversaturation at bay.

But even for a city like Austin, the road to recovery can be rocky. The area’s aforementioned employment volume dipped this past June, with manufacturing jobs reaching an 18-year low, according to the U.S. Bureau of Labor Statistics. Unemployment also reached its highest level in the 19 years the Texas Workforce Commission has tracked it for the region.

Vitals

Population: 757,688

■ Population in 2000: 656,562

■ Rank (U.S.): 15th-largest

■ Metropolitan-area population: 1.6 million

■ Metropolitan-area rank (U.S.): 36th-largest

Average commute: 23.1 minutes

■ Average commute in 2000: 22. 4 minutes

■ U.S: 25. 3 minutes

Median household income: $48,966

■ Median household income in 2000: $42,689 ■ U.S.: $50,740

Median age: 31. 4 years

■ Median age in 2000: 29. 6 years

■ U.S.: 36. 7 years

Unemployment (MSA): 7.1 percent

■ Unemployment in June 2008: 4. 5 percent ■ U.S.: 9. 5 percent

Industry

Licensing: All originators and loan officers must be licensed through the state Department of Savings and Mortgage Lending. Texas will begin converting to the National Mortgage License System and Registry in April, with unique, issued identifier numbers required by Dec. 31, 2010.

Licensed brokers (active, pending and probationary):

■ Austin: 227

■ Texas: 2,923

State association: Texas Association of Mortgage Professionals

■ Online: ttamp.org

■ Conference: Sept. 10-12, Austin

Market

Average conventional-loan size (May): $224,249

■ Average size in May 2008: $198,658

Median home price: $199,900

■ Price in June 2008: $199,900

■ U.S.: $181,800

Total home sales: 2,135

■ Sales in June 2008: 2,421

■ Sales in June 2004: 2,433

Housing inventory (May): 7 months

■ Inventory in May 2008: 5. 7 months

Foreclosure volume (MSA): 508

■ Volume in June 2008: 656

■ Rank in Texas by foreclosure percentage: 11th (out of 68)

Federal Housing Administration (FHA) loans (May): 321*

■ FHA loans in May 2008: 176

Percent of FHA loans with seller-assisted downpayment assistance (April): 2.2 percent*

■ Percent with downpayment assistance in April 2008: 40. 9 percent

U.S. Department of Veterans Affairs (VA) loans (Travis County, May): 88*

■ VA loans in May 2008: 53

■ VA loans in May 2007: 31

Single-family building permits (first quarter): 421

■ Permits in first quarter of 2008: 651

*MortgageData Web.com

Résumé

Demographics: 64 percent white, 8 percent black, 6 percent Asian, 1 percent American Indian, 21 percent other; 49 percent identify as Hispanic or Latino.

Largest private employers: Dell Inc., H.E. Butt Grocery Co., Seton Family of Hospitals, IBM Corp., St. David’s HealthCare Partnership

Tony Stasiek is the editor of Scotsman Guide. Reach him at (800) 297-6061 or tony@scotsmanguide.com.

Elvis Stulting turns over the presidential reins of the Texas Association of Mortgage Professionals (TAMP) at the group’s annual convention Sept. 10-12 in Austin, Texas. His tenure witnessed state legislation enforcing the federal Secure and Fair Enforcement for Mortgage Licensing (S.A.F.E.) Act and the implementation of the Home Valuation Code of Conduct (HVCC).

Stulting discusses those developments and possible remedies for a struggling market.

How would you describe the past year for Texas brokers? With all the changes on the legislative side — including S.A.F.E. Act implementation — HVCC and a dramatic drop in loan volume, it’s been a challenging year. But Texas is still a good market. There are still a lot of people here who remember the 1980s and how things were overbuilt. Many of the builders and lenders remember that and made a conscious effort not to overbuild.

Why did your group change its name from the “Texas Association of Mortgage Brokers”? The S.A.F.E. Act refers to “originators” — whether they’re loan officers, mortgage brokers or mortgage bankers. To complement the legislation, we felt like it would be a good move to change names.

Our association has always fought for originators, and we will continue that mission. There are many issues that affect the small mortgage broker that also affect the small mortgage banker.

The federal first-time-homebuyer tax credit has helped boost market activity, and some states are offering advances on the credit, set to expire Nov. 30. Where does Texas stand in this regard? The Texas Department of Housing & Community Affairs (TDHCA) has implemented a plan to allow a $7,000, 90-day advance. When borrowers close [a Federal Housing Administration loan], they have 90 days to request their funds from the Internal Revenue Service to pay back that $7,000 [interest-free].

We’re just now getting a taste of that and getting it out to the point where individuals can use it to purchase their homes. The total federal tax credit is $8,000, but TDHCA elected not to go to that level. The funds that TDHCA is providing are limited [to $5 million total].

What other changes do you think would help rejuvenate the market? There are two things I would recommend to really help this market. No. 1, HVCC has to be stopped. If it could have come at a worse time, I don’t know when. It definitely has affected sales of all types of properties.

The second thing would be to try to get Fannie Mae and Freddie Mac to modify their guidelines on investor properties. There are people out there who love to buy properties, fix them up, and turn around and sell them. But the restrictions on loans from Fannie and Freddie have a stranglehold on that part of the market.