Port Aransas Median Price Report - October 2007
Port Aransas has performed well this year. Its median prices have remained fairly consistent from month to month. September has the lowest median price of the year at 191K while August has the highest at 367K. As of October 29, the average median price for 2007 was 280K while 2006 had an average median price of 239K. Sale numbers are still low compared to 2006, yet buyers this year were still willing to spend a higher amount than the buyers from a year ago.
North Padre Island has been one of the hardest hit Gulf Coast markets. A Channel 6 News report stated that sales have gone down 30% this year and the average sale price for a home is still going up. According to the Corpus Christi CEO of the Board of Realtors, David Cheek, the subprime lending that took place has contributed to the drop in the market. A real estate agent from the area says that it is not uncommon to see sales go up and down on Padre Island, but he has seen sales pick up over the summer months. He saw the market fall off considerably after a major resort development got cancelled around a year ago.
Click here to view the full Channel 6 News report.
Median Price: The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median price.
Changes in median price measure changes in market activity. When there are more buyers buying less expensive homes than there are buyers buying more expensive homes, the median price falls. Conversely, when there are more buyers buying more expensive homes than there are buyers buying less expensive homes, the median price rises. The median price indicates which price range is most active. Not all price ranges experience the same market activity at any given time.
Another trend indicator is the average spread in an area. Port Aransas has a low average spread of 8,671. This means that the average difference between seller’s asking price and actual sale price was only $8671.00 a low number compared to South Padre Island’s $34,770 which is a strong buyer’s market.
The current buyers include investors and retirees. We are seeing many buyers in our sales pipeline which are first members of the baby boomer generation retiring in 2008. They have sold their first home and are interested in retiring to warmer climates. A strong Texas economy due to federal spending and other capital investments in the region is increasing the number of people with disposable income to purchase beachfront property or second homes. The federal government funded 3 billion to develop the southern border security fence and Texas' exports to China's booming economy are skyrocketing. These are just two factors that influence the second home real estate market in Texas.
Good News For Investors We’ve all heard about the recent problems with mortgages referred to as subprime loans. The current and more importantly future defaults on these loans could push many homeowners into the rental market. In a nutshell, subprime loans are issued to borrowers with a low credit rating. A typical loan starts out at low interest rate and then adjusts in 2-5 years to a significantly higher rate. On a $300,000 loan the payment could increase by $1000 when the interest rate adjusts. The already cash-strapped borrower simply can’t come up with the extra funds.
Another factor investment property owners should closely consider is softening prices in the real estate market. There are some great deals out there. I’ve come across many stories of huge price drops. Last month, Hovnanian Enterprises Inc., one of the largest homebuilding companies in the U.S. kicked off a 72-hour promotion, in which it slashed prices by as much as $100,000. If you are not seeing good deals close to home, look further, there are many great property managers that can help the absentee owner with their property management needs.
If you are an investment property owner this could be a great time to expand your holdings. You should benefit from the stronger rental market and lower housing prices. Of course, it takes someone with the financial resources and, perhaps more importantly, the courage to ride out these turbulent times!
NAHB Economic Forecast
Tighter lending standards and reduced availability of credit will complicate - but not derail - a national recovery in the housing market, according to the National Association of Home Builders' (NAHB) state and metro economic forecast, which is available through NAHB's HousingEconomics.com.
The impact on housing markets will come in two forms, said NAHB Chief Economist David Seiders. First, tightened lending standards have already reduced the availability of loans overall and raised the price to riskier borrowers. A second effect, with the potential for a vicious cycle of defaults and price declines, will depend on the level of exposure to these loans, the current house price environment and the strength of the local economy.
While national trends tend to be dominated by some of the larger and more troubled markets, it is worth noting that many markets around the country have less subprime exposure, experienced modest and sustainable house price appreciation during the boom and have relatively strong local economies. These markets are positioned to out-perform the national trends with earlier and stronger recoveries than the more troubled markets, according to NAHB's forecast.
Clustered mainly in the Southeast, Texas, Pacific Northwest and Mountain states, these markets are currently recording single-family permits at or above pre-boom levels. The contrast between the strongest and weakest markets across the country points out substantial regional variation and suggests that steep nationwide house price declines and mortgage defaults are unlikely.
Top 10 reasons why the Texas Coast real estate market will boom to record levels in early 2008 Oceanfront property has not lost its appeal and with the East and West Coast prices becoming less affordable, the Gulf Coast has become the most affordable alternative. Below are the top ten reasons why Texas is getting ready to experience a real estate market boom in 2008.
Click here to read the full article. - Baby Boomers from thriving Houston/Dallas/San Antonio/Austin are coming in mass starting in 2008
- Investors from California/Florida are now turning to Texas
- Huge capital projects in Beaumont area for energy plants - 3.6 billion
- Federal Spending on the Border Security Fence – 3 billion, construction starts in fall 2007 for Texas
- Strong rental demand for coastal properties for massive local and growing populations within driving distance to the coast.
- Texas Exports to Booming China’s economy are skyrocketing.
- New high-end developments transforming the resort markets to accommodate all the new and different buyer profiles.
- State expenditures to improve and protect the coastlines with beach replenishment, geo-tubes and other major coastal initiatives already funded or soon to be funded.
- The affordable prices for Texas coastal property and steady appreciation rates. We are 1/3 of California’s and half price of Florida’s median pricing for ocean front property and our newer products are on par.
- Consumer Confidence Index Climbs to a Six-Year High and Insurance companies are now returning to the Texas Coastal markets.
Click here to View a Video of North Padre Island