The data wizards at real-estate analytics site NeighborhoodX have recently been conducting a broad analysis of affordability in several major U.S. cities, including Austin, and the results offer valuable insight into that most constant and urgent of local concerns, which is up there with transportation and not much else.
"We wanted to use a metric that would make the information accessible to the general public,” said NeighborhoodX co-founder Constantine Valhouli of the study. “Rather than using an index, we simply identified and analyzed the 10 most affordable market-rate properties in each neighborhood."
The analysis excluded income-restricted properties, properties that cannot be purchased with a conventional mortgage (such as those requiring all-cash purchases because of building code issues), short sales and foreclosures, and properties that are positioned primarily as redevelopment sites.
The study also focused on properties that have one or more bedrooms, as studio efficiencies tend not to be viable as long-term primary residences.
“[Those] criteria are critical to identifying which properties are actually affordable and within reach of the average buyer,” said Valhouli. “Too often, many of the more apparently affordable listings had some issue or encumbrance (such as requiring an all-cash sale) that put it out of the reach of a regular buyer with a conventional mortgage.”
The Austin data looks primary at listings from the second half of the fourth quarter of 2016. Here are some of the findings:
• The rise in prices in Austin has been uneven. There are pockets in neighborhoods where prices have risen dramatically, but not all areas of Austin have seen equal price growth. As a result, there are still pockets of affordability. The study found “starter” homes $169,000 (Rosedale), East MLK/MLK-183 ($185,000), and Zilker ($199,000). East Riverside-Oltorf had properties starting at $82,500.
• One step up were the most affordable properties in Central East ($209,000 and up), East Cesar Chavez and Downtown (starting at $249,000), and Barton Hills, Govalle, and North Loop ($252,000; 265,000; and $299,000, respectively).
• The next bracket would be neighborhoods where the most affordable properties begin in the $300,000s: Steiner Ranch (starting at $324,000) and Mueller ($339,000)
• The most expensive neighborhood looked at in this study was Old West Austin, where the most affordable property for sale was $450,000.
To put these numbers into perspective, even while mortgage rates remain relatively affordable, the 20% downpayment for a conventional mortgage would range from $17,000 for the least expensive property on this list (the $82,500 property in East Riverside-Oltorf) to $50,000 for the least expensive listing in East Cesar Chavez, Downtown, or Barton Hills, and up to $90,000 for the least expensive one in Old West Austin.
"First-time buyers who are priced out of the more established neighborhoods will be increasingly considering the emerging neighborhoods where there are still affordable properties." said Valhouli. "If these areas continue to become more desirable and prices continue to rise, this will allow new home owners to build the necessary equity to move to a larger property later."