There are a couple of rules of thumb when it comes to new developments in Austin, and the news that there will be 221 new homes coming to Mueller in 2012/13 has probably got some potential home sellers here a little nervous. The first rule of thumb is that buying new construction is like buying a new car – as soon as you drive it off the lot, you’ve lost a bunch of money. While hopefully your home never leaves its lot, the idea that you pay a premium for the ability to customize and own a brand new item is often paralleled – in some neighborhoods and in a flat market.
The second rule of thumb is that you can’t compete with builders, so if you try to sell your recently built home while a builder is busily selling new homes, you’ll have to discount your home significantly. Or include all of the upgrades that you did after closing and the appliances and pay down the buyer’s mortgage rate and thrown in your pet Chihuahua to make the deal work.
What do these rules of thumb mean for your home value if you’ve lived at Mueller for more than a year? And really, if you’re selling in less than a year, the high transaction costs of real estate are going to bite harder than anything else. The answer depends on what you did to your home since you bought it, how you market it, what makes it unique, and what the builders are actually doing.
The key part of that is “what the builders are actually doing”, as if you look at the breakdown of new homes, it looks something like this:
Yard homes on 35′ lots. These are already so over-subscribed that anyone considering selling their yard home is probably going to be inundated with the folk who can’t get a new home. Half of this 30 are by a builder who hasn’t built on this size lot here before – Standard Pacific, so these have to be new floorplans. The other 15 David Weekley homes could be new floorplans or from their existing Mueller catalog. Regardless, if you have a yard home to sell, there’s not going to be much like it. And if prices for the new homes aren’t above $360,000 for an 1800 sqft home, I’d be very surprised.
76 row houses from two builders who have both built these at Mueller before. These may be the same or different floor plans as before, so competition will be a little stiffer, especially if there are perceived benefits of the new home locations. Still, with any sale there’s a timing factor – if the homes are built in blocks of six for example, you might not be able to get the townhome you want in the block that you want at the time that you want, and a resale home may present better timing to you – if you’re relocating for example. It could be that the new townhouses are smaller than those currently – the most recent resales have been over $310,000 for an 1800sqft home.
Garden homes – if these are the same David Weekley plans that were built over on Threadgill and Hermalinda, then the current homes are less than a year occupied. There are also more Standard Pacific condos in the Mueller Houses – these are again competing only with very newly completed units on Simond which have only really been occupied for the last few months.
35 courtyard row Streetman homes. This is a new housing style, and while it may offer some competition to the currently built Muskin and Saldana Garden Court Homes, the floorplan and location are substantially different. In addition, the two existing garden courts have somewhat of a cult status – front porch living at its best.
New Shop houses – a new style of living which has no direct resale competition here.
So rules of thumb aside, it seems that the row homes will have the largest volume of new supply and hence competition. If you’re living in a larger lot yard home, you have the least new competition (aside from the new custom homes – two lots on Camacho and the four David Weekley Estate homes).
I don’t anticipate the new home floor plans will be released much before Summer 2012, so the Spring market may well have already sprung before any real competition arrives, and that may mean the first closings are at the end of 2012, so brisk resale business as usual until at least the Summer. Overall, I expect the resale market to be bolstered by new amenities like the Urban HEB, and home values to remain steady.