I met a couple this week who were looking to relocate to Austin. They have a buyers’ agent who was not keen on them buying a home at Mueller, and they wanted to sit down with a cup of tea and see why I was so bullish about the neighborhood. Their agent had said to them that buying into the former Robert Mueller Municipal Airport development was a bad real estate investment, as when they came to sell, they would be competing with new builds.
I have written about the challenges of competing with the builder starting about three years ago, and it is certainly true that if there are new homes to choose from that are close comparable homes to your resale home, then the odds are stacked in the builders’ favor. There are certainly ways to compete with the builders, but their agent was right – it’s tough. Normally. But things are a little different here. If you look at the bulk of the resale market at Mueller, it has actually been faring very well. Prices in the under $500k homes have been increasing, sometimes at an alarming rate. At the same time, new homes have been on the market.
So what’s the Mueller Miracle – why have prices risen at somewhere between 8-13 % in 12-18 months? Why haven’t the builders undercut the resale market?
If you look at the builder price lists for all of their models, you’ll see a steady trend of price increases as the development progressed. “We’re having price increases next month” is not just a sales technique to get people to sign contracts, it is a reality here. It’s still happening – if you look at the Mueller House Condominiums, there’s a significant difference between the original pricing and the current pricing for homes that have not yet been completed. This is great for sellers. Many sellers have bought new homes, sold within three years and walked away with a profit. Isn’t that unheard of in a new development with builder competition in a flat or down market? Yes it is quite unusual. The Mueller market is neither flat nor down, and it’s a world away from the new developments in some of the Austin exurbs where sellers are under water and facing short sales.
So the tried and tested Realtor rule of thumb “don’t buy in a new development for investment purposes” doesn’t really ring true. It works in the exurbs with a relatively consistent new home product but Mueller hasn’t had that. We’ve moved from yard homes to row homes to garden homes to 4 unit condo buildings. Density and price points have changed. Neighborhood amenities have increased, and are still moving forward. Home sizes and styles have changed. Either the master planners got very lucky, or perhaps they really do know what they’re doing. I know, staggering – I was very skeptical at first too.
Unlike the exurbs, Mueller has limited space, and if you think that the average homeowner stays in a Texas home for just under six years, perhaps the space will be full by the time the Muellerite of 2011 comes to sell. It’s also possible that the development will still be under way, or that development will have a brief hiatus too. But sooner or later, the 711 acres will be fully utilized, and then the only new build competition will be from other in-fill developments in the area, and aside from a few old airport surface parking lots, there isn’t a whole lot of space nearby.
As a closing thought, I rarely consider a personal home as an investment. You’re buying a living solution as an alternative to renting, which is really making someone else’s investment work for them. You can certainly compare the chance of appreciation in your prospective personal living solutions in different neighborhoods, but ultimately you’re choosing somewhere that you want to live that meets your needs. For the couple I had a cup of tea with, perhaps their living needs were more important than the ability to sell a home for a profit in three years. The funny thing to me is that if they’d bought here three years ago, then they could have had both – a place to live that they seem to like, and built up equity. But that’s the benefit of 20-20 hindsight.
Check out new and resale homes at Mueller, or get in touch if you want to discuss your needs more. I like to drink tea and discuss things in a civilized fashion without trying to make you drink the koolaid. 512 215 4785