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High end home appreciation

2,735 Views | 28 Replies | Last: 3 yr ago by Keeper of The Spirits
beachfront71
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AG
We just spent a 5 days running around Austin - Lakeway looking at neighborhoods and really the pricing is all over the place out there.

I really liked Belvedere and Signal hill but for the realtors on this board, how do you see these areas appreciating over the long term?

Both neighborhoods are sort of out there with no real amenities and are asking a premium for semi high end build quality.

Is the expectation that over the next xx years all that vacant land off of hamillton pool is going to be developed?

Just trying to better understand what a good long term investment / appreciation opportunity would look like..
The only thing we really decided on this trip is that westlake is not for us (for better or for worse) and we want to be south of lake Austin..

Building would be the ideal scenario but if we make the move I am not interested in the 18 month process from start to finish.

We are making another trip out there soon to spend more time figuring all of this out.

Thoughts?
ContinentalAg
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You will see some appreciation in Lakeway but not what you would see in Westlake. Problem with Lakeway is land is relatively plentiful. Westlake has lower taxes, great schools and a superior location for those that need to be closer to town for work. I've seen the best appreciation in Lakeway is for moderately priced homes...too much current and future competition in the high end bracket.
ContinentalAg
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And I get that Westlake isn't for your family. You'll be able to get a great house for cheaper in Lakeway...just temper your expectations as far as appreciation goes.
evan_aggie
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AG
I guess I'm not entirely sure what your first priority is? A house, typically, isn't a great investment.

Austin and the surrounding area is going to continue to appreciate because 2,500-3,500 still move here every month. I think there are some constants that are true anywhere: you may not want to be the most expensive house in your neighborhood, or at least not by a wide margin.

Appreciation is going to be greater than closer you are to town, because as mentioned, land is not plentiful. However, you are going to deal with high prices and get less home.


The Silverback
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AG
We bought a lot in Signal Hill literally this week and going to build with Sendero Homes. I researched out there for 4-5 months, feel free to DM me and I'll expand further on what my thoughts are.
Hanrahan
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AG
Don't have any input for you other than I'd make sure you can live with having to drive on Hamilton pool road everyday. I could not do that. It's gotten so bad with all the building out there and it's only going to get worse. It's dangerous and often you end up behind a truck going 15 under the speed limit due to the twisty-ness of the road, not to mention the lack of lighting out there at night. We live in the uplands in bee cave and don't think we could ever go any further west due to the traffic and not wanting to drive Hamilton pool specifically. Lakeway with 620 is a complete non starter. Traffic during rush hours there is absolutely brutal.
austinag1997
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AG
evan_aggie said:

I guess I'm not entirely sure what your first priority is? A house, typically, isn't a great investment.

Austin and the surrounding area is going to continue to appreciate because 2,500-3,500 still move here every month. I think there are some constants that are true anywhere: you may not want to be the most expensive house in your neighborhood, or at least not by a wide margin.

Appreciation is going to be greater than closer you are to town, because as mentioned, land is not plentiful. However, you are going to deal with high prices and get less home.





Really? My houses have been the best investments over the years. Built a $200k house in 2003. Sold it in 2016 for $350k. Granted... built in a low, sold at begining of an uptrend. Probably could have done better waiting 3 months.

I expect similar % returns in my current house when we sell it.
evan_aggie
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AG
austinag1997 said:

evan_aggie said:

I guess I'm not entirely sure what your first priority is? A house, typically, isn't a great investment.

Austin and the surrounding area is going to continue to appreciate because 2,500-3,500 still move here every month. I think there are some constants that are true anywhere: you may not want to be the most expensive house in your neighborhood, or at least not by a wide margin.

Appreciation is going to be greater than closer you are to town, because as mentioned, land is not plentiful. However, you are going to deal with high prices and get less home.





Really? My houses have been the best investments over the years. Built a $200k house in 2003. Sold it in 2016 for $350k. Granted... built in a low, sold at begining of an uptrend. Probably could have done better waiting 3 months.

I expect similar % returns in my current house when we sell it.

You sort of just proved my point, actually.

The value of a dollar from 2003 to 2020 has depreciated. Today it is about $1.42 vs $1.00 in 2003. So that same house would be about $284,000 if bought today and you are talking about selling it for $350,000, less the commission and fees, so maybe $325,000.

$200,000 invested in a DJIA index fund (basically the entire market, right?) would now be worth around $586,000.
So the home you bought was a relatively poor investment, not to mention the upkeep I'm sure you spent over the years. This is why I mentioned homes being closer and more central to town appreciating more quickly. I think our home was bought/sold in 2010 (not us) for $310,000. Our realtor says we should be listing it for $715,000 today.

By the way: my first home bought in Cedar Park was 2009 $242,000 and in 2016 I think it appraised at $310,000. Another example of appreciation further from town being much less and slower.

austinag1997
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AG
Unfortunately we don't live in the Dow. And renting is a poorer decision than owning. But I get your point.
evan_aggie
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AG
I guess I'm asking you to explain the "renting is a poorer decision than owning" more?

I think there have been many examples and articles that reiterate that investing money in the stock market, while you rent or live in an apartment, is a financially advantageous decision. However, I'm with you: I want to live in a home. I want something that is "mine/ours" and not having to pay a landlord.
The Silverback
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AG
There is an argument to make on either scenario.

But a couple of flaws on your statement:

He built up equity in the house, didn't have the equity when he started. So to put the $200k in a fund at the time he bought the house wasn't an option, he didn't realize those funds until he sold his house later on. A better example would have been the 10-20% down he used to purchase the house to begin with, and what would that turn inot if he invested the money instead of buying a house?

Also, not sure if anyone wants to rent with a family and be forced or have the potential to be forced to move every 1-2 years. Not good for really any family. Add in the cost to move and the pain in the ass aspect, that alone is probably a deal breaker.

And then the obvious: Huge tax rebates from writing off the interest, no capital gain tax, paying down principle with monthly payments. The appreciation differs greatly from every situation. We have done excellent over the last 6 years on 3 real estate transactions. But partly luck, partly good decisions (location and home type), and partly living in one of he better markets in the country.

Again, there is an argument to renting vs buying but not sure many practical people would ever consider it.
Keeper of The Spirits
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AG
My 78751 went up about 31% from 2014 to present, but we added expense square footage but I'd say if we sold right now we'd make money on top of the addition cost
austinag1997
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evan_aggie said:

I guess I'm asking you to explain the "renting is a poorer decision than owning" more?

I think there have been many examples and articles that reiterate that investing money in the stock market, while you rent or live in an apartment, is a financially advantageous decision. However, I'm with you: I want to live in a home. I want something that is "mine/ours" and not having to pay a landlord.


You would have a difficult time convincing me that tossing $ down the drain on rent payments with no opportunity for equity is the wise choice. The delta in rent vs. mortgage is not significant to overcome the equity in home ownership. Just my $0.02.
evan_aggie
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AG
Like I said: I make the same choice most of us make: "better to own a home" than it is to rent, but that's not because it's an awesome money investment. It's a lifestyle choice and preference.

There are many costs you all know when owning a home. Renting isn't much more than my property taxes, let alone any mortgage payment. Plus you are paying mostly interest the first quarter or third of the loan.

I don't really need to convince you. You get to live your life and believe whatever you want in the face of math.
Keeper of The Spirits
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AG
I think the difference is you can get 100% control of 500k asset for 25k plus 360 easy payments

That money in the market gets you control of nothing.
one MEEN Ag
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AG
evan_aggie said:

I guess I'm asking you to explain the "renting is a poorer decision than owning" more?

I think there have been many examples and articles that reiterate that investing money in the stock market, while you rent or live in an apartment, is a financially advantageous decision. However, I'm with you: I want to live in a home. I want something that is "mine/ours" and not having to pay a landlord.
Those articles always take disingenuous approaches to renting equivalent properties. I've yet to see one that looks at renting an upper middle class 3,500 sq ft home for 20 years versus buying one. Its always comparing it to crap, smaller and older homes or living in a one bedroom apartment. At the end of they day, you're either paying someone else's mortgage or paying your own. Rents go up every year with the market/inflation. Mortgages stay the same. Taxes, insurance, and repairs are all paid by the person living in the house. Noone is renting and not passing along those costs.

Now that being said, people do get carried away with home ownership, nor hold onto their properties long enough. A home that has been maintained and updated usually has a net present value of 0.
beachfront71
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AG

Sorry for delay in replying to my own post .. been traveling..

I think my concern is if the far West Austin area can continue to support the crazy pricing that is out there or is there a correction/reset opp out there.

Im seeing CA prices but is there CA appreciation.. My home out here has appreciated on average 10% through all the good and the bad over the past 10 years w/ no end in sight..

I obviously want the best chance to replicate something like that. as best I can.

I get all of this is speculative opinions but it is good stuff.

expresswrittenconsent
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East side. We appreciate getting high and have high end home appreciation.
PabloSerna
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AG
evan_aggie said:

austinag1997 said:

evan_aggie said:

I guess I'm not entirely sure what your first priority is? A house, typically, isn't a great investment.

Austin and the surrounding area is going to continue to appreciate because 2,500-3,500 still move here every month. I think there are some constants that are true anywhere: you may not want to be the most expensive house in your neighborhood, or at least not by a wide margin.

Appreciation is going to be greater than closer you are to town, because as mentioned, land is not plentiful. However, you are going to deal with high prices and get less home.





Really? My houses have been the best investments over the years. Built a $200k house in 2003. Sold it in 2016 for $350k. Granted... built in a low, sold at begining of an uptrend. Probably could have done better waiting 3 months.

I expect similar % returns in my current house when we sell it.

You sort of just proved my point, actually.

The value of a dollar from 2003 to 2020 has depreciated. Today it is about $1.42 vs $1.00 in 2003. So that same house would be about $284,000 if bought today and you are talking about selling it for $350,000, less the commission and fees, so maybe $325,000.

$200,000 invested in a DJIA index fund (basically the entire market, right?) would now be worth around $586,000.
So the home you bought was a relatively poor investment, not to mention the upkeep I'm sure you spent over the years. This is why I mentioned homes being closer and more central to town appreciating more quickly. I think our home was bought/sold in 2010 (not us) for $310,000. Our realtor says we should be listing it for $715,000 today.

By the way: my first home bought in Cedar Park was 2009 $242,000 and in 2016 I think it appraised at $310,000. Another example of appreciation further from town being much less and slower.



This is really a key point for Planning and Development. I sit on our local P&Z Board and we recently studied our tax base and it was incredible how much higher the "return on investment" was the closer you were to the Downtown. In Bastrop, we have a few "districts" designed to incentivize development such as the Arts District, the Food & Wine District and so forth. All of this revolves around a strong Historic District.

I understood this years ago and purchased a modest h 1950's home in the Historic District for less than the asking price. It is poised to do very well and I haven't even begun our remodel.

This is happening all over the country and world for that matter. Building a walkable community is a real boon for small Texas towns. If I had the money, I would look at investing in communities that understand this concept and are making an effort to revitalize their Main Street and Historic Districts.

On last word.. public transportation can be sustained in these areas. They can tie in other satellite Neighborhood Centers and even nearby cities. Really is the way of the future.

+Pablo
evan_aggie
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AG
Thanks Pablo! My wife and I are *STILL* vacillating over whether to press forward with a garage-apartment. I'm worried about demo costs of our existing garage, among many other costs that I'm sure will pile up.

I'm not opposed to public transpiration from satellite neighborhoods, but people really underestimate the desire of Texans to have a car at-the-ready to traverse town and the sprawl that is Austin already.

A friend of mine commented that they thought Portland's rail system was decent. I looked it up, and despite a much smaller population, Portland is actually 60% more dense in people per km or mile than Austin is...which really surprised me.
The Silverback
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AG
PabloSerna said:

evan_aggie said:

austinag1997 said:

evan_aggie said:

I guess I'm not entirely sure what your first priority is? A house, typically, isn't a great investment.

Austin and the surrounding area is going to continue to appreciate because 2,500-3,500 still move here every month. I think there are some constants that are true anywhere: you may not want to be the most expensive house in your neighborhood, or at least not by a wide margin.

Appreciation is going to be greater than closer you are to town, because as mentioned, land is not plentiful. However, you are going to deal with high prices and get less home.





Really? My houses have been the best investments over the years. Built a $200k house in 2003. Sold it in 2016 for $350k. Granted... built in a low, sold at begining of an uptrend. Probably could have done better waiting 3 months.

I expect similar % returns in my current house when we sell it.

You sort of just proved my point, actually.

The value of a dollar from 2003 to 2020 has depreciated. Today it is about $1.42 vs $1.00 in 2003. So that same house would be about $284,000 if bought today and you are talking about selling it for $350,000, less the commission and fees, so maybe $325,000.

$200,000 invested in a DJIA index fund (basically the entire market, right?) would now be worth around $586,000.
So the home you bought was a relatively poor investment, not to mention the upkeep I'm sure you spent over the years. This is why I mentioned homes being closer and more central to town appreciating more quickly. I think our home was bought/sold in 2010 (not us) for $310,000. Our realtor says we should be listing it for $715,000 today.

By the way: my first home bought in Cedar Park was 2009 $242,000 and in 2016 I think it appraised at $310,000. Another example of appreciation further from town being much less and slower.



This is really a key point for Planning and Development. I sit on our local P&Z Board and we recently studied our tax base and it was incredible how much higher the "return on investment" was the closer you were to the Downtown. In Bastrop, we have a few "districts" designed to incentivize development such as the Arts District, the Food & Wine District and so forth. All of this revolves around a strong Historic District.

I understood this years ago and purchased a modest h 1950's home in the Historic District for less than the asking price. It is poised to do very well and I haven't even begun our remodel.

This is happening all over the country and world for that matter. Building a walkable community is a real boon for small Texas towns. If I had the money, I would look at investing in communities that understand this concept and are making an effort to revitalize their Main Street and Historic Districts.

On last word.. public transportation can be sustained in these areas. They can tie in other satellite Neighborhood Centers and even nearby cities. Really is the way of the future.

+Pablo

Pablo, I think that has been the case for a while now but you will see a mass exodus from the urban life style in the next several years. Go to Downtown Austin now (and many other major cities DT area) and take a look around. Dirty, unsafe, tent cities, higher crime rates and now with Covid there half the businesses are closed/closing.
PabloSerna
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AG
I'm sure there will be some ebb and flow. Just looked at an article on houses in my former neighborhood - Bouldin Creek. Elijah Wood's house is for sale at $1.875m after he paid around $1 million back in 2012. Our former house, pretty much exactly how it was when we sold in 2004 is clocking in a cool $524k (double what we sold for) !! We tripled our initial investment in 8.5 years, so there is a case to be made for flipping houses in these type of walkable communities.

If I had the foresight I have now, I would have never sold that small house in Bouldin Creek, just a block off of Congress. We did roll it forward, but the upward trajectory was never the same. I am hoping Bastrop experiences the next wave of development. If appears to be heading that way - not gonna make the same mistake twice!!

Keeper of The Spirits
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AG
I think crime and not property crime will have to get real bad before people start leaving the urban core for suburbs. People who chose to live in the city are comfortable with alot of he things you describe.
The Silverback
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AG
Keeper of The Spirits said:

I think crime and not property crime will have to get real bad before people start leaving the urban core for suburbs. People who chose to live in the city are comfortable with alot of he things you describe.
I think i would have to disagree with this....A majority of the the people living in downtown Austin (speaking specifically more about downtown and not Tarrytown, Pemberton, etc.) bought their home or condo when Austin was a completely different city. Have gone to dinner 2-3 times in the last month and don't want to go as far as saying its unrecognizable, but definitely not the same place.
Keeper of The Spirits
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AG
I can agree with downtown, I never saw the allure of high rise living myself but I don't see Tarrytown, Pemberton Heights, Brykerwoods, Hyde Park, Rosedale, Crestview, SoCo, or SoLa losing a ton. All walkable hoods away from the fray. Now that most businesses won't be forcing anyone back into the office, the downtown scene will change dramatically and unless it goes full bore on tourism and clean up the camps out of the parks, it will likely have to reinvent itself. However you will always have the State, the hospitals, the courts and UT down there
Potcake
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AG
We're in Brentwood and there are a ****ton of teardowns being replaced by A/B units, some into the 800K range, for a unit. New build on our block was listed at 1.35. We just hope it hangs on for 3-4 more years.
expresswrittenconsent
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Can't believe the Jenga bldg has any tenants. Sounds like DT is empty.
PabloSerna
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AG
expresswrittenconsent said:

Can't believe the Jenga bldg has any tenants. Sounds like DT is empty.
They pre-sell units way before they build them now. Lots of out of state/Dallas/Houston/foreign money investing in the hot Austin market. I had a developer friend sell his lot and all the plans we worked on to a Las Vegas outfit that was backed by big money. Needless to say we were bummed that they had their own architect!
expresswrittenconsent
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Yeah I dont doubt that there's a crap ton of non local money as 2nd/3rd homes there, but anecdotally the 4 couples I know who live there, 3 were local austin/round rock people who sold their house in the burbs and moved to the high-rise.
Keeper of The Spirits
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AG
Yeah no doubt we don't plan to sell ours for 7-10 years, especially since my new pool is filling with water right now. One with similar specs, slightly bigger on a slightly bigger lot just went for 1.1M, if I can cash that much out in 10 years I can retire comfortably somewhere else at 50.
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