a first for everything
Austinites are getting a lot of mixed signals from the housing market, and those can be especially difficult to sift through as a first-time homebuyer. Between all the trends, jargon, and potentially dramatic shifts in data from month to month, it can feel overwhelming just to decide to start the process, let alone go through the motions.
Barrett Raven, owner and realtor at Harpeth Realty, echoes many peers when he says it’s both a good time, and not a good time, to buy a house. His one stipulation: only do it if you plan to stay at least three years, given capital gains tax and appreciation. Beyond that, “I'm sure most people would expect every realtor to say [this], but I always think it's a great time to buy a home long-term.”
The most recent monthly Austin Board of Realtors (ABoR) report found that with more Austin homes in supply, buyers were more in control of prices, resulting in a more stable market. The thorn in a homebuyer’s side right now is high interest rates, but Raven offers a solution: “Marry the house, date the rate.”
Raven’s plan breaks down into three available paths. The first — his favorite — is a simple refinancing. Buy at a high interest rate and wait for rates to drop, hoping it’ll happen in an affordable time frame.
The second option is to permanently buy down the rate through a seller credit. In negotiations, buyers may ask for a credit from the seller, (say, offering $600,000 to get $20,000 back) effectively making the down payment larger without actively spending more. Then, that credit goes to the lender to lower the permanent rate. Raven would avoid this option, since that money may be wasted if the buyer does decide to refinance relatively quickly.
Third, an obscure option that falls somewhere in the middle, is what Raven calls a “3-2-1 buydown.” (There are other versions with different tiers, as well.) In this case, a 3 percent discount is applied the first year, the rate goes up slightly to a 2 percent discount the second year, and then 1 percent the third year. This also necessitates a credit from the seller, but the credit is not wasted if the buyer decides to refinance — the unused portion of the credit transfers to the principal of the loan.
“There are so many advantages right now about buying a home, and I don't want to seem out of touch or anything,” says Raven. “I get [that] the prices in Austin are still very high … and inflation is high, and things just cost more. But this … is what we have to work with. When I look at all the benefits right now, which are vast … the only real downside is high interest rates. We can take care of that for you.”
Raven lists five areas by ZIP Code that offer the most promise for first-time homebuyers ready to take the plunge:
78753 — Eubank Acres and North Oaks/Windsor Hills
This long corridor along I-35 is changing all the time, especially with new residential developments. West of the highway, Eubank Acres has great access to Walnut Creek Park, and has well-cared for houses, often still with their original owners. “I hesitated to even put it on this list because I didn't want more people to know about it,” Raven says. North Oaks and Windsor Hills, on the east side of the highway, are also both well-established and reasonably priced, but with generally younger families.
78704 — The Galindo area
This huge ZIP Code encompasses almost the entirety of South Austin as most Austinites will experience it. The Galindo area is at the southern edge, just north of West Ben White Boulevard. The area is walkable and close to lots of South Austin favorites, including a few outdoorsy breweries. This area, Raven says, is similar to the Zilker Area but more affordable — closer to the $600-900,000 range.
78744 — The Franklin Park area
Bounded by the Williamson Creek Greenbelt and McKinney Falls State Park, this neighborhood is almost country living, but still close to downtown. “This is a controversial area here,” says Raven. “People have been saying that this neighborhood is going to explode in value for the last, like, 30 years.” The draw is fantastic prices for houses in decently good shape, but buyers should do their research, since he calls the blocks “hit or miss.” There will be lots of flipped houses around.
78744 (again) — Easton Park
In the Southeast corner of Austin, on the other side of McKinney Falls, there’s a small neighborhood only a few years old that looks like it was plucked from Pflugerville. “It's kind of like this little oasis of new construction … in the middle of nowhere,” Raven says. This area entails a slightly higher budget, but buyers are less likely to spend time and money renovating, making this less intimidating for many. There is a lot of diversity of home types to choose from, and a little budget goes a long way on square footage.
78728 — Wells Branch
Raven “begrudgingly” chose this obvious contender, because although it’s the starting point of many first-home conversations, it can’t be overlooked. The far-North Austin locale takes on a suburban feel, but isn’t far from The Domain or Central Austin in general. This is a good place to find houses built in the '80s and '90s for a friendly option for first-time homebuyers who don’t want to tackle huge renovations, and at an affordable price. “I would call it the final frontier of being in true Austin,” he says.