What Lower Interest Rates Mean For You

In REAL dollars and cents

As I write this, interest rates are close to the lowest they’ve been in 3 years, making this a GREAT TIME to buy (or possibly to refinance your existing mortgage).

As an example, I created a little side-by-side comparison of a 30-year fixed conventional loan, using a $300,000 purchase price, 20% down payment, and a buyer with a 740 credit score – your interest rate could be as low as 3.625% in today’s market!

Comparing that to the exact same loan with a 4.875% interest rate (which is where rates were at 3 years ago and is still a great rate in itself, especially when you look at the big picture of mortgage interest rates over the last 30 years  ** for details on this keep scrolling down **) and notice the difference in monthly payment:

 

 

 

 

 

 

 

 

 

 

Now obviously, your individual credit score and down payment amount, as well as the loan type you’re using will impact your interest rate, but you get the picture — using the example above that’s a monthly difference in payment of $176!

Next, of course, we need to talk about how that same difference in interest rate effects the amount of money you’d be paying in interest over the life of the loan: it would cost you over $63,000 MORE with a 4.875% interest rate versus a 3.625% rate on that same $240,000 loan — and that’s not nothing!

Historical Perspective

For a quick trip down memory lane you can click on this interactive chart (provided by one of my favorite lenders, Cheryl Bullard at Premier Nationwide Lending) to see what interest rates have been doing over the last 30 years, and you’ll see what I mean when I say that that 4.875 rate is still nothing to sneeze at. (Seriously: look at where we were at in 1989!)

If you’d like more information on this topic or are ready take advantage of near historically low interest rates I’d love to chat with you about it.  You know where to find me! 😉

Growing Like a Weed

Boomtown Austin — still booming!

For those of us who live here, we already know this: the Austin metropolitan area has been growing like gangbusters for a while now.  And according to Ryan Robinson, the City of Austin’s demographer, the Austin area population will increase 2.75 percent in 2019; if this prediction holds up we will see 61,000 new residents in 2019, the equivalent of about 167 people per day!

So, whats driving this frenetic population growth?  Says Robinson: “With the pace of overall job creation remaining near 3.5 percent in Austin, anyone would be hard-pressed to predict much of a slowdown.”  Austin’s unemployment rate of 2.6% is well under the already impressively low national figure of 3.6%

JOBS, JOBS, JOBS!

Our once-crunchy, weird, small-ish city has grown into a massive tech hotspot, with some of the biggest names in the industry moving or expanding their operations here: Apple, Amazon, Facebook and Google (just to name a few) have begun or announced their company expansion plans for our fair city.

Increasing what is already a substantial presence here, Amazon recently announced their plans to add 800 new jobs at their tech hub near the Domain, which will bring their overall number of Austin-based employees to around 7,400.

Apple’s new Austin campus, which will be located just down the road from its existing facilities in northwest Austin, will initially accommodate 5,000 employees, with plans to eventually grow that number to 15,000.

Google has announced their plan to add an additional 5,000 employees who will be housed in a 35-story building downtown, with an expected 2022 opening — and this is in addition to the 800 or so Google employees already located here.

And Facebook, currently with about 700 employees in their downtown Austin offices, has now leased all 17 floors of the Domain 12 tower, which should be completed by the end of 2019.  In addition, the company has plans to lease 32,000 square feet at the upcoming Parmer Innovation Center in northeast Austin.

And again, the above is just a taste of what’s happening with Austin’s rapidly expanding job scene.  As of the end of March 2019, Austin added 22,700 net new jobs during the preceding 12 month period, pushing our ranking to 16 on the nationwide list of fastest growing major metropolitan areas.

GETTING HERE

With all those new bodies, we obviously need to update our capacity for folks to fly in and out.  In February, the first phase of the $350 million terminal expansion project opened in the Barbara Jordan Terminal at the Austin-Bergstrom International Airport — and this is just the beginning of ABIA’s expansion plans, which will see it gearing up for an expected 30 million air travelers passing through annually by 2030. Considering there were approximately 16 million travelers who passed through the Austin airport in 2018, that means in just over 10 years’ time we will see almost double that number — wow!

GETTING AROUND

Of course one of the more pressing issues that comes with all these new people showing up on our doorstep is the worsening congestion on our roads.  Ask anyone who commutes on our already clogged highways — even after the addition of toll roads and express lanes over the last decade — we are still struggling mightily.  To be honest, we are way behind the curve when it comes to reasonable mass transit options in Austin, which is something our city planners, along with Capital Metro are trying to address.  We are currently in the community engagement phase of Project Connect, which is a bold  and multi-pronged plan to tackle some of our our transit problems and will include fully electric high capacity rapid transit vehicles, light rail, express bus and commuter rail expansion.  Ongoing right now is engineering and environmental review, along with vehicle review/selection.  There is a proposed referendum date for the project of sometime in 2020.

HOUSING

So what effect has this growth had on local real estate? As you might have easily guessed, our housing market remains incredibly strong, with the median single family home price in the greater Austin metropolitan area reaching $320,000 in April.

We are currently ranked 5th nationally in new home starts, up 7% over last year, and indications are that this should remain strong throughout the year.  Leasing demand in Austin is up 7% over last year, with the average apartment occupancy rate hovering around 93%.

THE GOOD NEWS

The good news is Austin is a vibrant, flourishing city with a strong economy and loads of opportunity. Homeowners and investors have seen their real estate values skyrocket in a relatively short period of time (and unlike the housing bubbles in other cities of years past, this increase is based on actual growth rather than speculation).  And our home prices, while increasing steadily, are still among some of the most affordable compared to other major tech hubs around the country (I’m looking at you, San Francisco).  Yes, we are experiencing some growing pains, but there is a reason why Austin keeps being voted the Best City in America — and it ain’t just for the barbecue!

 

Property Taxes & the Homestead Exemption

Not just a terrible idea for a band name

A hot topic of conversation in central Texas is our property tax rates (boy-howdy is it ever!!), especially so while we are in the thick of tax season.  Depending on where you are located in the state, you’ll find tax rates that can be startlingly high and seem to be creeping ever higher. (Just a side note: that’s one of the trade-offs of living in a state with no income tax — the money to fund things like our utilities, roads, hospitals, and schools has to come from somewhere so, sadly, it kinda leaves homeowners holding the bag.)

Rather than debate the merits of our system of taxation, I just want to pass on a little reminder to homeowners — especially first time buyers — to be sure and file for your HOMESTEAD EXEMPTION in order to lessen your tax bill.

So for those of you unfamiliar, here’s a little FAQ to start with from the Travis County Appraisal District:

What is a general homestead exemption?

The general homestead exemption is provided by State law for owner-occupied residential properties. The exemption removes a portion of your value from taxation providing a lower tax amount for the homestead property.

How do I qualify for the general homestead exemption?

In order to qualify for this exemption you must have owned and occupied the property as of January 1st of that tax year. This property must also be your principal residence. You may not claim another homestead on another piece of property. You must submit a copy of your driver’s license with your application and the address on the license MUST match the address of the property for which you are requesting the homestead exemption.

If there is more than one owner of the property do all owners have to sign the application?

Yes, unless the owners are married. If the owners are married then only one has to sign, but we encourage both signatures. All owners must include a copy of their Texas Driver License or State-issued ID Card with matching address.

If my driver’s license does not match the property address, will you accept a passport/temporary/CHL?

No, per the Texas Property Tax Code the district cannot accept a passport or Concealed Handgun License (CHL). Only a Texas ID or Texas DL with the address of the property is required along with the homestead application.

When do I apply for my homestead exemption?

You may apply at the Travis Central Appraisal District between January 1st and April 30th of the tax year. You may file for late HS exemption up to one year after the date which the taxes become delinquent. 

I forgot to apply for my exemption, can I receive it retroactively?

You may file a late homestead exemption application if you file it no later than one year after the date the taxes become delinquent.

Is there a fee to file for an exemption?

There is no fee to file and you do not have to hire anyone to file for you. 

What year do I apply for the homestead exemption if I purchased my property last year?

To qualify for a homestead exemption you must own and occupy the property on or before January 1st of the year for which you are applying for. You may submit the form now and the homestead will be applied to year in which you qualify.

Do I need to reapply every year for my homestead exemption?

No, you do not have to reapply unless the chief appraiser requests a new application in writing or you move to a new residence.

Do I have to file another form for the new home I just bought?

Yes, a new application is required when a property owner’s residence homestead is changed.

How many acres can I claim as my homestead?

State law allows you to claim the portion of your land that you maintain for residential purposes but this amount may not exceed 20 acres. Generally, one acre or less is maintained for homestead purposes.

Where to file your exemption, or to get answers to more questions:

Travis County
Website: https://www.traviscad.org
Phone: 512.834.9317
Email: csinfo@tcadcentral.org
Homestead exemption forms are available on our website at on the Forms page under Exemptions or you can request that an application be mailed to you by contacting Customer Service at (512) 834-9138. The applications must be returned to the appraisal district and may be returned by the following methods:
Online:  Please call and select option 4 for general questions to request a Personal Identification Number (PIN)
Hand deliver to: 8314 Cross Park Drive, Austin, TX 78754
Mail: PO Box 149012, Austin, TX 78714

Williamson County
Website: https://www.wcad.org
Phone: 512.930.3787
Email forms to:  exemptions@wcad.org
Mail/Hand deliver to : 625 FM 1460 Georgetown, Texas 78626

Okay, I hope all that has been helpful.  Make sure your ID matches your homestead address and get those exemptions filed if you haven’t already!