August 2020

Will COVID-19 Be the End of Cities

Will COVID-19 Be the End of Cities?

  • Last week, we wrote about the hot Austin residential housing market. And how COVID is affecting that housing market. It is certainly on fire and continues to be so.
  • But what about the multifamily market? How has COVID and a blazing hot single family housing market affected the multi market?
  • That’s the question we are going to try to answer this week.

Early on in the pandemic outbreak in the US – back in March and April – there were a lot of theories that people wanted were going to flee cities. Indeed, this theory is largely still believed. From Chicago to New York to Dallas, people predicted that, because of COVID-19, city dwellers would Green Acres it and flee those high rises for farm living. People would want to be spread out so far and wide.* And there are good reasons to think this theory makes sense. For example:

  • Commute – More people are working from home. As a result, they do not have to worry about fighting traffic, the distance, etc.
  • More space – One potential downside of being in a downtown apartment during COVID is you have less space. When you have to spend so much of your time in your residence, you may want more space.
  • Social distancing – This one is pretty self-evident. There are a lot more people in cities than there are in rural areas. Its much easier to social distance in the rural areas.
  • Benefits of cities are closed – One of the horrible results of COVID is that we are losing some great venues. Restaurants, bars, music venues – are closed. As a result, the benefits of living downtown have been diminished.

But at Bukowski Law Firm, we love cities. And multifamily communities. And we do not want to count them out just yet. We still hope and believe that revitalized, dense cities are good for the country.

While the narrative has taken hold that people are going to flee the cities, the data may not supported that yet. (But see – New York) Now, obviously, it could be too early to notice a big change. But so far, cities appear to be holding strong. And again, that makes sense. All of the benefits that make city living great will still be there when COVID is gone – or at least contained.

  • Short commutes
  • Close and diverse entertainment and dining options
  • Walkability
  • Positive environmental effect

So while cities may not be the favored place to live during the current pandemic, we will eventually solve the COVID puzzle. We hope. And then all the reasons you wanted to live in cities previously will be back.

As a result, the multifamily market seems well positioned for the future. Indeed, some have opined that as single family markets continue to increase during COVID, apartment living can be a more affordable option for many people. So while there has been some slowdown in the multifamily market – it has held up stronger than other asset classes. And we have not seen much, if any, widening of cap rates.

So keep building those multifamily communities and promoting density. America needs you.

*I hope there are some seasoned citizens that read this blog. Because that is a 55 year old reference.

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Austin Residential Housing Market is Soaring

Austin Residential Housing Market is Soaring

This week, Erin Edgemon wrote in the Austin Business Journal that Tesla executives were already starting to hunt for homes here. In the article, a local real estate agent explained how the Tesla executives had to learn that there is not much haggling to do currently in the Austin market. Why? Because it is so incredibly hot. Houses are routinely going for above asking price. Its not unusual to see a house get 10 or 12 offers within two weeks of being listed. Why is this happening? Why is the market so hot?

A couple of theories may help to explain that:

1. Lack of Supply

2. COVID-19

3. People and businesses keep moving here

Lack of Supply

I am sure all of you already know this as you are loyal listeners, but each Tuesday I co-host the Real Estate Zone on KLBJ with John McClellan at Supreme Lending and Kevin Bown of Twelve Rivers Realty. Every week Kevin tracks the stats in Central Texas – the number of houses listed on the market versus the number of houses under contract. For weeks now we have been discussing how historically low the listing numbers are out there. People are just not putting their houses up for sale in Austin. Kevin has been in residential real estate in this area for over 20 years and he has never seen numbers like this. The obvious follow up question – why aren’t people listing their house? That brings us to our second point.


It appears that COVID-19 has had a big effect on whether people want to move. Moving is always a big endeavor, of course. Its quite possible that people do not want to put up with the hassle of it during a pandemic. There is enough uncertainty as it is – adding a move on top of that may complicate things.

COVID may also be changing where and how people live. As we are working from home more often, your commute may not be as important. And if you are in a home with a nice home office – perhaps you do not want to move and give that office space up.

Finally, where are you going to go? This is a difficult question for Central Texans right now in the market. If you sell your house, you have to move some place. With fewer listings out there, its harder to move somewhere. Which makes you less likely to want to leave your house. Which compounds the problem, and it begins to snowball.

People Keep Moving to Austin

Despite the fact that housing is in short supply, its still a great place to live. And we have a great workforce. As a result, people and companies keep relocating here. Which is great for Austin – more jobs, more people, and a more robust economy.

But that increased demand contributes to rising prices. It’s a first year economics problem – we have increasing demand and dwindling supply. As a result, the Central Texas residential housing market is on fire.

So how long will this continue? What is the future of the Austin residential market? As with so many things right now, that’s a bit of an unknown. We do not know what long term changes will come with COVID. What we do know now is that the Austin residential market is overheated – and that has resulted in rapidly rising prices.

One final question as we move forward – how will this also affect the multifamily industry? Maybe that’s a question we can discuss next week.

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Attorney General Says Local Eviction Ordinances are Unlawful

Attorney General Says Local Eviction Ordinances are Unlawful

As most commercial property owners in Texas know, many municipalities throughout the State have placed a moratorium on evictions during the COVID-19 pandemic. In response to rising unemployment, Texas cities began passing these orders shortly after COVID-19 began to spread throughout the State. While some cities have begun to relax those moratoriums, there are plenty still around. Each city is slightly different. With Austin’s being the strictest that we have seen.

Texas City Eviction Ordinance
Dallas Link
Houston No current order
Austin Link
San Antonio Link

Last Friday, Attorney General Ken Paxton released a memo addressing the local orders. In his opinion, AG Paxton explained that eviction (forcible entry and detainer) is a procedure that is specifically enumerated in Texas statutes. And, as a result, the local municipalities did not have the authority to suspend evictions.

According to Paxton’s analysis, the local officials do have some additional powers when an emergency is declared. During an emergency, a local official serves as the governor’s designated agent. As a result, he or she may exercise the powers granted to the governor under Texas law on an appropriate scale.

Paxton states that this does not give local officials the power to change state law. “While local officials do possess certain emergency powers, efforts to amend the statutorily prescribed, statewide eviction procedures far exceed the requirement that those powers be exercised ‘on an appropriate local scale.’”

Its unclear what will happen now. It seems the most likely scenario would be that a landlord files an eviction following the State guidelines – including using a three day notice to vacate. And then it would seek an eviction in the Justice of the Peace Court. If this were in Austin, for example, the landlord would not issue the required 60 day notice of proposed eviction. At that point, the City or tenant would likely challenge the landlord’s action as violating the City order. And the JP Court would determine if it agrees with AG Paxton – that the City exceeded the scope of its power in enacting the order.

The landlord, of course, would have the benefit of Paxton’s opinion. But while Paxton’s opinion is certainly influential, it is not controlling. So the court will have to determine if it agrees with Paxton that the cities have far exceeded the requirement that those powers be exercised ‘on an appropriate local scale.’

We will keep you updated as more developments arise.

For more information on the eviction rules in different cities or how this applies to your property, please call us at 512-614-0335.

Thank you.

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How to Fight Skyrocketing Appraisal Values of Commercial Properties in Texas

How to Fight Skyrocketing Appraisal Values of Commercial Properties in Texas

Increased demand in a given neighborhood is the key factor in rising appraisal values. When a building sells for a certain price, that price will be used as a comparative value when an appraiser is evaluating a similar building nearby. The higher a neighborhood’s commercial properties are selling for, the higher the appraisal values on other buildings in the neighborhood will be.

When you need to consult with a commercial real estate attorney in Austin, TX, the Bukowski Law Firm, P.C. is here for you. If you feel that you are dealing with an unfair or inaccurate appraisal value, you do have the ability to contest it.

For buyers, however, this can be a more troubling issue. Especially if the building in question requires repairs or modifications, the appraisal value may not accurately reflect what a fair price for that property should be.

Alternatively, an owner may feel that a given appraisal undervalues a commercial property. Either way, an experienced commercial real estate lawyer can help. In Texas, you have the right to protest a value before the Appraisal Review Board (ARB). If you believe their determination is still inaccurate, your commercial property attorney can appeal the matter before the district court.

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