Treasury_Department_rear_view

The story broke in The New York Times today, and it only affects Manhattan and Miami real estate right now... but get ready. The Feds are tired of cash buyers who hide their identities in “shell ownership” of luxury real estate. I, for one, am happy as it is so hard to chase down ownership of a property when it is in an LLC. But this could be a real game changer in those markets, and I will bet you a bottle of Veuve San Francisco is next: The Times also reports that 48% of the buyers in the Bay area used shell companies, whereas only 37% did in Miami, where the new rules will be effective beginning this March through August.

Treasury is essentially running a field test to see if they can capture scofflaws or major money stashing, and they plan to use title companies and mortgage companies to do so.

Since 2000, 44% of real estate sales over $5 million in the United States were to shell companies or, as I prefer to call them, LLCs. That came from what must have been a laborious investigative report by The New York Times. And that report may have influenced the folks in D.C. to implement this legislation — (more…)

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Yes, folks are about to sound a lot like “Zoltar” as they polish their crystal ball and look into the future to see what 2016 holds. We’re no exception. (Photo via flickr)

It’s the end of December, so brace yourself for the onslaught of crystal ball-wielding, looking-forward-looking-back pieces from just about every blog and website out there.

Of course, CandysDirt.com is no exception. We looked at the latest reports, and it looks like the housing market in December has been slower than molasses in January, perpetuating the cooling we’ve been seeing since October.

And next year? Look forward to higher interest rates that could scare off some buyers, and existing home sales will slow as a result. Of course, everyone’s still optimistic on jobs, so at least we have that? Some think that this signals a stabilizing of the market in most areas that have returned to pre-economic downturn levels.

Jump for more:

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Paul Volcker

Get ready for the media freak out. Besides a re-hash of last night’s Republican debates — the most substantive thus far, in my opinion — everyone is talking about an expected interest rate hike today from the Fed. I had two media calls yesterday asking me if I thought a rise in interest rates might hurt or slow our blazing Dallas real estate market.

Nearly everyone believes the Fed is going to raise interest rates for the first time since June 2006. If so, the federal funds rate — which is the wholesale rate banks charge each other for overnight loans — will tick up a quarter percentage point from near zero.

Only one-quarter of a point. But experts say that may begin a chain reaction that leads to higher rates in 2016.

Jonathan Miller

My favorite New York-based Real Estate guru Jonathan Miller looks at why have rates been so low for so long — basically a cruddy economy and slow job growth? And he asks, is it really time to raise them?

Looking at the charts it seems like no, though it would be nice to have banks pay us some money for keeping our money in their banks. Right now, the rates banks pay savers are so insignificant, it almost makes no financial sense to have large sums in the bank. That’s one reason why real estate investment has been so strong.

Secondly, a quarter of a percent is nothing. I remember Paul Volker’s days of 18% interest rates. It was like paying an HOA fee on top of your mortgage. He was trying to wrestle inflation, which was feverish. Then, people were buying houses to make money on them. Today, they are buying houses (or investing in the stock market) because you cannot make money saving it in the bank.

Which makes me wonder if a more significant rate hike would cool the market a bit.

Also, I wonder if Millennials, who have no experience with higher interest rates, might be scared off by a significant rate increase. Remember, this is the generation that, like their grandparents, doesn’t like debt.

What do you think? Would an interest rate hike hurt your real estate search or your business if you are in the business?

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Yes, it’s that time of year again. CoreLogic has come in at the head of the pack for 2016 predictions, issuing its forecast and data brief today. And while we’ve heard a bit of “doom and gloom” from Steve Brown, CoreLogic’s report says that not only will we see more home sales and more demand, but rents will continue to tick upward as well. Read the full list of predictions after the jump.

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Texas Quarterly Housing Report Graphic DFWA

It may not be as frenetic as it was during the spring and summer, but 2015 is still posting some serious numbers.

According to the Texas Association of Realtors Quarterly Housing Report for the third quarter of 2015, home sales and prices throughout the state are on track to break records. Low inventory is mostly the reason why we’re still seeing some outstanding price growth in sought-after areas, and a healthy job market is continuing to bring in more and more homebuyers.

 

“At this current pace, 2015 could very well surpass 2007 as a record year for Texas home sales,” said Scott Kesner, chairman of the Texas Association of Realtors.

In the Dallas-Fort Worth-Arlington MSA, the median home price is $215,000, up 10.3 percent compared to third quarter 2014. Likewise, active listings are up 4.7 percent, and single-family home sales are up 8.9 percent.

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Dallas Breakdown for Diff Family Types

Breakdown of Monthly Income Required to Live as a Human in Dallas According to the Economic Policy Institute

By Jon Anderson
Columnist

Candy and I have been opinionating back and forth on low-income citizens and how their access to safe and affordable housing is a means to promote economic upwards mobility. After all, if the poor are less poor, they will live richer lives (by any definition) and contribute more to society.

Unlike the rich who sequester money in intangible investments or various savings schemes, when the poor have more money, they spend it – because they need to. This creates a cycle that reverberates throughout the larger economy. If the poor buy more, manufacturers must make more which means hiring more people which in turn creates more people with money to spend, and so on, and so on. It’s exactly like the recession when governments were screaming for money because tax revenues took such a hit. Once people were put back to work, tax revenues rose, and in some states like Texas, overflowed.

In fact, recessions in general would be rarer and less dramatic if companies were forced to keep workers on the payroll or if unemployment benefits paid close to salary levels. As it is, recessions create a domino effect where one company dumps workers and then its suppliers dump workers because they’re not getting orders – and on and on. Call it trickle-back economics.

Personally, I spent nearly three years unemployed during the telecom meltdown that sent 500,000 skilled workers out on the streets early in the millennium. Desperate, I was open to anything and willing to uproot my life and leave my partner for any job. In the end, I was required to move to another state which led to the dissolution of my relationship. And compared to many, I was lucky.

For part of that time, I collected unemployment benefits that paid me the maximum $1,600 per month, a tiny fraction of my former salary. (Let me tell you, swallowing my pride and taking unemployment was one of the hardest things I’ve done – even though I’d paid into it for years. It felt like a stigmatizing failure.) All that check did was slow the eventual evaporation of a three-year “emergency fund.” I tell you this because $1,600 per month is more than the minimum wage in America and it was crippling even with a free place to live and extensive savings. Before you groan, this column isn’t about the battle for living wages, it’s about documenting and understanding how much it takes to live as a human being in Dallas. (Spoiler alert: it’s not the current minimum wage.)

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employment growth

In Texas, it’s all about jobs, jobs, jobs.

A new report from the Real Estate Center at Texas A&M University says that the Texas economy gained 276,400 nonagricultural jobs from June 2014 to June 2015, an annual growth rate of 2.4 percent, compared with 2.1 percent for the United States. Many of the major metropolitan areas in the state saw much bigger gains, like North Texas.

The Dallas-Plano-Irving metro area ranked No. 2 in job creation in the state (Midland was No. 1), followed by Odessa, Beaumont-Port Arthur, Austin-Round Rock, and San Antonio-New Braunfels. Fort Worth-Arlington ranked No. 7, with 2.7 percent job growth.

“The North Texas economy is more dependent on the U.S. economy, so it’s not energy-based, compared to the Houston or Midland-Odessa economy, where energy has a bigger weight,” said Real Estate Center research economist Luis Torres. “Because the U.S. economy is growing and doing better, you’re seeing that reflected in the Dallas economy.”

In fact, every single Texas metro areas except Wichita Falls had more jobs in June 2015 than a year ago.

Big sectors for job growth were:

  1. Leisure and Hospitality: 5.05 percent growth
  2. Education and health services: 3.87 percent growth
  3. Professional and business services: 3.54 percent growth
  4. Transportation, warehousing and utilities: 3.52 percent growth
  5. Construction: 3.34 percent growth

“The correlation between the Dallas economy and the U.S. economy is very high, and the main reason is because Dallas is a transportation hub and all the goods and services that pass in the state use Dallas transportation systems,” said Real Estate Center research economist Ali Anari.

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Texas Condo Report Mid 2015 Graphic

Condo sales are still brisk compared to last year, but sales have decreased an average of one percent between January and May of 2015, says the Texas Association of Realtors‘ recent report. Using data from the Real Estate Center at Texas A&M University, The 2015 Texas Condominium Mid-Year Sales Report shows that condo and townhome sales are flat or slipping in the four largest markets.

With runaway demand, Austin still leads the price-per-square-foot category, while condo sales actually decreased 12 percent year-over-year in the state capital. Both Dallas and San Antonio posted modest gains of 3 and 6 percent, respectively. Houston condo sales dipped just 1 percent from the same time last year. Jump for more interesting stats.

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