Separating Distressed from Non-Distressed Properties, Home Prices Not So Slumpy: Dallas Real Estate News

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Here’s part two of my KXAS gig over on Nonstop Nightly. The summer has not been kind to Dallas real estate prices, and now we have a guy in Flower Mound who thinks he can snag a home for a filing fee: welcome to the crazy world of real estate, the pot further stirred up by last week’s Debbie Downer Case Shiller report. One of the most important things I want to stress is that our market suffers from bad vibes when Case Shiller lumps all these reports together. Or, for that matter, Steve Brown: “Dallas prices down 4.7%.” Something you have to understand about Case Shiller: it mixes the foreclosure inventory in with it’s data and excludes new construction. Personally, I don’t think it’s all that reliable. It’s like mixing wholesale and retail prices — distressed properties are a different ballgame, a different product. Blue chip real estate tends to hold value longer, and spring back first. Distressed properties are not blue chip real estate. I like a Santa Ana, CA based company called CoreLogic because they separate out the distressed data from non-distressed when they report sales and home values, and guess what — it makes a huge difference.

This is interesting: Corelogic says home prices across the U.S. decreased by 7.4 percent from one year ago. But if you take out distressed sales, prices declined by only 0.4 percent.

Look at Dallas-Plano-Irving: including distressed properties, home prices were down 0.64 percent in May 2011 (from May 2011) and down by 1.80% in April 2011 (from April 2010). But get rid of the distressed properties, voila! Prices increased by 5.84 percent in May 2011 and 3.30% in April 2011.

Did you hear what I said? Prices increased!

Now we cannot ignore distressed real estate, and the foreclosures will continue to drag down the market, particularly in the higher end markets. (Of note, San Francisco is also healing up nicely, mini tech bubble going, but I was told that 32% of the foreclosures around SF are elective!) And yes, there are foreclosures in the higher end markets. I just heard of one today that infuriates me because if the bank had been willing to work with the seller, they’d actually have made more money on the deal. But this data shows that good, blue chip real estate realistically priced continues to thrive and move.

Case in point: See this gorgeous home? I am not supposed to tell you this, but it closed Wednesday after being on the market for 68 days, just over two months. Dave Perry-Miller sold it to his own buyer, they will soon be moving out of their home on Armstrong Parkway, a very significant home, I may add, arguably one of the crown jewels of Highland Park. (Stay tuned for details.) Now this home had been on the market since November of 2009 for $5,595,000 — a gorgeous Jeff Gilbert home built in 2005 with absolutely everything done in total perfection. Dave got the listing in April, lowered the price to $3,995,000 and had three back-up contracts. And no, they did not get asking, but close to it.

So as you despair over today’s stock market report, let this be your positive thought for the day: the rich do still have money, and when the price is right, they are spending it.