The Beat Condos Ext

Modern and affordable, Buzz Lofts in the southern Dallas neighborhood of The Cedars are a popular choice for those who want loft living south of downtown Dallas.

Condos are hot and getting hotter, according to the Texas Condominium Mid-Year Sales Report from the Texas Association of Realtors. Statewide, condo sales rose an average of 10.5 percent year-over-year between the months of January and May of 2014. In San Antonio condo sales were up 18 percent, followed by Austin at 14 percent, Houston at 6 percent and Dallas at 4 percent.

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Kings Road Demolition(Photo: Dallas Morning News)

We published an unedited statement from Dallas Housing Authority President and CEO MaryAnn Russ on Friday, in which she said that DHA clients have just as much right as nearby residents to live in an upscale neighborhood, and that the property on Kings Road must be affordable housing because of federal laws.

OK, that makes sense, but the main gripe of community advocates isn’t having low-income housing, it’s how much of it is planned for the site. Before it was demolished last year, many nearby residents said that the Kings Quarters development, a 70-year-old 200-unit public housing project, was rife with drugs and crime. DHA plans include more than doubling the number of units and decreasing parking. It’s a recipe for disaster, says a former neighbor to the DHA development that was razed.

I think that this would seriously impact the surrounding projects.  Having lived there I know first-hand what this can do to a community and unfortunately the bad element that can come along with this.  I think making it more dense will hurt resales nearby and increase crime.  I have watched SWAT teams bust down doors on busts at apartments across the street from these homes, and even personally wound up on an episode of a crime show that profiled our landlady, who carried a shotgun with her when she walked the property and stopped a break in one night.  It was a rough area and I for one don’t miss it.

But Russ says in her letter that DHA has owned the property longer than anyone aggrieved by the new development, and that improvements to the area started long before Kings Quarters was vacated and demolished. “We believe that by very careful screening of applicants and strict property management, we can retain the positive aspects of this fine area,” Russ added.

But that’s the rub for folks who saw how Kings Quarters descended into squalor due to lack of maintenance and upkeep. Advocates say DHA wouldn’t allow them to help tidy the property by planting flowers or helping with peeling paint.

“I hope when it is rebuilt that they will take better care of it because they sure didn’t the last time,” said a neighbor who wished to remain anonymous. “I would like to see it more mixed with some units at market rates and some subsidized. I think then the community would have a better chance of being a good neighbor and would help keep out some of the bad element that can come with these projects. It’s been public housing for years and I know we need it but I’d hate to see them make it so dense and reduce the parking. I don’t think that’s the right recipe for a good neighbor.”

I have a hard time disagreeing with that perspective. What about you?

6224 Aberdeen $1.65 ish multiple offers sold in 6 days in February

 

6238 Aberdeen listed for $1.79ish in March

Recent convo with an agent who is seeing a problem in the market with new listings right now. Because the first quarter of 2012 was brisk, he thinks maybe prices are goosing up. Quarter One was brisk because buyers and sellers had become more reasonable, not because prices were up. When that excitement is “improperly communicated”, sellers start “overpricing” their homes, because of the perception that the market is busy, he says.

“I think it is seller driven,” he says. “The seller hears chatter in the marketplace that the market is stronger so the SELLER gets a little too optimistic. I have gone into listing presentations where I show all the sales for the last 12 months. Dollars are flat, but transactions are up – I suggest a list price of say $600,000. The SELLER will respond, “But I hear from other people that the market is sooo hot right now, let’s list at $675,000 and see what happens.”

What happens is that you go 60 days with no action, and end up selling for less, say $530,000 and eating up all that time.

I sat through listing presentations last week where the seller just did not want to hear the market value of his home. “But I’d like to get XX,” he said, ” that is my comfortable number.” Well, comfort or not, the truth is the market sets pricing, not your comfort levels, just as it does in the stock market. My comfort level with my AOL stock (please pass the Tums) is $20 or $25 a share, ain’t happening.

But I have to ask: isn’t this just how a bull market begins? I know Robert Shiller keeps beating us with that wet noodle of “home prices falling” and he has an excellent point. Nationally, home sales fell in January to a new cycle low but even Shiller says it is not as bad as he even thought it was. However, it ain’t Miller time. Far from it. We just don’t know what the future could bring. As he says: prices could go up, prices could go down. Don’t expose yourself to too much real estate.  Like most of the problems in our business world, the uncertainty out of Washington is killing us. I recently tried to refinance our home: it was a disaster.  I can hardly wait to share the story. I will soon be knocking on Richard Fisher’s door to get in on the “Break Up The Big Banks” movement. Federal regulators are stifling lending because, of course, of all the bad lending that took place and got us in this mess. So it’s corporate punishment: a few screwed up, so now we just say no to almost everybody. Fannie and Freddie are a mess and really the only source of home financing for anything under $417,000. Jumbo money is starting to loosen up and there is promise of more on the horizon. Then, as Steve Brown wrote last week (paywall) about home appraisals: even though the market is picking up, the appraisals are not keeping up because often appraisers use sales from three months ago that might be lower. So a buyer comes in, makes an offer, only to have the appraisal come in and blow the deal.

Appraisers, in turn, say don’t stone us, we are just doing our jobs, and if a house can’t be valued at the proposed purchase price, that’s just what the market is telling us. (Who cares about your comfort level.) Lenders for sure don’t want to provide mortgages if properties are overvalued. That was part of the reason for the home market bust. Expect more of this friction in the year ahead as the North Texas housing market recovers.

As home prices rise — and they already are in some neighborhoods, and in San Antonio, see example above — appraisals will trail behind. Like I’ve said, a home may be priced at the greatest price in the world but if you cannot get financing, it’s not selling. And you aren’t going to get financing if the appraisal come in low. Mortgage companies are sticking with tough underwriting standards when it comes to appraisals and standards. The appraisal process is much, much tougher with new requirements, giving the perception that appraisers are holding values in check. In reality, they are taking marching orders from the feds.

Then there are the Z sales… don’t get me started.

So what our writer is saying is take heed. We’ve got a great spring market ahead, we’ve got multiple offers and the big properties are finally starting to turn. But let’s not get “irrationally exuberant”. Price those properties right, else they may get stuck in the constipation of the appraisal/financing system.

 

 

 

 

 

 

 

 

Dallas hasn’t been a great high-rise condo town when compared to other cities. It seems like Dallas builds a lot of high-rises that come online the day before there’s a huge recession. Many old-timers connect high-rises with recessions as financially troubled properties hit the skids when storm clouds circle. Their touchpoint is the 1980s S&L scandal-driven recession that hit Texas unmercifully hard.

And while it’s true that high-rises took a bigger hit even in the latest recession, the difference was single-digit. And when the economy came back to life, so did high-rises – often with a vengeance. One Turtle Creek high-rise is trading at triple its recession low.  Even had I not renovated my lowly Athena condo, it would have still risen by 75 percent in the six years I owned it.

This is all to say that condos are pretty much as resilient as single-family. Which is good considering Dallas, like the rest of the planet, is becoming more urban. In 2015, the US Census reported that on average, 62.7 percent of US residents lived in cities with Texas reporting 65 to 75 percent urbanization. The Census further reports that 39 percent of Texans live in its top 20 cities – in a state with 41 cities over 100,000 residents. The United Nations’ World Urbanization Prospects say 82 percent of US residents live in urban areas. While there is a 20-point disparity here, likely driven by definitions of “urban,” it’s still a lot.

We all know Texas, and specifically Dallas, is growing rapidly – Texas is one of nine states that account for half of the US population. We also know that a lot of our new arrivals come from markets that are more high-rise markets – e.g. California and New York – and their money goes further in Texas.

What do high-rise buyers have to buy?  Not a lot…

If you total up all the high-rise condos (buildings above 12 stories) for sale at this minute in downtown, Uptown, Victory Park and Turtle Creek, there are 133 by my count.  There are an additional 11 under contract. For reference, The Warrington at 3831 Turtle Creek has 132 units in total. That’s right, the sum total of high-rise buyers’ options would all fit inside one building.

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…and you still happily shop here.

One of life’s joys is the “I told you so,” because it is so often precluded by a period of scorn and disbelief. Last week I had a bumper crop, but let’s talk about Amazon’s HQ2.

You remember that? The corporate welfare pageant where municipalities fell over themselves, checkbooks flailing in the breeze, trying to lure Amazon to places its corporate relocation team had already picked? Yeah, that.

The Metroplex was one of those entries, and we even made it past the first culling before being sent home roseless, our taxpayer checkbook tucked firmly between our legs. New York may have kicked them out, but Amazon continues to hire there, albeit fewer than the 25,000 expected from their half of HQ2. Amazon wanted a presence in New York regardless of the freebies.

On the other hand, Virginia, happy to accept the Amazon bouquet, has seen home prices surge by 17 percent while property owners hoping for more, have caused new listings to crater – one zip code near HQ2 saw an 85.3 percent decrease in new listings. This has essentially frozen the market and caused property tax bills to swell.  Everyone’s expecting that once hiring picks up with HQ2, the lid will be blown off valuations. The same thing is playing out in the rental market especially in areas with the lowest rents as REITs and investors move in.

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Dallas

Photo courtesy Wikimedia Commons

With a mayoral and city council election still rather close in the rearview mirror, a recent WalletHub study into the best and worst run cities in the country — and where Dallas falls on that list — highlights some of the issues that drove at least a few people to the polls twice.

The study, which was released earlier this month, sought to measure the effectiveness of local leadership by focusing on how efficiently a city was run.

“In other words, we can learn how well city officials manage and spend public funds by comparing the quality of services residents receive against the city’s total budget,” the report explained.

WalletHub compared 150 of the largest U.S. cities, constructing a “quality of services” score comprised of 37 benchmarks grouped into six service categories, which were then measured against the city’s per-capita budget.

Source: WalletHub

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purplebricksFlat-fee brokerage Purplebricks pulls out of the U.S. market, we have May housing numbers for Texas, and we find out what Dallas-Fort Worth town was named to a list of the 34 richest towns in the U.S. – all in this week’s roundup of real estate news.

Purplebricks Hits the Bricks, Leaves U.S. Market

Less than two years after entering the U.S. market via Los Angeles, U.K.-based Purplebricks announced it would leave the market.

The flat-fee brokerage struggled as of late in its expansion, reporting a full-year operating loss of 34.1 million pounds (or roughly $43 million), Inman reported. It had previously announced this Spring that it was shutting down in Australia as well. (more…)

Five of the top 25 cities for home value appreciation are in Texas, but where does Dallas fall? Where does the state fall when it comes to affordability? And how many Texans (and Dallasites) can afford the median home price?
We have all this in this week’s roundup of real estate news.

Texas Leads Pack in Home Value Appreciation — Where Is Dallas?

An analysis by Forbes revealed that of the top 25 cities in the country where home values are still rising, five are in Texas. (more…)