Hyatt Regency San Antonio

Clients expect agents to know everything about the process of buying and selling a home, but with the constant regulatory changes and market adjustments … well, it’s best to stay abreast of everything, right?

That’s where the fantastic seminars put on by the Real Estate Center at Texas A&M University come in. The center will host its 27th annual Ad Valorem Taxation seminar on Aug. 28 – 30 at the Hyatt Regency Hotel in San Antonio. What’s better than getting your continuing education credits out of the way right next to the Riverwalk? Yeah, I couldn’t think of anything, either.

If you want to save a few bucks, register before Aug. 7 for the earlybird fee of just $485. The regular registration fee is $515.

Housing Starts

(Photo: Dallas Morning News)

I am very cautiously optimistic about our market, y’all. I want to be just ridiculously, pie-in-the-sky buoyant about North Texas resilience that has us leading multi-family construction as well as seeing gains in new home starts.

According to Dallas Morning News reporter Steve Brown, North Texas is building multi-family developments faster than any other state in the nation, raising rents an average of 3 percent, as well as hitting an annual leasing record in June. From his July 3 story:

Analysts at Carrollton-based MPF Research credit the apartment sector’s recent gains to the area’s growing business environment.

“They clearly reflect the strength of the local economy,” MPF’s Jay Parsons said in a report released Tuesday. “Dallas-Fort Worth isn’t just adding a lot of jobs, it’s adding the types of jobs that draw the key demographic for the apartment market — educated young adults.”

Developers are certainly doing their part to meet the demand for new apartments.

At the end of June there were 24,697 apartments under construction in North Texas — just a hair below what was in the development pipeline at the last construction peak before the recession.

There’s the “R” word — recession, of course. So we’re building almost as many apartments as we did before the economy tanked. But what about new home starts? How do they compare to levels from North Texas’ real estate hey day? Steve breaks it down in his story today:

Metrostudy reports that D-FW homebuilders started almost 6,000 homes in the second quarter.

They sold 5,127 houses – a 25 percent increase from second quarter 2012. The quarterly D-FW new home sales were at the highest level since 2008.

“It is likely homebuilders will start 22,000 homes in 2013, which is at the high end of our forecast”, said [Metrostudy’s David] Brown.

But even with the big recent gains, home starts in 2013 will still be almost 60 percent below the peak of local building in 2006.

OK, that makes me feel a little better. We still have a ways to go as far as growing the market. Of course, if I wanted to temper my optimism with a healthy swig of facts with a chaser of statistics, there’s the Real Estate Center at Texas A&M University’s database to help out with that.

So, do you think we should remain only cautiously optimistic? Or is there a ceiling to our growth?

Nonfarm employment Dallas Metro

If you want to know why growth in Texas real estate markets is outpacing other states, look no further than our great state’s unemployment rate. Like a mushroom that sprouts overnight, Texas’s seasonally adjusted unemployment rate is 6.5 percent — an entire percentage point lower than the national average, according to the Real Estate Center at Texas A&M University.

Job growth, combined with a healthy financial sector that leads in high-paying jobs, means that more people will be able to afford a mortgage. That’s the conclusion you’re supposed to draw from the report compiled by economists Mark Dotzour and Ali Anari.

But while Dallas real estate is selling like hotcakes, I was surprised that the Dallas-Plano-Irving area only ranked sixth in job growth, with Midland and  Odessa in first and second place, Fort Worth-Arlington in third,  Austin-Round Rock-San Marcos in fourth, and Houston-Sugar Land-Baytown in fifth.

Bone up on the statistics in every market by reading the full report on the Real Estate Center’s website.

Home Equity Economy

Don’t get me wrong, I am thrilled to see Case-Schiller reporting double-digit annual growth across all composites in their latest report. The 10- and 20-city composites showed gains of 10.3 and 10.9 percent through the year ending in March 2013.

For the Dallas area Home Price Level Index, the year-over-year growth according to Case-Schiller’s indicies was a very healthy 7.94 (117.02 in 3/12 and 124.96 in 3/13). So yes, we’re experiencing growth, but why is our total economic recovery so slow?

Mark Dotzour, chief economis at the Real Estate Center at Texas A&M University, explains it this way:

We are witnessing a recovery in the housing market. Housing prices are increasing, and new residential construction is picking up. The increase in home prices has a positive effect on economic activity in two ways.

First, an increase in housing prices gives way to investment in new housing construction. Second, the “housing wealth effect” is magnified as an increase in residential prices causes some households to increase their expenditures on home improvement, consumption or both. But to do so, they must first get a loan from a financial institution. This is extremely difficult to achieve under current borrowing constraints and behavioral biases.

As discussed earlier, households have been deleveraging from high debt levels as they attempt to manage debt. Conditions are tight; banks are not willing to lend easily. Uncertainty about job retention and professional growth is another factor that lowers the probability households will increase their debt burden.

Dotzour goes on to add that homeowners with less-than-stellar credit are less likely to capitalize from the recovery of the housing market. It’s those homeowners who have pristine credit, high levels of equity, and very little debt who are able to make money from the process of selling their home.

So what amounts to a full economic recovery? Well, it’s bigger than the housing market, Dotzour says. Sure, a sharp decline in the housing market can tank the economy, but home prices and construction alone won’t revive it.

If household debt decreases and technological gains increase, then employment increases, and, therefore, household income rebounds, Dotzour adds. So while it’s good to be optimistic about the housing market, our economic recovery is still waiting in the wings.

 

Coming Soon signWell yes, it’s not even mid-April and it’s a mad house out there in the inner-loop real estate world. Sales of pre-owned single-family homes in March rose 22 percent from 2012. 7,483 properties sold. That’s the highest number of home sales since March, 2007.

And we all know what happened after 2007.

Hot discussion Wednesday over at the Oak Lawn MLS, I hear, on Hip Pocket sales. Agents are selling homes off of “Coming Soon” signs. Ever think you’d see the day? Property values are inching up, too. According to the all-knowing Real Estate Center at Texas A&M University, median single-family home sales prices were 8 percent higher last month than in March 2012. We may be feeling real estate rich again: in mid-2007, before the recession hit, median Dallas home sales prices were $168,000.

And of course, everyone is scratching their heads wondering, what the hell happened? As Michael Turner of Classic Urban Homes told me, come January, someone turned on a switch in the real estate market. Dr. James at the Real Estate Center calls it a “double-whammy” —

“Part of the increase is from demand growth, part is from the short inventory of available properties,” said Dr. James Gaines, Real Estate Center economist.

I will add this: low interest rates are helping a whole lot.

Home sales through the MLS are up 19 percent from first quarter of 2012. Folks, that’s almost one-fifth. At the same time, there are fewer homes on the market: total inventory of for-sale homes in North Texas at the end of March was down 22 percent from a year ago. There is about a 3 month inventory, when 6 months is normal.

But the number of homes on the market in the Dallas-Fort Worth area is at the lowest level in more than 20 years, according to the Real Estate Center.

Over at the Ebby Halliday Companies, all-time sales records for both the month of March and the First Quarter of 2013 have been set reaching an all-time high. Closed real estate transactions of more than $550 million in March alone reflect an increase of 47% over March 2012. That’s nearly TWICE the number of sales in 2013 over 2012.

Ebby says closed sales add up to more than $1.1 billion in the first quarter of 2013, an increase of 34% over the first quarter of 2012. There are 1400 Ebby agents, making the firm the largest independent real estate brokerage in North Texas.

You have to wonder: if the market is so strong, interest rates are low and home prices inching north, why aren’t more people listing their home?

Steve Brown posed this question to George DeCourcy, associate director of the real estate program at the University of Texas at Dallas. DeCourcy said it will take more than price increases to cause a big jump in homes on the market.

“Prices have come back, but not like a bull,” DeCourcy said Monday. “People feel there is no compelling reason they should move at these prices.

“I think you will have to see significant move-up from here before people decide to list their homes,” he said.

Also, many homeowners are stuck in rental contracts as they filled their homes to create an income flow a few years back. Some homeowners have refinanced at near record low mortgage rates, and it’s pretty cheap living. If prices escalate, it may not make sense to sell and buy another one, which will be more expensive, too. Then since there is a shortage of homes to buy anyhow, so where will they go?

One group may benefit from this: the downsizers selling large homes and buying less. But again, good luck finding product!

Then there are the Hip Pockets, those private transactions that never go into MLS. Experts are saying that as many as 30% of sales are hip-pocket deals, and I have also heard that’s about the number going at each of the four top brokerages. Talking to Ginger Nobles with Briggs-Freeman Sothebys the other day, she said she has never seen a market like this one.

“I have been in real estate for more than 30 years, and I have seen everything,” says Ginger. “But homes now are selling before you can get them into MLS!”

Agents are even instructing clients not to discuss potential listings they are “eyeing” publicly lest they be swooped up by another agent and buyer. It’s like, mum’s the word until that contract is signed and the ink is dry!

 

 

Coming Soon signWell yes, it’s not even mid-April and it’s a mad house out there in the inner-loop real estate world. Sales of pre-owned single-family homes in March rose 22 percent from 2012. 7,483 properties sold. That’s the highest number of home sales since March, 2007.

And we all know what happened after 2007.

Hot discussion Wednesday over at the Oak Lawn MLS, I hear, on Hip Pocket sales. Agents are selling homes off of “Coming Soon” signs. Ever think you’d see the day? Property values are inching up, too. According to the all-knowing Real Estate Center at Texas A&M University, median single-family home sales prices were 8 percent higher last month than in March 2012. We may be feeling real estate rich again: in mid-2007, before the recession hit, median Dallas home sales prices were $168,000.

And of course, everyone is scratching their heads wondering, what the hell happened? As Michael Turner of Classic Urban Homes told me, come January, someone turned on a switch in the real estate market. Dr. James at the Real Estate Center calls it a “double-whammy” —

“Part of the increase is from demand growth, part is from the short inventory of available properties,” said Dr. James Gaines, Real Estate Center economist.

I will add this: low interest rates are helping a whole lot.

Home sales through the MLS are up 19 percent from first quarter of 2012. Folks, that’s almost one-fifth. At the same time, there are fewer homes on the market: total inventory of for-sale homes in North Texas at the end of March was down 22 percent from a year ago. There is about a 3 month inventory, when 6 months is normal.

But the number of homes on the market in the Dallas-Fort Worth area is at the lowest level in more than 20 years, according to the Real Estate Center.

Over at the Ebby Halliday Companies, all-time sales records for both the month of March and the First Quarter of 2013 have been set reaching an all-time high. Closed real estate transactions of more than $550 million in March alone reflect an increase of 47% over March 2012. That’s nearly TWICE the number of sales in 2013 over 2012.

Ebby says closed sales add up to more than $1.1 billion in the first quarter of 2013, an increase of 34% over the first quarter of 2012. There are 1400 Ebby agents, making the firm the largest independent real estate brokerage in North Texas.

You have to wonder: if the market is so strong, interest rates are low and home prices inching north, why aren’t more people listing their home?

Steve Brown posed this question to George DeCourcy, associate director of the real estate program at the University of Texas at Dallas. DeCourcy said it will take more than price increases to cause a big jump in homes on the market.

“Prices have come back, but not like a bull,” DeCourcy said Monday. “People feel there is no compelling reason they should move at these prices.

“I think you will have to see significant move-up from here before people decide to list their homes,” he said.

Also, many homeowners are stuck in rental contracts as they filled their homes to create an income flow a few years back. Some homeowners have refinanced at near record low mortgage rates, and it’s pretty cheap living. If prices escalate, it may not make sense to sell and buy another one, which will be more expensive, too. Then since there is a shortage of homes to buy anyhow, so where will they go?

One group may benefit from this: the downsizers selling large homes and buying less. But again, good luck finding product!

Then there are the Hip Pockets, those private transactions that never go into MLS. Experts are saying that as many as 30% of sales are hip-pocket deals, and I have also heard that’s about the number going at each of the four top brokerages. Talking to Ginger Nobles with Briggs-Freeman Sothebys the other day, she said she has never seen a market like this one.

“I have been in real estate for more than 30 years, and I have seen everything,” says Ginger. “But homes now are selling before you can get them into MLS!”

Agents are even instructing clients not to discuss potential listings they are “eyeing” publicly lest they be swooped up by another agent and buyer. It’s like, mum’s the word until that contract is signed and the ink is dry!

 

 

Screen shot 2013-02-04 at 1.22.29 PM

 

Dallas, be grateful! We are rebounding! Things are looking up!

That is, according to the Jan. 31 Local Market Monitor report for the Dallas-Plano-Irving market. For me, this just re-affirms what Realtors and sellers are telling us: Well-staged homes that are priced right are flying off the market in record time. And we’re head-and-shoulders above the national market, too!

Home values for Dallas- Plano- Irving are forecast to increase by 2 percent over the next 12 months. Nationally, prices are forecast to increase by 1.2 percent. In the second and third year, prices are forecast to increase 5% and 7%, respectively.

To what do we owe this success? Well, it’s a mixed bag, but a lot of it has to do with job growth and economic recovery. There has been a 2.5 percent increase in overall job growth, with sectors such as finance experiencing a renaissance of sorts.

According to economist Mark Dotzour at the Real Estate Center at Texas A&M University, corporations are moving to more business-friendly climates and taking their jobs with them:

Let’s face it. Employers come to Texas and other southern locations because they feel that they can make a higher profit. Taxes are a major consideration. So is the cost of labor. Clearly businesses are moving away from areas with a high concentration of unionized labor.

Does this ring true for you? What do you think is the reason for our uptick in sales and existing home prices?

I am hearing it from agents and sellers, I am hearing it from appraisers and title companies: people are buying homes again (like these) in Dallas. Numbers are the proof: The Texas Association of Realtors said Tuesday that home sales in the state were up 12 percent in the first quarter from the same period in 2011. You know what happens when homes start selling: you get comps, and then prices creep up. Statewide, median home prices in the state were 3 percent higher than a year ago.

Texas Realtor chairman Joe Stewart told Steve Brown the year is shaping up to a very positive momentum:

“In 2012’s first-quarter results, we see a strong increase in sales volume and a meaningful increase in the median price,”

Texas has an average of a 6-month supply of homes on the market,  down from 7.6 months in first quarter 2011, and 6 is considered normal and balanced. The good news (for sellers) is that our home inventory has been decreasing for months. That’s not necessarily good news for buyers: home inventory was down 23 percent in the first quarter of 2012 from 2011. You know the reasons, but according to Dr. James Gaines, an economist at the Real Estate Center at Texas A&M University, some homeowners who don’t have to sell have chosen to wait for prices to improve before selling their homes. Or they leased them. There are also fewer distressed properties in Texas.

Now here’s what keeps me awake at night: people being able to afford mortgages or rents. Rents are rising and as one developer told me, the banks are tripping over themselves to lend money to anyone who wants to build an apartment complex. This leaves fewer affordable properties on the market. Realtor Tom Branch tells me he had MLS run numbers for properties under $200k in Collin County– there is only 3.1 months of inventory! Though I have to pack lunch and maybe even an overnight bag when I go up there, agent Brad Holden tells me there is no stopping Frisco. Since February/March of this year, there have been already around 48 contracts in Richwoods, and there are  8 to 10 lot holds. On top of that, Landon Homes has filled up their first set of available lots in the 64’s and 74’s and they have a combined total of 18 or 20 checks for when then next set of lots are released to write a contract! Landon started selling in the beginning and they have already had a $5,000 increase in prices across the board. On May 1st they plan to raise them another $5,000, another  $5,000 on May 21st. (Jesus that’s $15,000!) Brad speculates they need to slow the contracts down because they can’t get that many permits from the city. What a problem to have. Newcastle Homes has sold a couple and plans to build 6 specs in the $550,000 plus. Toll Brothers were last to release pricing and have sold two with two more lot holds, and KHOV had only eight lots in the first section. Only one of those is still available as of yesterday.

Why, I asked Brad, and I ask you, is everyone suddenly buying? The national economy still sucks. Is it the pending election? Brad says number one reason up north is pent up demand and the location/schools combo.

What do you think?