I am just so darn giddy with excitement, I had to go search and see if I really did tell you this, and I DID!!!, last November when Central Market was under construction at Preston Royal. I had heard from a reliable source that Trader Joe’s was going to plant its second or third Dallas store at the northwest corner of North Central Expressway and Walnut Hill Lane.

What fabu news for the neighborhoods! The famous West Coast foodie store that you have to drag me out of in Santa Fe or Cali will anchor a new development to be built on the vacant 42-acre property on that corner that is also to include an R.E.I.

Once upon a time, many moons ago, that corner was the Willow Creek apartments and shopping center, which were torn down starting in 2007, after a fire. Provident Realty planned to build a $300 million urban shopping and housing village on the tract. But the project stalled during the recession and bank credit crunch. Wells Fargo foreclosed on the tract in late 2009. I recall an auction where no one bought. Kroenke Holdings bought the land from Wells Fargo Bank in 2010 and formed a partnership with Provident Realty to continue development. Isn’t it nice that despite the bust, this project still came together?

Seems the stinkers at Provident Realty Advisors and Kroenke Holdings of Missouri have been covertly working with Trader Joe’s since last summer, planning a 14,000 square foot store as well as a variety of other developments on the corner, including several hundred units of multifamily residential at the same time. Keeping us in the dark, eh?

Trader Joe’s is opening its first two Texas stores on June 15 in Fort Worth and Houston; nine locations have been announced for Texas so far, including two more locations in Houston and one each in Austin and San Antonio.

According to Steve Brown, Trader Joe’s is “known for its value-priced store brands, kitschy interiors and zany marketing campaigns, Trader Joe’s has been in business since 1958. The company has more than 370 stores in 32 states.” Me, I like Two Buck Chuck, the ginger cookies and everything in the prepared food case.

The neighborhood is already AA Central: Houston-based Spec’s Wines, Spirits & Finer Foods has a 43,000-square-foot store (Good Lord!) near the southeast corner of Central and Walnut Hill, and is opening up another location at Preston-Royal where Blockbuster used to be. (Talk about the maturing of the community: it used to be a Toys R Us!) Then Total Wine & More, a Maryland wine and beer retailer, is opening a store in this quad. As my friend Wyman Elrod says:

“There will soon be large liquor and wine merchants on all four corners of this intersection. You should move to The Meadows or Glen Lakes and walk to get your wine! You probably can even have it delivered like Ozarka!”

Another coolio thing about this deal: the neighboring Homeowners Associations really worked with the developers on the site:

“As most of you know, the 42-acre property at the northwest corner of Walnut Hill and Central Expressway that was owned by Provident Realty Advisors was foreclosed on by Wells Fargo late last year. Because the Wells Fargo loan pre-dated the private deed restrictions (“PDR”) that The Meadows, Glen Lakes and Windsor Park had collectively negotiated with Provident, the PDR has been negated. However, the zoning that we negotiated remains in place (see www.themeadowsna.org for a copy of the approved zoning). Because of continued support from our City Council representative and the expectation that any future owner will likely seek changes to the existing zoning, we believe we will have reasonable influence in what ultimately transpires on the site. As a reminder, current zoning includes, among other things, a requirement that the western-most 385 feet (approximately 17 acres) be solely residential, with no more than 140 residences that must be townhomes (rather than condos, apartments, etc). Wells Fargo has recently opened up bidding for the site. The Joint Task Force (made up of representatives from The Meadows, Glen Lakes and Windsor Park) will continue to work with potential developers on behalf of our respective neighborhoods. The JTF is currently taking the approach that, rather than express upfront what our neighborhoods want on the site, we will wait and see what the future owner/developer has in mind.”

 

 

 

REI and Trader Joes, Too?

Why? Because these are the lucky ‘hoods that get the first Trader Joes in Dallas. I am so psyched. My dogs are so psyched. Teresa Gubbins and others report that Trader Joe’s has announced two new locations for stores, one in Dallas and one in Plano.

The Dallas store will open on Lower Greenville Avenue where the Arcadia Theater once stood. The Plano store will open in an old Kroger location at Preston and Park, in the same shopping center as outdoorsy store REI.

Speaking of REI, I have been meaning to tell you that one is also coming to the primo shopping center at Walnut Hill Lane and Central Expressway. I learned this at a holiday party and word was Trader Joes’ might still open a store there, too. But the guys in Preston Hollow are pretty psyched about having an REI so very close by!

As you may recall, those 42 acres are considered the best commercial dirt in town. They were owned by Wells Fargo bank from a foreclosure on Provident Realty Group in 2009. The neighbors have been quite concerned about and watching over that property. The property was purchased in October, 2010 by a partnership set up by Kroenke Holdings of Columbia, Mo. Kroenke Holdings, a private owner and developer of properties including shopping centers and apartments, is owned by billionaire sports team owner E. Stanley Kroenke who is married to Ann Walton. Maybe that means a WalMart is sure to pop up.

Looks like Stan and Ann are taking over the whole darn hood: Kroenke also just bought 80 acre MidTown Park, at Meadow and Central about a half mile north of the Walnut Hill/Central spot. It was  in a receivorship.

Last year, the neighbors expressed their concerns over any changes to the mixed-use zoning:

“As most of you know, the 42-acre property at the northwest corner of Walnut Hill and Central Expressway that was owned by Provident Realty Advisors was foreclosed on by Wells Fargo late last year. Because the Wells Fargo loan pre-dated the private deed restrictions (“PDR”) that The Meadows, Glen Lakes and Windsor Park had collectively negotiated with Provident, the PDR has been negated. However, the zoning that we negotiated remains in place (see www.themeadowsna.org for a copy of the approved zoning).  Because of continued support from our City Council representative and the expectation that any future owner will likely seek changes to the existing zoning, we believe we will have reasonable influence in what ultimately transpires on the site.  As a reminder, current zoning includes, among other things, a requirement that the western-most 385 feet (approximately 17 acres) be solely residential, with no more than 140 residences that must be townhomes (rather than condos, apartments, etc). Wells Fargo has recently opened up bidding for the site.

The Joint Task Force (made up of representatives from The Meadows, Glen Lakes and Windsor Park) will continue to work with potential developers on behalf of our respective neighborhoods. The JTF is currently taking the approach that, rather than express upfront what our neighborhoods want on the site, we will wait and see what the future owner/developer has in mind.”

I just got off line with one of my fave mortgage gurus, Ron Schulz, over at Reliance, asking him what effects this new liquidity deal might have on our local real estate market. I love what he said:

“It means they are trying to assure the world that there is money in the system.  If China and the US are working together it is serious.  Europe is a mess !”

One of the culprits in the current crunch has been the Fed’s getting tough on banks and tightening lending by imposing increased reserves. Ron says they are lowering reserve requirements. I am refinancing a property now that is with Wells Fargo. They clearly do not want me as a customer as the loan is due Jan. 1 and I hear from them about every day that I had better get my butt moving. All that government bail out cash must have gone straight to the marketing departments! Personally, I want to stay with a local bank where I can meet my loan officer and shake his hand. That, says Inwood Bank’s Robert Poe, is the future of mortgage banking. Inwood Bank has just opened a fabulous new mortgage division. I asked Robert if the liquidity injection has had any effects on mortgage rates and he said no, not thus far. The stock market likes the move, and when the market goes up, rates usually go up, but so far, no changes.

Texas, as Ron reminded me, remains a country unto itself, thank God. I’m just now getting to yesterday’s Case Shiller and at first glance, looks like Dallas did OK. On a seasonally adjusted basis — September is a slower month for sales generally —  five cities actually posted minute price increases. Those would be Dallas, Cleveland, New York, Portland, and Washington D.C. Eighteen of the 20 cities posted annual declines, and when you look at the whole national picture, it is still not so hot. Basically, home prices are at about first quarter 2003 levels. 

“Any chance for a sustained recovery will probably need a stronger economy,” says David Blitzer, Chairman of the Index Committee at S&P Indices.

This may be a great time to BUY a second home, but are banks, who make it hard enough to finance your primary residence, cooperating? The answer is yes, if you have good credit and a hefty down payment. But I have heard so many conflicting stories on the nuances of getting a second home loan, I decided to consult broker extraordinaire Marcus McCue of Guardian Mortgage. Is it true, for example, that the home has to be a certain distance away, and that some banks would rather eat a Listeria-laced cantaloupe than make a second home loan. Raw land? Impossible, Wells Fargo told me — too many underwater mortgages. So I needed to bring in the big gun, aka Marcus. He tells us the biggest challenge is defining just what a second home is. Here’s a secret: even Real Estate agents get confused and need the Loan Ranger:

It seems obvious what it means when you tell your REALTOR® or lender you’re buying a second home, right? If only that were true! Many surprised homebuyers have gotten part-way through the loan process and been denied before they discovered that their home cannot be categorized as a second home and cannot be financed as a second home due to the occupancy requirements for second homes.

1. The second home must be located a reasonable distance away from the borrower’s principal residence.

What is a “reasonable distance” can be up to interpretation. For example, if the property is a lake house or beach house, the property may be located less than an hour away from the borrower’s primary residence and still be acceptable to the underwriter as a second home. However, if you live in Dallas and are buying a second home in McKinney, the originator or their underwriter is likely to deny the loan as a second home and will require the loan to be processed and closed as an investment property.

2. It must be occupied by the borrower for some portion of the year

If the property is a second home, then this means the property will be occupied by the borrower for some portion of the year. This could be seasonal for those properties located in ski or beach areas, numerous times per month like weekend visits to a lake house, or periodically during the year like a home grandparents purchase near their grandchildren.

3. Financing is restricted to one-unit properties only

A duplex or other multi-unit property is categorized an investment property by conventional guidelines even if you live in it part of the year. The owner would be occupying only one of those units – with the other units leased to tenants – the financing on the entire property would be categorized as an investment.

4. The property must be suitable for year-round occupancy

A property that is only functional in one season like a hunting cabin with no heat will be denied.

5. The borrower must have exclusive control of the property (no timeshare or split ownership situations)

6. The property must not be a rental property or a timeshare arrangement

7. The property cannot be subject to any agreements that give a management firm control over the occupancy of the property.

Basically, see point #6. If you have an agreement where a management firm controls the occupancy, then the borrower does not have exclusive control of the property and the property is likely to be rented to tenants during the year.

Question: Does this mean you can never rent out your beach house?

The issue here is intent. The intent at the time of closing needs to be that the property will be owner-occupied and not rented. If the property is rented after closing or years later, but the borrower occupies the property themselves at some time of each year, then the loan is not fraudulent.

Question: What if you want to buy a house for your child to live in while in college?

In this scenario, the property is an investment property and not a second home. Your children are not you … so if they occupy it is not owner-occupied. There are very limited and specific scenarios where properties can be financed for family members as owner-occupied properties, but these are limited to disabled children and elderly parent situations.

If a parent is buying a property in a college town because their child is attending the college, then their intent needs to be that they will be occupying this property themselves when they visit the child in college: Not that the child will live as the occupant and they will have a room to stay in during visits.

Question: If you’ve determined that your home is not a second home, what are your financing options?

The options are primary residence, second home or investment property. If a property is not your primary residence and not a second home, then the only other option is investment property. Both primary residence and second home properties are in the “owner occupied” category. If the property is not owner occupied, then it is investment. Investment properties generally require more of a down payment and do not qualify for the same tax benefits as an owner-occupied home.

If you have additional questions about your particular mortgage financing situation, feel free to contact Marcus McCue at (214) 473-7944, marcusmccue@gmc-inc.com or find him on Facebook. Or email me and I’ll hook you up!