(Above) Typical home in Pebble Beach (NOT Palmeiro’s)

The Texas Rangers are going to be world champs for the second year in a row, I feel it in my bones! But Rafael Palmeiro, the Rangers former slugger turned real estate developer, might be wishing he could get back into the game and out of real estate. Palmeiro is now asking creditors in his bankruptcy case (says the Fort Worth Star Telegram) to give him five years to sell the 200 acres of undeveloped land near Grapevine Mills mall he had planned for a mixed-used development called Gardens of Grapevine.

Palmeiro’s creditors are owed more than $40 million, and $10 million of that is owed to Palmeiro himself, the “skin” he apparently put into the deal which has Branch Banking & Trust listed as the largest creditor at $19 million. According to the Fort Worth Star Telegram,  Palmeiro negotiated loan extensions with three lenders last year, but in March, BB&T played hardball:

“BB&T “abruptly demanded $8 million cash to extend again,” and posted the property for foreclosure, pushing the development into bankruptcy, court filings said.”

Wow, that’s mean. Palmeiro and his wife, Mary Lynne, live in Colleyville. Stay tuned for the deets on that home. But they also own a home in in Pebble Beach, Calif., worth at least $10.5 million, they claim, which they say they will sell. (Hey, I know a great Realtor out there.) The Star-Telegram says they plan to make $2.5 million from the sale of the Pebble Beach property to make interest payments on notes until the Grapevine  property, which fronts Texas 121 and Farm Road 2499, sells, hence the request for five years until the market turns around.

I did some digging in Pebble Beach, where I spent a week this summer at Concours D’Elegance. My sources tell me the Palmeiro Pebble pad is about 6,700 square feet, a stunning 1920’s Mediterranean complete with a wine cellar, three car garage, pool and guest house. It was originally priced at more than $12 million, but they snagged it in 2008 for $8,500,000. It may well be worth $10.5 million, but how do they expect to sell it in this market — and California real estate is not exactly flying off the shelves — for more than they paid in 2008? That’s a real head-scratcher.

Of course, my sources there do tell me that while the summer in Pebble was slower than my golf game, things have picked up.

Palmeiro is working to obtain liquidity: Gardens of Grapevine is under contract to sell 17 acres to Lincoln Property Co. for $6.9 million in February. And Lincoln has an option for another 17 acres. With luck and any sort of market turn-around, he could sell 192 acres to net as much as $46.3 million.

And more good news: a recent appraisal put the land’s market value at $55.2 million, up $2 million from an appraisal done a year ago, court filings said, as reported in the Fort Worth Star Telegram. Very encouraging, indeed.

I love the way the Fort Worth Star Telegram started this story:

 “New-home sales in Dallas-Fort Worth continue to decline, according to the latest quarterly market report from Metrostudy, released Wednesday.”

Actually, I don’t love it. I think it stinks. Of course NEW home sales declined. Of course builders closed sales on only 3,505 new homes from April to June 2011, more than a quarter (26 percent) less than they closed second quarter of 2010. Remember this thing called the First-Time Homebuyer’s Credit?

Steve Brown didn’t do much better:

D-FW new-home market still losing ground from a year ago

Why do most reporters bury the good stuff, like the fact that home sales — I’m talking re-sales of existing homes — are up nearly 9 percent from the first quarter of 2011? And pending sales, said Metrostudy, were up 35% in May from a year ago.

I know why: because new home starts affect our economy more than re-sales.

Now if you want to compare everything to those days when the real estate world was on steroids, new home sales peaked about the third quarter of 2007.  A whopping 10,037 homes were sold. So anything done now in this recession is going to look extremely wimpy. And truth be told, DFW home starts are down a good 70% from that high. We are at a 15 year low in new home inventory, which is frankly amazing and I marvel at any home builder who is still standing. You can thank tighter lending practices and all the foreclosures the market is trying to absorb, but you can REALLY thank the recklessness of Wall Street. Builders cannot start homes without financing, and with higher down payment requirements, fewer builders can get into the game. Way fewer. 

But! The good news is that compared to first quarter 2011, home starts in the second quarter are up 18 percent, so says the folks at Metrostudy.

In fact, David Brown, director of the Dallas-Fort Worth office says it looks like first quarter 2011 may be the low point in home-building activity, you know, after those tax credits expired.

“We are beginning to see signs the housing market is slowly coming off the bottom after the drop-off in sales that began in May of last year.”

Inventory of finished new homes was 8,658, end of June 2011 which is down 25 percent from the end of June 2010, he said. But Brown says that if current job trends hold strong, if unemployment should fall, new home sales could pick up in 2012. The Catch-22 here is that building new homes creates jobs —    but you cannot build a home without financing. The estimated one-year local impact of building 100 single family homes in a typical metro area is an infusion of $21.1 million in local income, $2.2 million in taxes and government revenue, and 324 jobs. This according to the National Association of Home Builders. 

 

If you are going to buy investment property, you want a place where your home/land etc. is going to appreciate, right? And we all know the messages received across most of the country is fat chance, bubba. Sure, real estate in (drowning) Phoenix and Vegas is so cheap you can buy a home once listed at $1.5 million for $500,000. But here’s the thing: what are you going to do with it? Lease it, OK, to who? Where are the jobs, where are the people moving in to work and lease from you. I told a client the other day, if you want to invest in real estate, at least buy in Texas where we have decent job growth, universities, and a youthful age demographic.

Now comes word that Fort Worth, Texas grew 38.6 percent in the last decade, beating the bejesus out of every other Texas community. Even Houston, which is not too shabby, and San Antonio, where I have had zero problems leasing a rental property — multiple calls per day. Here are the stats from the Fort Worth Star Telegram of the largest counties in Texas: Tarrant county is third, behind Harris and Dallas. The way I see it, I want to buy investment property where people are moving and working, so I may be looking for some good buys in Fort Worth. Holler if you see any.