July 2009

Texas leads the nation in homebuilding

07:35 AM CDT on Tuesday, July 28, 2009
By STEVE BROWN / The Dallas Morning News
stevebrown@dallasnews.com

Texas cities continue to lead the nation in homebuilding, even in the face of huge construction cutbacks.

Houston and Dallas-Fort Worth are the top markets in the country for building permits for single-family homes, based on numbers for the 12-month period ending in May.

And Texas had more homebuilding permits than California and Florida combined, according to data provided by California-based John Burns Real Estate Consulting.

Austin and San Antonio also rank among the country’s 10 busiest homebuilding markets.

“Texas didn’t see the downturn in the housing market the other states did,” said Lesley Deutch, a vice president at John Burns.

“Florida and California have really pulled off their permit totals, but Texas is still high up there.”

During the 12 months ending in May, almost 64,000 single-family homebuilding permits were recorded in Texas.

Houston had almost 22,000 permits, and more than 15,000 were recorded in the Dallas-Fort Worth area.

“It’s not surprising that we lead the country – both because every place is really hurting and we’ve held up relatively well,” said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M University.

“We do have to be careful that we don’t build just for the heck of it.

“Most of the builders I’ve talked to say they are doing mostly contract work with just a few speculative homes here and there and only by those with capital resources to be able to finance it.”

Gaines is forecasting a 25 percent drop in homebuilding permits in Texas this year, “the lowest level we’ve had since 1992.”

“Builders have to build somewhere, and Texas is about the only game in the country,” he said.

“We still have a growing population – although not as much – and our home prices and markets have held up pretty well.”

At midyear, home starts in the Dallas-Fort Worth area were down about 70 percent from mid-2006 levels.

“The industry understands that Texas has performed much better than the rest of the country throughout the downturn,” said Ted Wilson, a housing analyst with Dallas-based Residential Strategies Inc.

“But to say that there hasn’t been pain here is a misstatement.

“Yes, the market has been better here, but you aren’t going to find many builders crowing about local market demand.”

Top homebuilding markets
Based on single-family home building permits for the 12 months ending in May:
1. Houston 21,921
2. Dallas-Fort Worth 15,115
3. Phoenix 9,293
4. Washington, D.C. 7,498
5. Atlanta 7,100
6. Austin 6,411
7. San Antonio 5,271
8. Riverside-San Bernardino, Calif. 4,888
9. Charlotte, N.C. 4,810
10. Raleigh-Cary, N.C. 4,678
Top states:
Texas 63,993
California 25,766
Florida 24,027
North Carolina 20,292
Georgia 13,573
SOURCE: John Burns Real Estate Consulting

By the numbers

Ever wondered just how big Texas is? These statistics will give you an idea.

1. 23,507,783 people (2006 census estimate) reside in Texas. For more demographic data about the Lone Star State, visit the official site of the Census Bureau.
2. 262,017 square miles of land; equal to 7.4% of the total area of the United States, and second only to Alaska for size
3. 4,790 square miles of inland water
4. 367 miles of coastline
5. 801 miles is the longest point from north to south within Texas
6. 733 miles is the state’s widest point from east to west
7. 8,749 feet – Guadalupe Peak, the highest elevation
8. 305,951 miles of roadways, more than any other state

Shorten Your Mortgage

A 15-year fixed-rate mortgage lasts half as long as a 30-year fixed-rate loan. You don’t have to work in the lending industry to know that. But if you guessed that monthly payments on a 15-year loan cost twice as much as on a 30-year loan, you’re in for a surprise.

First off, you can typically get a slightly better interest rate on a 15-year loan. Also, you pay much less interest over the life of the loan and start paying down the principal on your loan balance much sooner. That means you build equity in your home sooner as well. Fore example, with a $150,000 30-year loan at 6.25%, your monthly loan payment would be $924. Your monthly payment on a 15-year loan at 6% would be $1,266. You would pay more than $100,000 more over the life of the loans if you went with the 30-year fixed instead of the 15-year. In fact, after 15 years, you would still owe more than $100,000 on the 30-year loan.

Does that mean you should always go for the shorter term? No. The choice you make will depend on several factors. Can you afford the higher payments? If you have to forego investing in your retirement or can’t afford the lifestyle you want, the 15-year loan does not make sense. Also, if making the higher payments leaves you no cushion for emergencies and large expenses, you are likely better off with a 30-year loan. The amount of time you plan to stay in the home and other factors can factor in your decision as well.

Of course, there are other loans out there besides fixed-rate offerings, and your Texas REALTOR® can help you sort through various loan options and discuss which ones will work best for you.

Texas Association of Realtors®

Don’t Forget the Trees

When you’re buying a home, it’s common to consider the kitchen, bathroom, living space, and other indoor amenities, but don’t forget the outside, especially the trees.

Trees are a bigger part of real estate than you may think. For one thing, you may find that you prefer older neighborhoods, and established trees are a big part of the appeal of these areas.

Trees also affect property values: well-cared-for, mature trees add value, whereas poorly maintained trees can be a significant detraction. According to the International Society of Arboriculture, a tree’s value is based on four factors: tree size, tree type, tree condition, and overall tree location based on its functional and aesthetic purposes.

Residential lots with good trees are a wise investment because landscaped homes are more valuable than non-landscaped homes.

It’s not just about how the house looks, either. Rising energy costs are a concern these days—you can use trees to save on energy. Well-placed, established shade trees are a good way to keep the sun away from your home and lessen your cooling needs during our long Texas summers. It’s difficult to quantify the savings due to many variables, but savings can approach or surpass 10% of a summer electric bill.

Trees don’t just provide relief in the summertime, either. Consider a species like cedar for use as a windbreak from the cold northern air that blows during winter. You may find that you can enjoy similar savings from keeping that wind off your home during the heating season.

There are benefits to large trees, but there are maintenance issues and cost to consider, as well. What’s the tree’s life cycle? Is it healthy and in a smart place? Will the tree need trimming? Also, remember that trees spread out underground as much as they do above ground, so consider the proximity of the tree to the home’s foundation and underground plumbing.

Additionally, pruning or removing trees, especially large ones, can be dangerous work. Work of this nature should be done only by those trained and equipped to work safely in this environment.

Even when weighed against the cost of purchase and maintenance, trees are an important consideration in a real estate transaction. Strategically placed trees can improve energy efficiency in both the summer and winter, make your home more desirable, and have a positive environmental impact.

Texas Association of Realtors®

New Rules Give Buyers More Protection at Closing

By Kenneth R. Harney, Texas Association of Mortgage Brokers
Saturday, July 18, 2009

If you’re applying for a loan to purchase a primary or secondary home, or planning to refinance, you should be aware of a little-publicized new set of federal consumer-protection rules that takes effect July 30.

Among other key changes, the new Federal Reserve guidelines require lenders to give you initial disclosures of your mortgage costs within three business days of your loan application. If you don’t get them, you can pull the plug..

The rule also prohibits lenders from collecting any fees, except a reasonable charge for checking your credit, until you have been given the loan-cost disclosures. This means no more out-of-pocket, upfront application charges until you have received the truth-in-lending disclosures and an annual percentage rate (APR) calculation of those loan costs.

Since many mortgage brokers and lenders traditionally have collected fees covering appraisal, credit and various other charges at the time of application — sometimes amounting to hundreds of dollars — this will be a significant change in procedure for the lending industry.

The rule also prohibits quickie closings on loans by requiring a seven-day waiting period after applicants are handed their early disclosures or the disclosures are mailed. You will now have up to a week to think about the transaction and decide whether it’s right for you. Final truth-in-lending disclosures are due three business days before closing.

Here’s an even more sweeping change for applications on or after July 30: The new Fed rules require lenders to deliver a copy of the real estate appraisal to you three business days before the scheduled closing on the loan.

In the past, even though federal regulations guaranteed that consumers could request and obtain a copy of the appraisal, lenders and home buyers frequently ignored that right. In fact, many consumers had no knowledge of this right because no one in the home purchase, financing or settlement process told them about it.

Now, the timing of the loan closing itself — which is the financial ballgame for loan officers, real estate agents, and title and escrow officials — will be dependent upon your receipt of the appraisal in advance. The exception will be that the three-day rule can be waived if you don’t think receiving the appraisal is necessary.

Another significant change under the new rules: If the APR on the early truth-in-lending disclosure increases by more than one-eighth of a percentage point (0.125), the lender will be required to “redisclose” — provide you a corrected version and allow you an additional seven business days to consider the transaction before settlement.

What might cause the APR to increase following the initial, early disclosure? Lots of things. If you allowed your initial rate on the loan to float with the market but rates increased, you would need to get an amended truth-in-lending disclosure. Or if the lender got inaccurate estimates of costs from a third-party participant in the transaction such as the settlement or escrow company. Or if unexpected, 11th-hour junk fees materialize.

All of these events, which have been frequent sources of consumer complaints this decade, could force the lender to redisclose loan costs and set back timing for the settlement.

What are some of the likely repercussions of the Fed’s new mandates? First, the traditional approach of aiming in advance for a date-certain settlement target for home loan transactions almost certainly will be affected. Actual closing dates will be more closely tied to lenders’ and settlement agents’ accurate estimates and their ability to deliver disclosures and appraisals by the required dates. For example, if appraisers are backlogged and can’t produce valuation reports quickly enough, settlements will have to be postponed.

Second, the purposes of the rules are to afford consumers better access to and more time to consider key elements of what, for most people, are major financial transactions. There might be fewer instances of last-minute closing-date surprises on fees, where buyers are slammed with hundreds of dollars of charges they never expected. But nobody can say that for sure.

Finally, the rules may well trigger new waves of litigation if lenders and their business partners are not scrupulous in their compliance. There is an aggressive segment of the legal profession that specializes in going after banks and mortgage companies for truth-in-lending violations. Don’t be surprised if you hear of lawsuits seeking cancellation of mortgage deals because timing deadlines were not met or appraisals were not received.

As David Berenbaum, executive vice president of the National Community Reinvestment Coalition, put it in an e-mail comment: “Consumer advocates will closely monitor” compliance with the new Fed regulations, and the lending industry can expect “civil litigation against bad actors.”

The Truth About Today’s Market

“For most folks, no news is good news; for the press, good news is not news.” – Gloria Borger

You hear the bad news everywhere you turn. It’s on the television, the Internet, the radio and in print headlines. What you don’t hear is the good news about the real estate market.

Bad news sells newspapers and gets high television ratings; therefore, the media has no reason to report the upside of today’s real estate market to the average American. This is where I come in. For example, did you know that approximately 30 percent of homeowners own their home free and clear?

The current market also affords some great opportunities for those looking to purchase a home. First-time homeowners, move-up buyers and investors can all benefit from low home prices, large selection and historically low interest rates.

In addition, the government recently approved a First Time Buyer Tax Credit, up to $8,000, that does not require repayment if the borrower resides in and maintains ownership of the property for at least three years. Regulations do apply and can be reviewed at www.federalhousingtaxcredit.com, or just give me a call and I will be happy to discuss it with you.

Call me to hear more about the good news in today’s housing market. I can’t wait to share it with you.

Michael Tanner Landscape Designs

Check out this landscape designer.  Michael is working on my back yard right now. 

Michael Tanner Landscape Designs

Report predicts minimal risk for home price declines in DFW

7/8/2009

There’s a “minimal” chance that DFW home prices will be lower in two years than they are today, according to the latest study by mortgage insurance firm PMI Group.

Dallas and Fort Worth rank among the U.S. cities that are the least likely to see a drop in home prices in PMI Group’s first-quarter risk report.

Dallas’ housing market has only a 3.8 percent risk of lower home prices two years from now. In Fort Worth, the likelihood is 5.8 percent.

That compares with a 65.5 percent risk of overall lower home prices in the 50 largest U.S. cities.

The risk of falling home prices rose in the first quarter in 45 of the country’s 50 largest metropolitan areas, including Dallas and Fort Worth.

Dallas’ home price risk is up from 2.5 percent a year earlier. The Fort Worth risk index moved up from 2.5 percent a year earlier.

[Dallas Morning News]

Debunking the Myths

Are you aware that a lot of what you know about buying your first home might be wrong? According to a national housing survey conducted by Fannie Mae, there are widespread misconceptions and gaps in consumers’ knowledge of the home-buying process. Here are a few examples:

Forty-four percent of all Texas adults believe they need a 20% downpayment to get into a house. That couldn’t be more wrong. There are programs out there that will allow you to put $500, even $0, down on your first home.
Nearly 40% of Texans believe they need at least five years on the job to qualify for a mortgage. Wrong again! There are many lenders out there willing to qualify consumers with less than two years of employment.

More than 30% of all adults believe they need a perfect credit rating to get into a home. This is also a myth. Lenders today look at more than just your credit score. There are non-traditional methods of analyzing consumers’ credit, and some lenders will even compile a credit profile, varying weight of credit accounts by importance.

The fact is that myths abound in the real estate industry, particularly for consumers who have yet to get their feet wet. Talk to your Texas REALTOR® about what you can do to get into your first home today.

The Texas Association of REALTORS®

Get Legal

As a new Texas resident, you have 30 days to register your vehicle and get your Texas driver’s license. Before you register your vehicle, though, it must pass the state inspection process. In order, here are the three steps to follow:

1. Take your vehicle to a state inspection station. You can find a list of what types of inspections are required in your county and an inspections-station locator at the Department of Public Safety Web site. When you go, make sure you take your current driver’s license and proof of insurance. If your insurance policy wasn’t issued in Texas, you may need to show proof that you carry the minimum coverage required by the state: $20,000 bodily injury or death to one person; $40,000 bodily injury or death to two or more persons; and $15,000 injury or destruction to other property.

2. When your vehicle passes inspection, the inspection station will give you a verification form to bring to the county tax assessor-collector’s office. This is where you obtain a Texas vehicle registration sticker and license plates. You’ll need proof of ownership, such as registration or title from your previous home state, as well as proof of insurance. Again, you may need to show that you carry minimum coverage amounts.

3. Apply for a Texas driver’s license at the Texas Department of Public Safety (DPS) office in your area. Bring an ID, proof of Social Security number, proof of liability insurance, and proof of Texas vehicle registration. Expect to provide a thumbprint and surrender any valid out-of-state license you currently have.

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