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PROPERTY writes
What's That Knocking
It won't last long ...
Good News Is Coming For DFW Homeowners!
Yes, it’s true. There are a lot of homes (45,000) on the market in the DFW market. The number of pre-owned sales in April was down 11% from a year-to-date from a year earlier, and down 15% for the first four months of 2008. Naturally, it would follow that home prices have receded, and in April they were down 3% from a year earlier. Although this isn’t good news for homeowners and the real estate market in particular, compared to the rest of the country, we are doing GREAT.
GOOD NEWS IS COMING FOR DFW HOMEOWNERS! Our market is firming up QUICKLY. Liquidity is increasing in the market place and loans with terrific interest rates are being made to people with good credit; and isn’t that a refreshing concept! Today, you actually must have good credit to get a loan! Currently, there is a less than 7 month supply of homes on the market in DFW. That still makes it a buyer’s market, but a “blood bath” it ain’t! Pity the Miami area where recently there was a 60 month supply of homes on the market! So if you are contemplating buying a home, CALL ME TODAY and let’s find you one! Knock, Knock, Knock … that’s opportunity at the door, and she won’t hang around very long at these prices!
 When Doctors Can't Get Loans
Something is out of wack ...
OK. Let’s admit it. The housing picture is not pretty. Because of the “sub-prime dust up” there are fewer buyers in the market because if one has weak credit you can’t get a loan. Gone are the days when anyone who could "fog a mirror" was approved. Heck, today I heard that even if you’re a doctor or a lawyer making huge amounts of $$$ with good credit and you want a JUMBO loan of $417K or more, that’s not a slam dunk either. It seems like lenders just want to limit their exposure. “Sorry Doc, we know you’ve got a boat load of money and good credit, but we just don’t want the exposure of selling you a $1M home. Why don’t you settle for something “less”, maybe something in the $300’s; we would feel more comfortable making you that kind of a loan!”
LENDERS JUST DON’T WANT ANY RISK! THEY’RE GUN SHY!
Taking a look at Dallas, we see that the number of homes sold are down because there are fewer buyers looking, the length of time it takes to sell a home is increased because there are fewer buyers and less demand, and fewer homes are on the market because people are cautious and don’t want to sell when they perceive that prices are down.
BUT WAIT. Prices in Dallas on the homes that have sold are UP. Friends and neighbors, Dallas is one of the BEST markets in the country. All this NATIONAL NEWS is making local folks NUTS. Turn off your television and stop listening to the pundits. It’s their job to depress you. That’s what they get paid to do!
Now is a fantastic time to buy. It is probably the best time in a generation to buy a home! All the data we are digesting and sifting through is in the past. Things are getting better and I’ll tell you why. We’re getting this lending mess figured out. Solutions ARE being put forth. We’re beginning to figure out where “all the bodies” are buried and get a “grip” on the situation. I’m not saying things will be great next month or in 6 months necessarily, but the situation is becoming more stable.
 The Firemen Of The Three Corners
There is never a dull moment at Station 56 ...
Dallas Fire Station #56 sits on the southeast Corner of Hillcrest and Belt Line Road and just east of the Fretz Park Library. I call the area immediately surrounding Fretz Park the "Three Corners" which referrs to the Prestonwood subdivisions east and west of Hillcrest, the Spring Creek Subdivision, and all of Northwood Hills. I focus the majority of my efforts as a successful Residential Realtors in the Three Corners. Blink when you pass Station 56 and you’ll miss seeing it. The station's non-descript exterior belies its importance. I had the opportunity to visit with 17 year department veteran, Captain Charley Lopez, recently about the station and the day to day life of being a fireman.
My visit left me with a feeling of deep gratitude for the job these public servants perform, day after day, protecting the lives and property of the good citizens of Dallas. Station 56 is an “engine” company which is different than a “truck” company. Their equipment consists of a fire engine and a chief’s car. Their job, according to Captain Lopez, is to “put the water on the fire” saving homes, businesses, and property from destruction. For this task they carry hoses, a few ladders, and a lot of H2O … approximately 500 gallons. A fire truck, on the other hand, is primarily involved in the saving and rescue of lives. A truck would carry lots of ladders, hooks and poles to pull down walls and tear through roofs, sledge hammers to break down doors, and maybe even an extreme rescue contraption called the “jaws of life”.
Some of the fireman at station 56 have been there for as many as 30 years. The rookies, and occasionally they have some, have 2 years of training including extensive paramedical instruction. The station is manned 24/7 by a crew of 18 to 24 firemen who work in a 6 man rotation. Firemen work a consistent 24 hour shift of one day on and two days off. And yes, they cook for themselves, each fireman contributing about $10/man/shift for food. As to who does the cooking, that depends. Some fireman love to cook and volunteer for the position. Others cook by rotation. In certain rare cases, some of the firemen are paid NOT to cook! Captain Lopez reports that as with the rest of the nation, they are eating in a more “health conscience” fashion these days.
We focused briefly on what the average citizen can do to make their homes in the 3 corners safer. Like so much in life, it appears that it’s the simple things that matter most. Suggestions for a safer home include changing the batteries in your smoke detector, keeping a well maintained fire extinguisher at “the ready’, and making sure that your family had a well rehearsed exit plan. The Captain pointed out that in these days of conspicuous consumption, many homes simply have too much “stuff”, much of which doesn’t get discarded in a timely fashion. Too much “stuff” in a fire means a hotter, more intense fire, and one that is harder to extinguish. Also, furniture, piles of books and magazines, assorted toys, etc make the physical act of escaping harder to accomplish. So if you are lookin’ for a reason to clean up the ‘ole homestead, Captain Lopez just gave you a good one!
Finally, a word about the fire pole at Station 56. There isn’t one! It turns out that the fire pole was in itself a dangerous enterprise that resulted in a lot of injuries, as firemen often landed on top of one another. Not exactly the “safety first” example firemen across the country have always tried to paint!
From Where I Sit
 Our real estate market close to home ...
(But first things first! Dixie and I had a wonderful time visiting our new Grandson in Hattiesburg, MS the first of March. Son David and wife Sarah, won a well deserved Caribbean cruise and we volunteered to babysit. Problem is, we're running out of Aadvantage Miles! While there we discovered LETHA's and the finest BBQ ribs this side of heaven! BTW, I think being a grandfather agrees with me!)
Back to real estate ...
The current real estate market in Dallas, relative to the rest of the country is in very good shape. According to Global Insight Research, Dallas is the #2 city in the country for undervalued real estate with our median price for a home being $130,500. This represent a price that is undervalued by 30%. To come up with its valuation estimates, Global Insight says it determines what prices should be in the area accounting for differences in population density, relative income levels, interest rates and historically observed market premiums or discounts.
What does all that mean? Simply stated it means that North Texas is one of the few large metropolitan areas that has not experienced dramatic home price appreciation over the last few years.
As an agent who doesn’t engage in mindless “Happy Talk” it is fair to point out that business has slowed dramatically. You can see in the column on the flip side of this newsletter in the column labeled "February 2008 Home Market Update, that the number of houses sold is down, and the number of Days on Market are up. But the BEST NEWS is that prices are remaining stable. And recently I have noticed an upswing in biz for three main reasons:
1. The market is laboring under pent up demand at this moment.
2. Buyers aren’t as reluctant today as the were 2 months ago to make a decision. They recognize that prices are lower and that they aren’t going into a free fall. They are beginning to strike while the “iron is hot”.
3. Buyers with good credit have decided that the “hysterically” low interest rates they are witnessing “ain’t a gonna last ferever.”
NOW is a great time to buy if you have the credit to qualify for a loan. Not everyone can, and certainly not everyone who got a loan in the past can get one today! However, although lenders are more cautious, they are still making loans.
NOW is a great time to buy a home if you are trading up, because the more expensive house you are planning on buying will appreciate more over the years than the less expensive one you’re living in now! Add to that the low, low rate you’ll pay for new money and the deal you make gets even better!
Closing The Barn Door
Home appraisal standards stiffened …
It looks like another case of perfect timing by the Federal Governmental Agencies,
Fannie Mae and Freddie Mac! Fannie Mae and Freddie Mac, the home mortgage
giants, said Monday that they would stop buying loans from lenders that do not
use independent home appraisers, as part of an agreement with theattorney
general of New York.
The shift, which will go into effect at the start of 2009, is expected to
force large lenders like Countrywide Financial to sell or spin off their
appraisal businesses. It will also create a new group to monitor the
appraisal business.
The deal is significant victory for the attorney general, Andrew M.
Cuomo, who has been investigating the mortgage industry for a year,
and last year sued an appraisal company owned by the First American
Corporation. Because Fannie Mae and Freddie Mac are buying most
home loans being made today, the terms they dictate to banks and
mortgage companies become de facto industry standards.
The deal is unusual in that it has the blessing of federal regulators
who supervise Fannie Mae and Freddie Mac. Mr. Cuomo and other
state officials have often squabbled with federal regulators over who
should police the mortgage business, and how. Negotiations over the
agreement have been taking place for several months and intensified
in recent weeks.
Mr. Cuomo, who was secretary of housing and urban development in
the Clinton administration, said the new rules were important to
restoring the confidence in the mortgage market. He has asserted that
pressure from lenders, brokers and real estate agents has
compromised the independence of appraisals, leading to overinflated
home prices and adding to the riskiness of loans.“The appraisal is the linchpin of the system,” he said. “But theappraisal was the most susceptible to pressure.”
Under the new rules, lenders who want to sell loans to Fannie Mae or
Freddie Mac will not be allowed to use in-house appraisers to do the
first evaluation on a home. They will also be forbidden from using
appraisals done by a subsidiary or an affiliated company. Mortgage
brokers and real estate agents involved will also be prevented from
picking an appraiser.
Fannie Mae and Freddie Mac will also put up $24 million to create
the Independent Valuation Protection Institute, a group that will
accept complaints from consumers and appraisers. The institute will
put the new rules into place and monitor their enforcement, reporting
to Mr. Cuomo’s office and the Office of Federal Housing Enterprise
Oversight, the regulator that monitors Fannie Mae and Freddie Mac.
 Where Have All The Buyers Gone
It’s time to get potential home-owners to go ahead and buy in this so-called “buyer's market” …
While today’s market plays to their advantage, buyers, who should be swooping in to make the most of reduced housing costs and favorable interest rates, are sitting by, waiting.
As a competent and informed real estate agent, I am encouraging my buyers and anyone with credit willing to listen to invest in home ownership now! When the market turns, today’s bargains will be yesterday’s missed opportunities.
While it is conceivable that home prices may drop further, it is likely that these decreased prices will be accompanied by increased financing costs due to rate increases by the Fed. This means that any money saved on paying less for a house in a few months time will be offset by your client having to pay off their mortgage at a higher interest rate making “playing the waiting game” a waste of time (and very little fun).
This rate increase isn’t just speculation. Just a couple of weeks ago, in early February, the fixed mortgage rate jumped a full half-percent, making it the fastest rate increase in 20 years.
The table below demonstrates how even as home prices may drop, monthly mortgage payments basically stay the same; due to increased interest rates:
Scenario 1
Today's Market
Home Price $218, 900
Interest Rates 6.04%
Monthly Payment $1,054
Scenario 2
Home Price: -5% $207,955
Interest Rates: +0.5%
6.54%
Monthly Payment $1,056
Scenario 3
Home Price: -10% $197,010
Interest Rates: +1.0% 7.04%
Monthly Payment $1,053
Warning Sub-Prime Loans
Ameriquest is full of hot air ...
It is indeed unfortunate that unsophisticated and trusting first time home buyers, often times with poor credit, have been placed in untenable loans by unscrupulous lenders. The most egregious offender and the nation's largest sub-prime lender, Ameriquest Mortgage Company, has agreed recently to pay $295 million in restitution to consumers and make sweeping reforms of practices that states allege amounted to predatory lending.
Recently I listened totally mesmerized to an NPR report about Ameriquest and their deceitful lending practices. It seems as if Ameriquest and its mortgage lenders knew no lie was too outrageous or promise too vague to tell in order to secure a loan. Borrowers who couldn't really afford the first month's mortgage at the time the loan docs were signed, quickly found themselves overwhelmed when their loans ballooned to unsustainable levels. Their next stop was usually bankruptcy and foreclosure.
Any loan officer at Ameriquest who didn't RUN from the company during training should have had their head examined. It seems that in some offices part of the training involved watching the film Boiler Room. Boiler Room was a forgettable film from 2000 in which to impress his father, a young man gets sucked into an unscrupulous stock brokerage firm. Eventually, he must sacrifice himself to bring down the company. The hero of this fictional brokerage company is the protagonist from yet another move featuring financial crooks, Gordon Gekko from Wall Street, who is famous for the line "Greed is good"!
Ameriquest's CEO Roland Arnall was recently appointed Ambassador to the Netherlands by the Bush Administration. Hmmm... Orchestrate a scheme by which 1000's of unsuspecting citizens lose their homes through foreclosure, become a billionaire in the process, give millions to politicians, and become a US Ambassador to the Netherlands. God Bless America!
Who Needs Them
The days of formal living rooms are over...
Formal living rooms are on the wane, as homeowners focus on expanding the informal spaces of their homes for work or play.
The formal living room has traditionally been at the front of a home, a showpiece to entertain visitors. But many buyers today are moving beyond "untouched" formal rooms and using the space as a game room, playroom, study, secondary bedroom and especially a large dining room. This gives homeowners a lovely place for entertaining and a perfect additional work area. Bachelors put a pool table at the front of the house and families use it as a toy storage space and play area.
In Dallas, many buyers turn living rooms into studies. In fact, more than half of participants in a 2007 survey by the National Association of Home Builders said the formal living room will vanish from the average home by 2015. The survey named the informal family room as the space most likely to increase in size.
Many buyers are turning the room into a study, a popular option offered by many national builders. That conversion costs between $900 and $1,500 – to enclose the room, add French doors and install a ceiling fan with an attractive light kit
Another reason living rooms are on the wane is because young buyers are also less likely to have living room furniture – or to buy it – especially if they are moving into a starter home from an apartment. Today's new home owners are also more comfortable inviting guests into kitchens and family rooms than in years past. They invite guests into the heart of their home, not into a "parlor room" where you greet guests.
The trend today is to informality and casual living and the demise of the formal living room is proof positive that those changes are under way!
 McMansions Revisited
Maybe they're not such a bad thing afterall ...
NIMBY stands for "Not in my backyard". It is the mantra many homeowners have chanted and still do in old and quaint neighborhoods of Dallas and other cities. That mantra, however, may be changing to SMM which stands for "Show me the money".
Character be damned! The bottom line is that quaint and old does not translate as well today as it did in the past. Life moves on and so do neighborhoods. Barring historic value, such as George Washington having changed his shorts in your bathroom, other realities are shaping neighborhoods. Consider the following ...
McMansions increase the tax base of a city, and lets face it ... taxes are what make the wheels go round.
McMansions attract families into the type of homes families in 2007 want to live. Three car garages, media rooms, huge closets and bigger kitchens are what people want. For growing families, small tudor cottages don't work!
McMansions and the tax revenue they provide make public schools better and more accountable to the families that build and occupy them. With the kind of money they're spending on taxes, they're gonna hold someone accountable!
McMansions make it easier to get an accurate assessment of the actual tax value of a property. As long you're not the one paying the higher taxes, this is a good thing for the city!
McMansions help retire folks wanting to cash in on having lived in a neighborhood for 30+ years make out on the sale of their home. As Dick Cheney would say, "Big Time".
Unfortunately Realtors supporting such changes and McMansion development are likely to be on the receiving end of some vicious hate mail and can expect some irate neighbors to visit and confront them at their open houses. Life ain't perfect.
The birth of "Awesome Dawson" ...
My son David and his lovely wife Sarah blessed us with a grandson on 9/9/07. Dawson Baum weighed in at 6.5 pounds and was 20 inches tall. Oh, did I mention that he is BEAUTIFUL! Being the sentimental fool that I am (NOT!) I quickly bonded with my new progeny. My grandfather name is going to be "Den" because "Pop" is already taken.
Dixie and I were impressed with the fact that son David went out and bought a camcorder and quickly established "Dawson Cam" so we could watch him kick his blanket off or spit out his "passie" 24/7. My wife commented that now she was certain she would never get anything done again. She's afraid she'll miss him doing something ... like sleeping which is all he does except for when he is eating or pooping!
I have researched my stock of advantage miles and plan to spend them all flying between Dallas and Gulfport, MS (an hour from Hattisburg). Driving in the car for 8 hours to Hattisburg is for the birds! After I have burned through my mileage, I will start a charitable foundation to raise money to continue my visits, I hope you will give generously!
Stone Exteriors Are All The Rage
Lueder's limestone leads the way ...
In North Texas, we've entered a new stone age, in which builders, architects and masons are using a host of natural and engineered materials to give an Old World look to new homes.
Whether it's Lueders limestone quarried in Texas or man-made blocks virtually indistinguishable from their natural counterparts, stone imparts an upscale aesthetic to almost any structure.
Of course, stone buildings are hardly a modern invention. "Just think about the Parthenon or Stonehenge, and you realize that natural stone is very long-lasting," says Melody Turner, sales and marketing coordinator of Custom Stone Supply in Dallas. "The natural stone you see on homes comes from all over the United States and from around the world, including Africa, China and Brazil."
As with any material used for residences, trends vary. A few years ago, superwhite Austin stone was all the rage. It's quarried in Texas; man-made Austin stone also exists in all manner of shapes and sizes, though a cobblestone look using varied sizes typically adorns exteriors.
Ms. Turner says that in the last couple of years, Austin stone's popularity has waned and the more colorful Lueders limestone is outpacing it.
"Lueders limestone comes in various colors like yellow, gold, gray and buff, and people either use one shade alone or they use a blend of all of the colors," she says. "It's a nice alternative to the washed-out look of the all white, yet it's not too dark." Drawbacks of natural stone are its weight and expense. As a result, a new generation of manufactured stone as pictured to the right and above has provided an appealing alternative. (thanks to the Dallas Morning News and Trae Williams)
Flip This House
It's your choice, you can tear it down or remodel ...
I came across this unique marketing proposition recently in far north Dallas at the intersection of Hillcrest and Briar Cove. With all the
" Re-modeler Wannabes" in circulation these days, I am certain this seller will get lots of inquiries!
Northwood Hills is a subdivision I work regularly and "tear downs" are becoming regular features. The lots in NWH are often .5A and the homes built in the mid to late 60's often lack the amenities that well-to-do people are looking for in today's market. Many of the homes have been remodeled to the "9's" and will carry on for decades. For those with the deepest pockets, however, a 1 story, 3500 sf home on a .5A lot can easily become a 6,000 two story on essentially the same "footprint" as the preceding home but with a pool and lots of room to spare.
Something like I just described can be had in Dallas for $1.2M to $1.5M easy. Housing is a bargain in Big D compared to the rest of the country. Come on down, the water's fine!
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