The Allmanac
What’s Real in Real Estate


Economists at the Dallas Federal Reserve Bank say there are signals that the worst is over for the DFWhousing market. Next year looks better for builders and buyers. The decline in existing North Texas home prices has all but stopped. Median prices are actually rising. The number of homes for sale in North Texas has fallen to the lowest level in more than two years. National analysts agree that Texas is poised to see home sector gains in 2010.
Home starts in the DFW area rose by 10% in the fourth quarter, the first increase since 2006. The DFWarea has only about a three month supply of finished vacant new houses, less than half the national average. A supply of slightly under six months is considered balanced. The top economist for the National Association of Homebuilders said home starts in Texas are already 30% higher than a year ago.
December’s 1% decline in home resales for the DFW area followed a 31% increase in November. But condominium sales were up 31%from a year ago. In far north Dallas, December sales jumped 54% from a year ago, while home sales were up 56% in the Park Cities, 55% in Coppell and 48% in Colleyville.
North Texas is fifth among major U.S. markets in delinquent loans tied to commercial mortgage-backed securities -totaling $1.45 billion, including the Four Seasons Resort in Irving which has declared bankruptcy. And the 52 story Elm Place at 1401 Elm Street in downtown Dallas, formerly the First National Bank, is closing its doors. When it opened more than 40 years ago, it was the tallest building west of the Mississippi River. Foreclosures in the four county DFW area are actually down 20% from last month, the lowest for this time period in three years.

The National Association of Realtors says the current home
sales pace is 44% higher than a year ago, including detached
single family homes, townhouses, and condominiums. And
sales are up in every region of the country. For the second
month in a row, sales totals are higher in all price classes.
Unsold inventories of houses are down 16% froma year ago.

Investors are becoming active. Denver-based Dividend Capital Realty Trust has bought the 147,000 square foot Preston Sherry Plaza and the 177,000 square foot Park Place on Turtle Creek, two of the largest transactions of the year. The University of Michigan’s bellwethers survey reports consumer confidence went up 7.5% in December, affirmed also by a survey from the Conference Board. Even a pessimist has to admit that 2010 looks more positive for real estate than last year at this same time. Both the Dow Jones Industrial Average and the S&P 500 posted their best performances since 2003, with gains of 18% and 23% respectively. Notable is the rally from the dark and fearful days in March - the Dow and S&P have surged by 59% and 65%.

FannieMae’s forecast for 2010 suggests that sales of existing homes may jump another 10% over 2009 and new home sales could go 26% higher. The Treasury Department has said it is committed to Fannie Mae and Freddie Mac with as many billions of dollars
as necessary for the next three years - no limit. The two institutions provide funding for up to 60% of the U.S. mortgage market and can now borrow capital at favorable rates, hopefully to pass along lower rates to borrowers. In a recent policy change, FannieMae said it will now accept purchase offers for REO homes immediately after listing, without notifying lenders or mortgage servicers whose loan files are under review. Under its previous policy, fifteen days notice was given to find a better offer - but their inventory was moving too slowly. Bottom line for buyers and agents - look for earlier access to REO properties and quicker decisions on purchase offers. Changes in RESPA effective January 1 require lenders to fully disclose all closing costs including cost of obtaining a loan, title insurance, settlement and any other services within three days after a buyer applies for a mortgage. Both the GFE and HUD-1 Settlement statement have been revised. Economists caution that the trend in employment is improving, but meaningful job growth will take a long time. Health care has actually added 631,000 jobs since the recession began and is now the second largest source of employment in the U.S. The federal government is #1. One consideration of the proposed healthcare reform is that, if it succeeds, the government will directly or indirectly influence 30% on our entire workforce. Extension of the homebuyer tax creditmight also prompt parents to look at student housing. Some loan programs allow a “non-occupant” co-borrower.

Most common is an FHA loan:
• Allows non-occupant co-borrower (on loan or title) or co-signer (on loan but not title)
• Minimum downpayment 3.5%
• Qualification based on combined income and debts of borrower and co-borrower
• Co-borrower may not have an interest in the transaction (seller, builder, agent).
• IRS says a child first time borrower is entitled to the tax credit even if a parent co-signs the loan.
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University Park has modified requirements for fence construction and trash insets:
• In rear, side and front yards, fence heights may now reach eight feet.
• Minimum size of a trash inset has been changed from three feet deep by eight feet in length to
three feet deep by five feet in length.
Another constant issue for University Park residents is foliage trimming:
• Limbs, shrubs, foliage must be trimmed flush with sidewalk edges and cut to provide eight feet
minimum clearance above sidewalks.
• For alleys, clearance is a minimum fourteen feet above curb line and fifteen feet above alleys.
No vegetation over eight inches high is permitted within one foot of alley pavement