Un-utterable: What Would A Depression Look Like In Dallas?

I hate to use the D-word, but after reading this article in The Boston Globe, I started thinking about a local application. Dallas has such strong job growth — as I discussed last night with Stewart Lytle and Karen Taylor. If we look at the history of The Great Depression, that could mean many people would migrate here to find work. Oh great, just what we need — more cars on the road. So let’s turn on the comments. Tell me what you think Dallas would be like if we were to have a Depression. I heard all about the Great Depression from my mother, who saved plastic lids and rubber bands until her dying day. I know doctors used newspapers as sterile drapes – does that mean we’d go to the Gyno and he’dcover us up with The Dallas Morning News? Or would it be The Dallas Fort Worth News Telegram? People mended clothes and wore them forever. Would J’s Tailor do more business than Neimans? Would the Dallas Blonde fade to the Dallas Brunette? Big hair to bangs and a bob? Would the McMansions on Park Lane and Beverly Drive be filled with three generations under one roof so much that HPV would start a Bingo night? Would everyone move in downtown, fill up those condos, and leave their cars to rust in Frisco? Your turn…�

Bank Bundling: Anatomy of One Bad Banana In The Bundle

The story I am linking to is provocative and full disclosure requires that I inform you I personally know two of the parties mentioned. Big Dallas names are invoked — Rusty Rose, Don Lummus. Let me remind you I am a messenger and impart no opinion nor further fact on the information. In the last 45 days, real estate reporting has become a brave new world. It is no longer prices up, down, sales volume or House Porn — though House Porn still rocks. It is now about complex mortgages and penny-stock banks and alogrithims and however else the financial geniuses of our generation twiddled and fiddled with home loans. That is why I reacted negatively to the SEC investigation of Mark Cuban, why I think it was overkill to waste tax dollars sending Martha Stewart to prison. Peanuts compared to what’s been going on the last few years… read on.  

NorthPark Crime

Found this message in my email concerning increased crime at NorthPark Mall. Question: are there security cameras in those garages? Of course, technology only goes so far. Driving home from Austin today I saw a woman driving, wearing a rock of Gibraltar — at least 10 ct — on her left hand. Beautiful ring, yes, but given the economic climate this might be a good time to leave the bling in the Safety Deposit Box unless it’s Crystal Charity night. (more…)

The Stoneleigh: Q&A (Sort Of) With Jud Pankey

Jud Pankey was kind enough to answer my questions about the Stoneleigh last week, then our blog was down, etc. etc. So here you have it.  I am truly sorry The Stoneleigh has been caught in this credit mess. I would like to personally march all those Wall Street Rocket Scientists over to that shell and tell them where to stuff their financial algorithms…

DD: What are you going to do with the shell?
Jud Pankey: The shell is going to stay as is. It will be ready to go again once we close a loan. The garage will be ready next week, so we have made some progress. We will then turn our attention to the courtyard.
DD: The parking garage is completed for the hotel, so will you let the shell sit?
Jud Pankey: Not sure what else we would do. Do you have any creative ideas, as I am all ears?
DD: Was the crane really costing $30K a month?
Jud Pankey: Yes—close enough.
DD: Will you build a smaller, scaled back condo perhaps?
Jud Pankey: No—does not make sense.
DD: Do you have any financing promises at this point?
Jud Pankey: We are working with a couple of lenders. They do exist!!
DD: Is this why Paulson (last week) said he is aiming the bail out funds at the banks?
Jud Pankey: Not sure what he said but the banks are trying to figure out risk between banks and customers. I think it is confusing for everyone, hence there is no confidence. The banks are trying to price risk and they have plenty of capital, but they are not being paid to lend money just to lend money just yet. Plus, the regulators need to encourage them to lend versus contract. It is an interesting time.

Mark Cuban Accused of Insider Trading

Frontburner asks if this means he’ll have to sell the Mavericks. I ask, will he have to sell his home? (Love me that Texas Homestead law.) That is, homes properties. I did not know he owned all this land near Northwest Highway and Douglas. A reader pointed out that what he has done is no different than what Martha Stewart did, but I have to say this: I think Martha got a raw deal, especially in light of all the shenanigans those big Wall Street players have pulled that we are just now unearthing. Three words for you, SEC: Credit-Default Swaps.�

Steve Brown NAR Reports: “Half Of Those Properties Were Vacant”

Must read Steve’s take on how fixing home mortgages won’t save the housing industry. It’s been PC for Citibank and JP Morgan Chase and all the banks to announce new touchy-feely programs (”we feel your pain”, not “your pain is our gain”) for thousands of borrowers. (I have two Citi mortgages on investment properties and just may have to find out how low they’ll go… all for the sake of reporting, of course!) But read what happened when Freddie Mac sent out help letters.

Steve Brown: Stoneleigh Heritage On Hold

I asked the question last summer… amid near-weekly emails from folks saying nothing was happening at the 22 story, 118 unit luxury condo residence tower under construction behind the Stoneleigh Hotel. Now we know why: Steve Brown reports today that Prescott’s financing fell through, and the cranes are coming down, at least for now. Putting calls through to some of the first buyers, so stay tuned. 

Dallas Home Prices Nosedive, But But But…

Remember, we are comparing to last year, one of the hottest sales years in the history of Dallas Real Estate, and maybe the world. The good news is that inventory is dwindling. Realtors have told me that folks who are not serious about selling are yanking up the for sale signs, putting them on ice. Builders are telling me that if they can hold out for about a year, 2010 will be the Comeback Kid and because there are so few housing starts now, there will be very few new homes for sale come 2010. Less inventory, stronger market, better prices. Everyone’s just taking a chill pill. P.S. Clip and save (or bookmark) this article to help fight your tax appraisal next spring.

New Law Saves Banks Tons In Taxes

Guaranteed to get your blood pressure on on a Monday morning: nice story about a change in our oh-so-complicated tax law lets banks off the hook for about $140 billion in taxes. Who pays taxes — we do, here’s proof.

Stock Market Taking A Bite Out Of Real estate Market

So says Park Cities People Real Estate editor Austin Kilgore.

Texas Touched By Recession: Houston Bank Fails

Franklin Bank, taken over by Prosperity Bank, which we so hope lives up to its name.

NAR Week, 2008 Sales Downgraded

The National Association of Realtors is meeting in Orlando — believe Catherine is there — and the trade group reports altered sales expectations for the rest of this year. Of note is how powerful housing is to our entire nation’s economy — at least according to NAR economist Lawrence Yun:

“The depth of the recession depends entirely on housing — with sufficient housing stimulus, the recession will be shallow. If government actions stay focused on housing, the cost to the Treasury would be much less that the potential losses in the nation’s output and income in a severe recession.”

The Rate Cut: I Love This Blog

The Mortgage Reports, because I can count on them to explain in English what all the fed posturing means to me as a home buyer. A Fed cut does not always mean a cut in rates. In fact, MR expects rates to go up in the next 30 days.

Everybody’s Suing — Music To My Ears

Only because I have two lawyers in my house, but I kind of saw this coming a few week’s ago. If people have no money to pay their attorneys fees, think they’ll take chickens?

“Dad Is Rarely Wrong, Usually Early”: Interview With Ross Perot Jr.

Caught him quickly emerging from builder extraordinaire Mark Molthan’s Luxe Showhouse at the Creeks of Preston Hollow, a gated Hillwood development at Inwood and Royal Lane. Wanted to ask him how things were going at Hillwood’s beach-front development, Peninsula Papagayo, in Costa Rica. Swimmingly: sold two lots and since other developers have backed out or put nearby projects on hold, PP is the only luxury development in that area. Also couldn’t resist asking how he thought we’d survive the Walt Street meltdown:

“We are very lucky to be in Texas right now,” he said, where we have great leadership, a pro-growth and business climate, light regulation and affordable homes. We never had a crazy run on housing prices here, he said, and we have a great quality of life in Dallas. While we are part of the global economy, the three most recession-proof places he can think of right now are Dallas, Dubai and Abu Dhabi. Development is slowing, credit is clogged (but there are signs that Washington’s medicine may be starting to work to get credit markets moving) and it’s a great time for the right people to buy real estate – no tricky mortgages. Both parties contributed to the mess — folks are waiting to get this election over. The whole country — the world –must come together, work together, to solve this. Just like the weeks post 9/11, it’s important that people don’t stop, don’t freeze. Yes, his Dad did warn us the country was in trouble, just as he warned us about General Motors in 1992.

“Dad is rarely wrong,” said Mr. Perot, “He’s just usually early in his predictions.”

Jim Landers: Blame The Credit Rating Agencies

Oh yes, oh yes! Standard and Poor’s and Moody’s hired financial engineers who cooked the computer assessment of securities and tweaked until they got the answers they liked, then gave them to the rating agencies for AAA ratings. Not only does this sound like Enron, it also reminds me of those studies the government pays millions of dollars to figure out something we all know, like how children get better grades when they do homework in a quiet room without the distraction of televison.

Yes, Virginia, There Still Are Mortgages Out There

Delightful lunch with Harold Smith at Cornerstone Mortgage who gave me the best news I’ve heard in about three weeks of financial yuck: young couples can get loans for starter homes and they don’t necessarily need to sell his sperm or her eggs for the down payment. If you are talking starter homes in the less than $300K range, FHA mortgages are available with decent rates for as little as three percent down. Yes, I said three percent. Of course, Mom and Dad can always cough up a little welcome help.

Republicans Tried To Warn: Fannie Mae And Freddie Mac Were Cheating On Us

Now they are playing hard-ball: The Mortgage Insider says that, beginning December 13, 2008, Fannie Mae and Freddie Mac have a bunch of guideline changes that will make it harder for people to obtain mortgages–  basically ”No home equity, no down-payment, no dice.” Primary refi’s will be limited to 85% loan to value ratio, 75% for second homes and you’ll have to have a 25% equity stake in investment props for refi’s.

As a stock holder — or whatever I am now — I say too little, too late, baby. Loved this report depicting how a group of  Republican Senators led by Chuck Hagel from Nebraska wanted to regulate FM/FM back in 2005 because they were smelling trouble. FM secretly paid a Republican consulting firm $2 million (of stockholder’s money) to lobby against this legislation: “If effective regulatory reform legislation… is not enacted…American taxpayers continue to be exposed to the enormous risk that FM/FM pose to the housing market, the overall financial system and the economy as a whole.”

Anyone else sick and tired and not wanting to take it anymore?

Will The Credit Crunch Create Undeveloped Development?

Perhaps, says this article from Back Talk Preston Hollow (which I really respect, and I would really like to meet the blog’s author) which says that anyone who doesn’t have financing in place will find it incredibly difficult to obtain a loan. Commercial lenders, like home mortgage lenders, want more money up front from the developers as well as near-perfect credit. They are also more likely to lend money for apartment complexes rather than condos, retail or mixed use anticipating, I guess, more people leasing. Meantime, I ran into a sales executive from one downtown condo unit and we talked about The Stoneleigh Heritage, which seems to be in slow motion.

Foreclosures: They Put Feces On Doornobs?

Oh yuck. Think I’m going to be sick. Finally got around to reading Daniel McGinn’s story on foreclosure properties in last week’s Newsweek, where he interviewed agents on the hazards of selling foreclosures. One example: a house with an indoor (filthy) swimming pool. ‘Tis true: whenever we hear the word “foreclosure” a few neurons do the Neimans Last Call dance in our brain: a bargain, something for (almost) nothing. But the truth is, many foreclosure properties are a mess and may not be such a bargain. (I mean, who would be dumb enough to build an indoor swimming pool without a proper ventilation system?) You want a Money Pit? Buy a foreclosure. Tell us what you’ve seen in Dallas foreclosures — I haven’t seen that many, but having just received Roddy’s Foreclosure List, I’m going to be hunting and posting. Meantime, will someone please tell these Realtors back east to carry Lysol wipes, not Purell?

Oh Dear: Layoffs at Zillow

One of my fave companies – you guys hanging in there?

Housing Starts Lowest In 17 Years

That’s the national news helping to squeeze the stock market today, but I say, why is that bad? Fewer homes for sale equals less inventory, this is a good thing to stabilize prices. Even Steve Brown agrees. And maybe next year, when Steve compares 2009 sales to 2008, those headlines won’t be quite so dramatic. Meantime, what agents are telling me is that every buyer is going in about 10% under asking price.

Highland Crusader Fund Shutters

A source has informed me that Jim Dondero, one of the founders of Highland Crusader, is heavily invested in some of our area’s most expensive homes. Dondero is the financial backer behind Andrew Merrick Custom Homes. Quick call to Craig Barrow with Andrew Merrick this am: “I’m not even a little bit worried”.  

It’s A Blue Light Special Over At Coldwell Banker ‘Till October 19

Kind of an unusual price slash unlike any seen before: Coldwell Banker Real Estate LLC is running a time-sensitive sales promotional during which participating sellers who have listed their homes through a CB agent can voluntarily drop their asking price by up to 10 percent from October 10 through 19.

If you think that sounds like an auto sales marketing event, it sure does is.

Obvi this is designed to get home buyers moving and off the fence. Jeff Sprick promises to get back to me after the 19th so we can tally the sales. Who knows, if this works, we may see more programs just like it!

(more…)

Tate Lecture Series: James A. Baker Singing A Different Tune

I am lifting this quote from a CNN report:

“This is bigger than the private sector can fix by itself,” said James A. Baker III, who served under President Reagan. Robert Rubin, treasury secretary under President Clinton and now an adviser to Barack Obama, said it was important “to be highly, highly proactive.”

Talk about how quickly things have crumbled: last month I heard Mr. Baker talk against a bail-out the very night the government agreed to take a majority stake in AIG.  Oh to be a fly on the wall in one of these financial guru’s inner sactums — wonder who what they are blaming saying in private?