If you or someone you know is involved in a short sale in the greater Dallas area, please email me at Candye@dmagazine.com. If requested, I will keep your story confidential and change names to protect the innocent.

“While the Obama administration has proposed a 20 percent capital gains tax as a compromise, Shulman thinks a bipartisan agreement could be achieved by permanently setting it at 15 percent.

In return, Republicans could grant the administration its wish — to set the top rate on ordinary income at 39.6 percent. While the Obama administration wants that rate to apply to any income a married couple earns beyond $250,000, Shulman thinks a compromise would involve setting the threshold at $400,000.

“The Obama administration would get its higher top rate and a step, albeit smaller, toward deficit reduction,” Shulman said, and Republicans “would get their low taxes on capital. Above all, the economy would achieve at least a modicum of certainty with respect to tax policy.”

A one-year extension of the Bush tax cuts, as some have proposed, would only postpone uncertainty, Shulman said. The worst outcome of all would be to allow all of the Bush tax cuts to lapse, he said.”

So, think we could micro-chip the word “compromise” into Angela Hunt, Tennell Atkins, Dwaine Caraway, Carolyn Davis, Vonciel Jones Hill, Delia Jasso, Pauline Medrano and Steve Salazar?

They are the ones hurting our real estate market.

And I have had it with turrets.  The home below is in Dallas and I have a message for the owners: this is not Scotland, nor Ireland, and we do not need to go high to ward off the Jacobites marching down Preston Road!

Dear Candy: We are living a dirty little secret here in the Park Cities. We can no longer afford our home. We bought when the market was really hot in 2007 because my husband had received a job promotion and was making a lot of money. We also bought a second home property because we thought those were good, solid investments. (What’s even worse is I am having to hide my identity because my husband is in private wealth management — he advises people on how to make and maximize money, when all he’s done is lose ours! In fact, one of his clients developed the second home property.) But recently our cash-flow was cut in half, our portfolio is so depressing I can’t even look at it, and I have about $10 left each month after paying the mortgage and groceries. I recently had a high-profile realtor here for a market analysis: our home is worth less today than what we paid for it. Even worse, it’s worth less than what we owe the bank. I’ve been reading about strategic defaults and think we may have to go that route or worse — foreclosure. But honestly, I will die from the shame. What do I tell the kids? No summer vacation this year about killed them — they went to their grandparents’ house. I know this sounds trivial, but I haven’t had a massage in months, I am doing my own manicures and have given up my personal trainer. I’ll even go back to work, if necessary, but when you figure the taxes and nanny, my husband says it will probably cost us money for me to work.

I love my house, but I’m not sure it’s worth the financial drain. Do you have any advice at all? I’d go beg my doctor for anti-depressants but guess what? Cannot afford them.

Wowsers. So sorry to hear this. When I read that 11.2 million American borrowers are underwater on their mortgages — that is 19% of all mortgage holders, by the way — I never stop and translate exactly what that means. It means no money sitting around to save for a rainy day or enhance life. It means you are a slave to your home. Is there a way out? Perhaps. It’s called a short sale. Or, what I call it, Something’s Got To Give and Everyone Takes a Hit.  The lender has to agree to take less than what is owed — hit for the bank. The homeowner agrees to sell the home for less than what they paid for it — hit for the seller. Then a short sale specialist Realtor negotiates dissolving that outstanding balance, kind of like negative negotiation.

What’s so good about this? Your credit rating stays intact. A foreclosure can constipate your credit rating for up to seven years. With a short sale, it’s a two-year blip, not much more chastisement than a series of late payments. But beware: I’ve heard there are a lot of charlatans out there peddling short sales.

What’s in it for the lender: They take a hit, of course, but a short sale is far less costly to lenders than is a foreclosure. And the government is currently offering a $3000 subsidy to mortgage lenders to encourage short sales and even $1,500 in relocation assistance for the Seller.

I don’t know if this would work for you, but it sounds like you’ve got to get out of that house — or both homes. I still think second homes are a great long-term investment for families as future family gathering places but certainly not if you cannot even afford a manicure!

Homeowner’s insurance is one area where first-time homebuyers usually feel lost — where do you even go to buy it and how to get the best rate?

Dear Candy,

I currently have a house under contract and I am shopping for homeowners insurance. First, where do I start? Secondly, I need help understanding the quotes. I want to get the best price possible, but most importantly I want the best coverage for my money.

I asked independent insurance agent Alston Williamson over at Hexter-Fair Insurance (214-378-8870 (o) 214-205-3696 (c)) for help. He says to go through an independent broker, naturally, because he is one and says they do all the hard work for you.  Sounds reasonable. The broker will gather quotes and coverage plans from multiple companies to compare so that you can get the policy that best fits your needs. Like all insurance, it’s nearly impossible to compare apples to apples. But to understand homeowner’s insurance, Alston tells us we’d darn well better know our ABC’s:

In order to compare quotes it is important to fully understand the ABC’s of homeowners insurance. The letters ‘A,B,C’ have multiple meanings in regard to a homeowners policy. First, the three most commonly used policies in the State of Texas are an HO-A, HO-B, and HO-C. But what you get with each of those policies is extremely different. HO-A is the most basic policy and is a named peril policy. It covers the insured only against named perils listed on the declarations page. To tell the truth, I do not write HO-A policies for my clients because they do not provide enough protection. The HO-A is comparable to the state minimum auto requirements. It gives you proof of insurance but not enough of it to help out in the event of a loss. The HO-B policy adds perils that the homeowner is protected against to the HO-A. The HO-B is also a named perils policy, but the number of perils is increased. An HO-C is what is called an all risk policy and it protects the homeowner against all risks. I write HO-B and HO-C policies because they protect my clients better. Obviously with each upgrade in policy you will pay a higher premium, but as a home is typically the largest investment that most people make throughout their lifetime it makes sense to protect that investment the right way. And of course your lender will require it. The second set of ‘A,B,C’ refers to an actual portions of a policy. Coverage A is where a homeowner’s dwelling is protected. Coverage B is where ‘Other Structures’ are protected. ‘Other Structures’ include things like detached garages, fences, decks etc. Coverage C is where personal property is protected. This includes furniture, clothing, jewelry, electronics etc. which are listed or “scheduled”.  So if you want to understand insurance, you’d better know your “ABC’s”.

Thanks, Alston. Now tell me: can you window shop for property insurance on-line yet like you can real estate?

What he told me was fascinating and a good lesson in looking below the surface of a recession. Because believe it or not, smart people manage to make money even when the sun isn’t shining so brightly. And the Heritage success story is really a real estate story: their expansion came about in part because they got some good deals on real estate, because of the recession.

Heritage may have started as a coin auction house, but they now sell art and antiques, coins, currency, entertainment memorabilia (which is going gangbusters), historical, stamps, jewelry and time-pieces, movie posters (ditto), natural history, rare books, and sports collectibles, 30 categories in all. They opened a gallery in Beverly Hills Feb 1 and are opening — are you ready? – another new location on Park Avenue and 57th Street in New York City September 1. We are talking the highest rent district in the U.S.A. Sotheby’s and Christie’s might as well take a ten year coffee break.

September 16, 2008: the day the financial markets started to crash. Greg Rohan has it etched in his memory. He says he was with one of his biggest clients shortly thereafter and asked how he was doing.  I’m down a half a billion, the client said, but I don’t have to start flying commercial yet.  Naturally, Greg wondered how clients would react post 9/08 and how Heritage should position itself. For all wealthy people, he says, the recession was a wake-up call. Some had to lower their style of living to fly commercial first class rather than private, others had to fly coach.  And buying habits changed, too, except that people who have the collecting gene have it during lean times as well as fat.  They collect but steer towards the rarest of the rare items across the spectrum, not so much common items. Common means items that will always come along, like a bus.

Because of that, as far as collectibles, today the best of the best is still worth as much or even more than it was pre- September 20, 2008. Really good items are worth maybe 10% less than pre-crash, common items are generally worth 15 to 25% less.

Rohan thinks that about June, 2009, people settled into their new-found wealth status (worth less on paper, well you can’t take it with you) and adjusted, hence started spending again. And collecting. That’s where the uptick came from.

“I think Dallas is indicative of the rest of the country,” says Rohan. “If it’s something they want, they’ll buy it.”

Even better: Rohan knows folks who made money — they sold collectibles in early 2009 at a 15-25% loss then turned around and bought stocks and real estate that had dropped 50% or more.

And Heritage had always wanted to expand to the east and west coasts but never anticipated opening both offices simultaneously. Voila, the real estate market had dropped so much that a well established company like Heritage, with solid gold credit, negotiated leases with a big stick , 35% off Beverly Hills, a whopping 50% off Park Avenue.

Which is now fueling their expansion. The company’s business has expanded over the last ten years, averaging a steady growth rate of 10 to 15% a year, this over the greatest recession since the Great Depression.

Which is why I picked up the phone.

(I’m working on a story for HousingWatch that will jolt you about this even more!)

Anyhow, about 6520 Northaven: great house, I’ve written about it so much they may have my name on the title policy. And yes, the 7400 square foot house was once listed for almost $6 million — $5.9 or something insane — and I almost had a car wreck when I heard that. (Listed for $4,495,000 in 2009.) I just don’t get it. Maybe if the sellers had been a little more realistic back then, the house would not be in foreclosure today. It’s a great home — a Dilbeck  extensively remodeled by Diane and Daryl Johnston in 2003 and home to many celeb-studded events. (Update: The Johnstons sold the home in 2007.)

You know what else is interesting? Once upon a time agents from Rolls Royce firms like Briggs Freeman, Dave Perry-Miller, and Allie Beth Allman did not want to dirty their hands by listing foreclosures. Well, folks, the world sure has changed.

Steve, I wonder if this means we are going to start showing up at the same restaurants and hotels now?

“Texas’s greatest advantage may be housing demand. Its population grew by 3.9 million, or 19%, last decade, leading to a natural increase in households. The economy is stronger than in most parts of the country, with unemployment also holding at 8.3%, below the national rate.”

Which reminds me. The April issue of D Magazine ran a story on “How Missing The Bubble Hurt Dallas” by Joseph Guinto. When I read it, I was furious, and not because it was not my by-line. I was furious because the writer missed one of the most giant reasons why our market tends to be more stabilized than others: we cannot mortgage away our homes or use them as non-stop piggy banks. Mr. Guinto is probably too young to remember the days (I sure do) when we couldn’t even borrow one penny against our home equity in Texas. Now we can, and oh how the banks loved that little change, but we are limited to 80% of the total mortgage debt of the fair market value of the home. Explained here, but if  you have $50,000 in equity on an $80,000 home you can only borrow 80% of that equity, or $34,000. And you can only make one home equity home loan per year, regardless of how fast you paid it back. Texas laws protect us from ourselves — this did not happen in other states like Florida, California and Nevada.

Well la de dah, now the Wall Street Journal has picked up on that. Get this:

So it’s important to have a view on which markets will recover most smoothly. Among those with the best prospects is Texas, which barely participated in the real-estate bubble. Home prices in Dallas, for example, are down only 7% from their peak, according to S&P/Case-Shiller.

Texas may have avoided the excesses of other states partly because of laws enacted after its own property bust in the 1980s. Back then, an oil boom created plenty of investment demand. And thanks to partnerships designed as tax shelters, property investments offered sky-high returns.

Later, tax reforms took such structures off the table. What’s more, Texas is one of a few states that taxes property but not income. That likely tempers demand for real estate because pricier homes have a big impact on total taxes. Texas also has lower-than-average foreclosure rates, thanks partly to limits on home-equity lines of credit.

Ah ha, did you catch that? Higher property taxes DO HAVE a bearing on home prices, you betcha. So everyone wants to come here (and to Florida) because we don’t have a state income tax, but they won’t buy buy buy because of the real estate property taxes which are among the highest in the nation. So I don’t want to hear anything about 10 cents more here or there for better streets or convention trips or whatever. Hold the line on spending at City Hall. The Wall Street Journal has spoken: higher property taxes hurt and hamper our real estate values.

But I am way happy we did not have a bubble here. I didn’t want to be rude after the article came out, because the graphics were so nice, but folks in those bubble towns were only paper rich. Here in Dallas, we are dirt-rich.

“Pima County Supervisor Richard Elias adds, “We’re not sure the landowners understand the biological importance of Painted Hills, nor the fact that it’s a signature piece of property … with important cultural resources and habitat that we would like to preserve.”

Long story short: Wilonsky says the $27 million investment is now land valued at $2700. This is why it is so darned tootin’ tough to develop out there, and one reason why when you finally, after an act of God, get something built, the boom  booms higher than in other places. Maybe the Pension folks think Texas might be a better place to do business.

And he’s a neighbor, of sorts. He owns a few acres down on a shared ownership Longhorn ranch near Johnson City, Texas, where we also own a few acres. Steve also gets up early, or at least he did Monday to be interviewed by CNBC on the financial reform bill making its way through Congress. Steve said that the bills being merged by Congress are good and bad, 80% good, 20% bad. (“Which will scare you to death,” said Steve.) Putting government price controls to merchant banks on interchange fees might make debit cards cost consumers more  – price controls always make things bad for consumers, says Steve; better to let the marketplace decide. Banks always get their money one way or the other.

“We must cap their size or break them up – in one way or another shrink them relative to the size of the industry,” he said … Some banks are seen as so large and interconnected that their failure could bring down the entire financial system, analysts say. In times of stress, such as the severe financial crisis in 2008 and 2009, regulators will always step in to save them – even if the banks’ own mistakes helped cause the crisis.”

Interesting because yesterday I sat and listened to A&M’s Dr. James Gaines talk to the Home Builder’s Association of North Texas. While most of his message was positive, well positive for Texas,  he said something that brought back what I term the “shudders of 2008″. Did we know, he said, that the Fed had a committee meeting last November 2009 where it literally looked at the U.S. government taking over the entire U.S. banking system? All 8,000 U.S.banks. They were kind of doing a what-if: what if ALL  8,000 U.S. banks failed. Most banks fail, he says, on a Friday afternoon and are re-opened on Monday controlled by the Fed. Scary scary thoughts. Hearing this, we know where Mr. Fisher is coming from and I’m on his bandwagon 100%. Instead of government controls, make ‘em smaller and let ‘em compete.

Lots of other good stuff from Dr. Gaine’s talk, in a nutshell, thank God we live in Texas. Did you know that the GDP of Texas is performing better than the U.S. GDP? From 2001 to 2008 Dallas and Houston provided 5% of the entire U.S. GDP. We’re doing better on jobs, too, losing jobs at a  2.5% rate instead of 5%. Of course what everyone wanted to know was, has the housing market bottomed out yet?

Are we there yet, Dad?

Maybe, probably, not sure yet. We’ll know more in October because we are still on a high from the home-buyer’s credit, that major shot of estrogen that has juiced up the market. (Want. Some.)  Foreclosures will stay high, federal government programs are winding down, interest rates still low and he confirmed what I have long suspected: the banks really don’t want to loan out money. Part of the reason why the market is so constipated — the banks are hoarding cash and buying government securities. Hard to get a loan, hard to get an appraisal. Finding jumbo loans is like finding a needle in a haystack, though I’m told here locally Inwood National Bank is making decent jumbo loans. (See? Viva small banks!) Wells Fargo, too. Fort-seven percent of real estate sales lately have been to first-time home-buyers.

Want more scary thoughts? Shadow inventory – that’s vacant homes and condos not even offered for sale right now — 9 to 12 million units. Normal is less than 5 million.

Now here’s a question: why can’t we get the homeless into that shadow inventory? And where the heck is it, anyhow? I’ve always wanted to be a squatter!

Here’s what George Roddy had to say this week about foreclosures:

Addison, TX — Foreclosure Listing Service, Inc., which has been monitoring foreclosure posting activity more than four decades, released the findings of its recent study of upside-down residential foreclosure postings filed for the First-Half of 2010 (January – June).

Mr. George Roddy, Sr., President of Foreclosure Listing Service, Inc., announced, “For the first-half of this year, upside-down residential foreclosure postings jumped 39% within the 19-county area covered by Foreclosure Listing Service, Inc.”

He continued, “From January through the June foreclosure auctions, which were held just this past Tuesday, 10,359 foreclosure notices were filed against homes in an upside-down position within this 19-county area compared to just 7,446 postings by this time last year.”

“‘Upside-down’ means that the amount of the original mortgage exceeds the appraised value of the home (based on appraisal district valuations),” Mr. Roddy stated.
The foreclosure researcher, who’s firm has been monitoring foreclosure posting activity for more than four decades, remarked, “Both the homeowners and the lenders of these upside-down homes are in a no win situation.  Generally, the homeowner can not sell the home for what they owe on the mortgage; and,

most often, the lender can not sell the home after repossessing it for the amount that they have invested in the mortgage and other costs that the lender has incurred.”

Mr. Roddy noted, “Upside-down postings have risen at a much higher pace than overall residential foreclosure posting activity.  Compared to one year ago, the number of postings filed on homes in an upside-down position climbed 39% in the 19-county area; whereas, total residential posting activity increased just 10%.”

For the first-half of this year, 51,991 total foreclosure postings have been filed on residences within this area compared to 47,069 notices for the first-half of 2009.  In comparison, for the first-half of this year, 10,359 postings had been filed on upside-down homes versus 7,446 one year earlier.

BY COUNTY

Foreclosure Listing Service, Inc.’s 19-county coverage area ranges from the Red River in North Texas to just below San Antonio in Central Texas.  In the North Texas region, the following counties are included: Dallas, Tarrant, Collin, Denton, Rockwall, Ellis, Johnson, Grayson, Parker, & Kaufman.  In the Central Texas region, Travis, Williamson, Hays, Bastrop, Bell, McLennan, Bexar, Comal, & Guadalupe counties are included in the firm’s coverage area.

Mr. Roddy commented, “Upside-down residential foreclosure postings were up 50% or more in 5 of the 19 counties.”

COUNTIES WITH HIGHEST PERCENTAGE GAIN

Mr. Roddy announced, “The largest percentage gain in upside-down home postings within FLS’s coverage area was a 121% surge in Williamson County.  For the first six foreclosure auctions of this year, 384 postings were recorded against upside-down homes in Williamson County compared to just 174 for the same period last year.”

He continued, “There was a tie for the second biggest gain in upside-down postings with these postings jumping 65% in both Bexar and Comal Counties over the past year.”

In Bexar County, foreclosure notices filed on upside-down homes climbed from 939 postings for the first part of 2009 reaching up to 1,552 postings by the middle of this year.  In Comal County, just 31 postings were filed on upside-down homes for the first-half of 2009 compared to 51 so far in 2010.”

Mr. Roddy said, “Ranking third in gain was Dallas County with a 56% climb in postings of upside-down homes.  From January through June of this year, 3,743 foreclosure notices had been filed on Dallas County homes in this troubling situation compared to only 2,403 postings by this time last year.”

He added, “Denton County had the fourth highest percentage gain in upside-down residential postings within the study area.  Over the past year, foreclosure postings have risen 51% on homes in an upside-down posting within Denton County.  For foreclosure auctions held in the first-half of this year, 500 postings have been recorded against homes in this upside-down state compared to 331 one year earlier.”

COUNTIES WITH HIGHEST SHARE

Mr. Roddy also announced, “Twenty percent (20%) of all of the foreclosure postings filed on homes within our study area for the first-half of 2010 involved homes that were in an upside-down position.  This means 20% of all the homes posted for foreclosure were in this no win situation.”

He revealed, “In 9 of the 19 counties, 20% or more of the residential postings filed for the first-half of this year were upside-down.  These counties included, Dallas, Johnson, Grayson, Parker, Kaufman, Bastrop, McLennan, Bell, and Bexar.”

Dear Candy,

Well, here’s the good news: we put our home on the market with a wonderful
agent, and we got what we thought was a firm, solid contract. Too good to be true, right? Thinking we were
about to close, we had an estate sale and sold everything in the house except for our beds.

Their financing fell through.

The financing is the toughest part about buying or selling a home these days. That’s
what’ slowing the market. If it weren’t so hard to get financing, things would be moving a lot faster.

Thank God we did not buy another home because we’d really be SOL. OK, so
what do I do? I have a home on the market without a stick of furniture in it.
Shall we go ahead and move out and stage it, shall we buy furniture, is
there anyone out there who could lend us furniture? Help!!!

Oh boy. What a market. And yes, the credit mess is not helping. Any home stagers out there who have any advice or — better yet — furniture?

Update: Yes, I pulled a boo boo here — I meant BUYERS pulled out in my headline. Apologies.