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Disney Week: Great Pinocchio Listing— And We’re Not Lying!

Wonderful listing in the storied Disney Streets, where things are Goofy these days over a proposed Conservation District. Disney is the closest thing you can get to Leave It To Beaver living in Dallas. My favorite things about this home: it’s on a huge corner lot, and has just been reduced by $10,000 to $359,000. (Even so, I still think it’s a wee bit pricey.) Check it out: pool, 3 bedrooms, 2 baths, try to forget the fact that the third bedroom is now a pool hall and the home’s updating lacks an overall sense of cohesiveness. Oh — almost forgot: the sellers are excluding the wine fridge, fireplace screens (???) and the sauna. Hope they’re calling Curtiss.

Sensationalizing Math: Could Underwater Mortgage Reports Be Flawed?

This is going to be a long one, and I’ll be late for lunch, as usual. I just got off the phone with Gwen Moritz, Editor of Arkansas Business in Little Rock. Gwen took a look at a scintillating report in Saturday’s Arkansas Democrat-Gazette that said 25% of Arkansas mortgages are “under water”. Steve Brown ran the same report Friday and I parroted, our number in Dallas being 30% underwater. Every media outlet in America ran the piece since it was wisely sent out localized and sensational. The study was made by a California company called First American CoreLogic. Gwen read the story and it nagged her — 25% of Arkansas mortgages under water? How can that be, she asked.

Now when I read the story, I too had my doubts, for this reason: if the reports CoreLogic used included HELOCS — home equity lines of credit — why would 30% of Dallas mortgages be underwater? In Texas we are limited to 80% loan to value home equity ratios. That would mean that if someone maxed out their HELOC in Texas, they’d have to have lost 20% of the value of their BRAND NEW 100% FINANCED home and then some to be underwater. Or maybe they’d be flat. Whatever, I thought, as I usually do, who am I to question the brainpower and computers of these geniuses in California? God, we are all so bad!

Well, Gwen questioned them. She did what I should have done and picked up the phone and said, you know, this just doesn’t look right. Artkansas never had a housing bubble. Neither did Texas. She did some research on CoreLogic’s methodology and found out — hold the presses!!! — the company’s numbers may be biased on the HIGH SIDE . In other words, giving us facts that are worse than they really are.

Most of the mortgages used in the study are less than six years old — really? Did the whole world re-finance in the last six years? When she called CoreLogic, Gwen got them to admit actually 85% are less than six years old.

The study assumes that the borrower owes the balance of the mortgage when they took out the loan — in other words, it does not take into account monthly mortgage payments made against that balance. Why? Because of the way CoreLogic gets it’s information — it aggregates information from lenders, matching total mortgaged amounts in geographic chunks, like how much was loaned in a specific area or zip code. Then the computers whiz out numbers against property values. (Obviously I over-simplify.) They get this proprietary info from the lenders and use original loan amounts from public data records. But they base it on the original loan amount — they never get to come into our file cabinets and see how much money we’ve actually paid down on that mortgage or home equity LOC.

See where I’m going with this?

Gwen also found out the study includes the HELOCs but again, uses only the maximum credit figures since that is all the information that is available. So it looks like every one’s HELOC is at the max. Don’t know about you, but I have to pay down on mine every month and in fact, ours is almost paid off.

So if you are using figures that assume homeowners still owe every penny in debt they ever took out on a loan, figures that give no credit to what homeowners have in fact paid, then Gwen asks, maybe that study could over-estimate the number of folks whose mortgages are underwater.

“It’s biased to the high side,” says Gwen. “We need to be a little more skeptical of these studies.”

No kidding.

(Note: Thanks to Gwen Moritz for not only questioning the CoreLogic report but notifying the Alliance of Area Business Publishers of her query via email, which Glenn Hunter, editor of award-winning DCEO, then forwarded to me.)

New Way To Market Dallas Real Estate? Coupon Cutting For One Million Dollars Off

That’s what a Fort Myers, FLA agent is using to lure buyers into buying an almost $7 million dollar, 15,000 square foot Italian Villa home on the coastal canal just completed in 2009. Can you imagine a one million dollars off coupon? Wonder if there’s an expiration date? Wonder if transferable to other cities and properties? Wonder when we’re going to see these in Dallas?

Did Dallas Miss Out On The World’s Biggest Real Estate Boom?

Wick poses the question over on Frontburner, with this colorful chart. I think we need to keep in mind that the purple line that represents Dallas real estate values is an overall average of everything from Preston Trails to Oak Cliff. There are parts of town –Park Cities, Preston Hollow, Lakewood — that, if graphed, I think would look more like Seattle. Real estate is about as local a story as you can get. And I wish I had bought more real estate in 1999.

Zillow Hearts Dallas’ Biggest Real Estate Deal

Yep, even those folks out west are impressed.

D Sale of the Week: 6202 Mimosa

Walk right in, tell the movers where you want everything to go, and just start living in an impeccably-designed, perfectly thought-out custom home built in 1999 by Joe Kain, designed by renown Dallas architect Robbie Fusch. 8,000 square feet well placed on this 112 by 150 foot Preston Hollow lot east of Preston Road, so you have just enough yard for pets plus this inviting infinity-edge pool. Five bedrooms, richly panelled study, mud room, wrapping room, home office, guest suite, hand-scraped hardwood floors, virtually all the latest and greatest. Great location, neighborhood security patrol, lock and go at your leisure. 

$2,450,000.

Agent: Ralph Randall, Dave Perry-Miller & Associates, an Ebby Halliday Company: 972.733.9613

Is Highland Park One of The Most Expensive Places To Live In The USA?

Highland Park, Texas made Business Week’s top ten list of the most expensive suburban communities, though we know HP and UP are not really suburbs but an island within the city. Frankly, I was surprised: Atherton, CA was first — no shocker, all the Silicon Valley big wigs live there — median home price $3.8 million, then Highland Park, Texas median home price $937,500., then Scarsdale, NY at $1.23 million. I guess it was HP’s nonretail spending at 245%, which was really a shocker, that upped the cost of living ante. Seems that some financial gurus are suggesting that folks who live in places like HP/UP and are finding it hard to make ends meet sell their homes in the pricier communities and seek shelter in lower cost areas — but to do that here would tack on the added expense of commuting if you moved to, say, Frisco. Or if you moved to a North Dallas ranch home you might end up forking out $20K a year for private school. Why not stay in HP and pay the high property taxes (ouch), at least those are deductible. I don’t know yet what I think about this article. Or this. What do you think?

Real Home Buyers: KRLD’s Ernie Brown’s New Plano Digs

KRLD radio personality Ernie Brown recently moved from the West Village to a new “stately Brown manor”  WAY up in Frisco — Shoal Creek Villas — so close to 121 you can see the highway from his second floor. But for Brown, it’s well worth the drive.

“It’s the quietest house I’ve ever lived in,” he says, “it took me two weeks to know that no noise is normal.” The house was so quiet it was keeping him up at night, in fact. You would think he wanted to be closer in to his job, like he was when he lived five minutes from the KRLD studios at Mockingbird and Central.  In fact, that was TOO close to work for him — Brown says he’d often go to a sandwich shop just to mentally prepare himself for work. Or wake up.

So here’s the bachelor pad, a two story, 2800 square foot home he picked up in the mid $300’s. Smart buy: Brown’s surrounded by homes that are more expensive, including the one next door listed for $424,000. For a bachelor, the house was in great shape. His kitchen stove was so spotless I asked if anyone ever used it.

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Steve Brown’s Pain Comes In The Nick Of Time

My husband just called and told me to copy and laminate Steve Brown’s Real Estate Report in today’s DMN. (Our neighborhood values, he says, have declined almost 30%.) Why laminate? Because next Friday, the Dallas County Appraisal District will be mailing out thousands of notices of valuation on all our properties.  My sources tell me they are going to have to enlarge the parking down at DCAD offices: it’s going to be a bloodbath. As for Browns’ reporting, he’s right on: what’s moving, if anything, are first time home buyers in starter homes — less than $100,000 to $300,000, spurred by the $8000 first time home buyer credit. (Stay tuned.) Homes above $500,000 to $2.5 million are sitting. Cannot move. Cannot get loans unless you have near perfect credit (”Nothing less than 620,” says Barbara Meager at Granite Mortgage) and big time equity. (Credit scores are the new SAT.) But what Steve didn’t tell you is that over the $2.5 to $3 million dollar mark, the mega homes are moving under the radar, off MLS, as I’ve told you on this blog and elsewhere.

State Of The Dallas Market: We May Not See Mega Leverage For 50 Years

W. Michael Cox is the Director of the O’Neil Center for Global Markets and Freedom at the Cox School of Business at SMU, and a Chief Economist for the Federal Reserve Bank of Dallas for the past 25 years. Cox, appraiser Brad Edgar, and economist Britt Fair (Hexter-Fair Title Company) spoke to a group of Realtors today about the Dallas market. Couple highlights:

No inflation is going on right now, the government is trying to stop de-flation. Almost all the experts agree that we may see eventual inflation because of the economic stimulus — that money pumping into our systems. We may have a window of about 12 to 16 months before interest rates will have to rise to control it.  The Fed can and will monitor inflation tightly 24/7 and may in fact want to see a bit of inflation, say 2 to 4%, anything but hyperflation or deflation.

The banks still aren’t lending, what will it take to move them? Maybe higher interest rates. Cox doesn’t think you can pass laws forcing banks to lend money.

“When the risks and rewards are in balance, they will lend,” he says.

Our day of reckoning for the stimulus package will be when we convince China and Japan that treasuries are worth buying.

Why are the banks doling out TARP funds to the “troubled” banks rather than the solid banks, so the solid banks could lend the funds?

Good question, said Cox.

Unemployment is starting to affect everyone, even in the higher net worth classes. Though Texas thankfully lags the nation in unemployment, layoffs may not be over yet. Two solid businesses now: healthcare and education.

And these men think Americans’ spending habits have changed dramatically, maybe forever for a generation. Just as they did after the Great Depression, people are tightening their belts. Whether they keep them tight and how many years they live lean depends on how affected they are by this economic downturn, how long it lasts. We may not see mega leverage for another twenty years.

Higher taxes may force people out of states like New York and California, and we could see another wave of  sunbirds heading here for our sensibly valued homes. Watch: commercial real estate failings. Be glad we live in a city that continues to attract business and generate jobs as well as technology (intelligent medical systems being developed at Texas Instruments) and varied corporate headquarters. Buffalo, New York was home to the largest number of wealthy individuals in the U.S…  once upon a time.

Real Estate & The Texas Legislature: Is There A Transfer Tax In Our Future?

A few bills on tap in the Texas legislature aim to get more out of our pockets when we buy homes. Grrrrreat. They would impose a fee on the transfer of real estate to benefit the state’s Housing Trust Fund.  Realtors were in Austin last Tuesday hissing about  SB 950, SB 934, and HB 3163. Although the transfer fee in these bills seems small — $10 — other states that implemented similar measures saw their small fees turn from small change to a percentage of sales price, which Realtors fear could ultimately price some Texans out of the housing market. Besides, closing costs are pricey enough. The Real Estate Center at Texas A&M University concluded that the creation of a transfer tax on real estate could cost Texas $955.5 million in lost economic activity with 11,575 jobs lost, not to mention a few trips to Starbucks.

Dallas Has Its Share of Mortgage Ripoff

The government announced yesterday a multi-department effort to crack down on mortgage scams - pulling desperate people into phony modification programs, promising them ways to keep their home from foreclosure, then ripping them off. I asked Dallas bankruptcy attorney Rustin Polk if he has seen any evidence of this hanky-panky in Dallas — and he said unfortunately, yes. Too many: One client was working on a loan modification with a “loan counselor”, paid several fees and appraisals during a six month period of time. The lender went ahead and posted the home for foreclosure today.  Yesterday at noon, the loan counselor said to his client, “Oh by the way, we just found out that your mortgage lender doesn’t do modifications.”

Another client paid a local “law firm” that advertises on a local Dallas radio station $3,000 to get his mortgage modified; the firms first piece of advice was to intentionally get behind on his mortgage. The mortgage company posted him for foreclosure, the modification people told him that they couldn’t help him. Now he now faces the prospect of losing his home if he does not pay three months of payments all at once, plus all of the bank’s legal fees related to the foreclosure, and he’s out the $3,000. What a scam.

Then there’s the “foreclosure rescue specialist” called North American Foreclosure, LLP.  Folks need to be careful, says Polk, a bankruptcy attorney and home foreclosure expert for 15 years.

“Sadly, a person will try whatever they have to in order to keep their home and a roof over their kid’s head.  And who can blame them?,” says Polk. “But a con artist can sense that kind of desperation.   The number of so-called “loan modification counselors” has quadrupled in the last 18 months as the hucksters have opened up shop.  These fly-by-night operators target desperate homeowners– the easiest mark, but also the least able to afford such a scam.”

Dallas Home-Buying 101: Ideal Interest Rate Not In The Newspaper

Most consumers who are buying homes tune into interest rate talk more readily than sex,  antennae positioned to pick up any waves indicating lower rates and fewer points. For those of you new to home buying, I will be offering Dallas Home Buying 101 periodically on this blog to help ease you into the (sometimes scary) process. Obtaining financing is usually step one in the home buying process. Here’s why: get pre-qualified before you begin your house search, you are ready to pounce when you find that perfect property. With financing in your back pocket,  you have a competitive edge on the other buyers who may not, ahem, qualify for a mortgage and therefore cannot bid against you.

Some of us used to look in the newspaper for financial information, like ads on mortgage rates. Well those days are gone because mortgage rates can now change up to five times a day.  As The Mortgage Reports tells us, you’d do better to follow rates through Twitter. Take-away: pre-qualify for your mortgage loan, and get the best possible rate by asking your lender to send you rate changes on Twitter.

Ray Nagin Must Pay Homeowners Fees On Texas Hurricane Home… Or Else

You remember Clarence Ray Nagin, Jr., yes? The Mayor of New Orleans? Well, Ray and his wife have a townhome in Frisco built by D.R. Horton, off the Dallas North Tollway and Stone Brook Parkway, which he has referred to as a modest “second hurricane home” since his wife has family here. But seems he hasn’t paid his home association fees of $1507.14. And in Texas, we know what that means: though we are a strong homestead state, not paying HOA dues can result in foreclosure. And in fact, the Casa Bella Owners Association has filed suit against Nagin for the past due moola. If he fails to pony up, the property will be auctioned off April 7 in Collin County. Over the weekend, CBS11 reported that the Nagins plan to “sell off” the property to pay off the debt; Collin County has the property, which he and his wife bought May 31, 2007, valued at $181,968.

I’m re-thinking my stance on hating homeowners associations.

What Price Home Does An Annual Salary Of $250,000 Buy?

I’m just saying here — looking ahead to how much house someone who earns $250,000 a year will be able to buy as we re-distribute the wealth. Not saying it shouldn’t be re-distributed, not saying it should. (Thain’s should.) OK, $250,000 in the 28% income tax bracket. That leaves $180,000. Or a monthly income of $15,000. Lots of money. We had a car lease of $1,000 on that Beamer, and maybe a little college loan out there. We are down to $13,000. We charge about $4500 a month — we pay that off. We donate and/or fritter another $1000. Did I forget anything? That leaves us $7500 for PITI — house payment, taxes and insurance.

I ask you: what price range home can you afford with $7500 a month?�

Case-Shiller: Biggest Home Price Drop Since 2000

2000 was when Standard & Poor’s/Case-Shiller National Home Price Index first started tracking home sales, but the drop is significant. However, this very cool interactive widget from the NYT allows you to find your city — Dallas is one of the 20 and at 4.3% our price plunge is a mere dip (and I contend it depends on the area, some are actually up and lots are hot hot hot) compared to the double digits other cities are experiencing. U.S. home prices sank a record 18.2% during the last three months of 2008, compared with the same period in 2007.