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Could HP’s Salary Cuts Further Erode Plano Real Estate Values?

I’m speculating here, but one reason why I am still wearing Debbie Downer glasses.

Building or Remodeling? Formals, Wine Cellars Are Out

Toured several new homes in Dallas yesterday, including a new, gorgeous $2.9 million spec home that has no formal living room. According to the architect/designer, Don Caperton, Caperton Johnson, two things are out: formal living rooms and wine cellars. The formal living rooms are considered a waste of space and building dollars. Unsaid but widely known: they also keep the Dallas Design District afloat and serve up to many a Dallas husband heart-attack-sized design bills. Wine rooms are also over-rated, costly to install, a legal nightmare if you have teenagers, and people never end up filling the cellar with all that wine.

They just drink it.

Next thing you know, people will be filling their swimming pools.

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?

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.

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.”

$275 Billion Home Stimulus Plan At First Blush

I know the reports are preliminary, but I am already getting ulcers over President Obama’s cure for our housing woes. Here’s my first report card:

A -$8000 tax credit for first-time buyers, l like very much. Assuming this will work like a section 179 deduction and come right off the taxes, not add 5 more pages or 6 hours of CPA billable hours to the tax return, essentially using tax dollars to help fund the home purchase. 

F- Revamping U.S. bankruptcy rules, giving judges the power to reduce mortgage payments and set lower interest rates. Excuse me, but I think part of our problem was that banks got too big, unregulated and complex. So now we are going to let judges play banker? This will slow down lending and banks will have to recoup their losses from somewhere —charge more to the customers who pay their bills, or higher PMI or PMI for everyone or higher interest rates.

Not fair, folks.

C – The government will match reductions lenders make to keep borrowers home payments at 31% of their income. What income — stated income? Does that include alimony?

Incomplete – Flushing Fannie Mae and Freddie Mac with $900 billion.

The Stimulus Bill and Home Buying

Reader James Clutts over at CSW Home Loan fills us in the details of what actually passed to benefit homebuyers in the Economic Stimulus package:

It now appears the economic stimulus bill will deliver be some significant benefits to those wishing to purchase or refinance a home. These include:

Ø A true first-time homebuyer tax credit in the amount of $7500 available for a qualified purchase of a principal residence between January 1 and September 1, 2009. I say “true” since, this time, the “credit” will not have to be repaid by the homeowner!

Ø FHA, Fannie and Freddie loan limits will be revised. While specifics have not been released, reports indicate the 2008 limits will be reinstated for 2009 with certain limited exceptions.

Ø Foreclosure mitigation and neighborhood stabilization is forthcoming. In essence, this means that there will be some as-yet-undetermined method for funding state and local efforts to abate foreclosure and stabilize and redevelop neighborhoods. of abandoned and foreclosed homes are authorized.

Steve Brown: DFW Average Home Prices Near 2001 Levels

News that housing prices have dipped is making the financial world all jittery today. I don’t know why this should be such a eureka — we have been saying for months now — homes that are moving are reasonably priced and buyers with cash in hand or financing are asking for deals. Everyone wants a deal. Even former presidents.

“Last month’s median house sales price, $129,000, was the lowest since early 2001.”

PRE 911. OK, but look at this:

“There are 37,224 homes offered in the Realtors’ Multiple Listing Service, meaning the area has about a six-month supply, which is considered a healthy inventory.”

Knock knock, Appraisal District, who’s there? 2001 home values…

Sanity Check: Property Taxes Levied By Developers?

I think this shocks me about as much as Nadya Suleman. I met with a property tax buster yesterday, who tells me that given the way the appraisal district raised appraisals this year coupled with the bleeding housing market, he thinks DCAD had better plan on valet parking come May.

Alternative Employment Opportunities for Dallas Realtors

Stoneleigh Heritage Gets Help From P.O’B Montgomery

P. O’B Montgomery & Company, a respected Dallas real estate and development firm, is now working with the Prescott-Apollo partnership that owns the on-hold Stoneleigh-Heritage Residences. (Or whatever they are now called.)  Mission: figure out what to do with that sad residence shell looming behind the Maple Avenue hotel. Early December, Prescott brought Montgomery into the picture to study all market options as an advisor, not investor. Apollo and Prescott have sought financing for the Stoneleigh project since their credit source ran dry in the fall due to the Wall Street financial meltdown.

“We are looking at doing whatever makes sense,” Phil Montgomery told me today, when asked if the residences would resume construction. “The market has clearly changed.”

Prescott’s Jud Pankey says the garage is complete and open, and construction attention will now focus on the courtyard. This month’s Architectural Digest feature on the hotel and colorful designer, Carleton Varney and his mentor, Dorothy Draper, has generated national interest in the project; Varney is coming back to Dallas in the spring to create more buzz.

If another developer were going to be engaged for this project, the most likely time would be when construction financing is being negotiated, said Pankey by email.

“Phil Montgomery introduced me to Apollo almost ten years ago, and we all try and assist each other when faced with a challenge,” wrote Pankey.

What we are doing, said Montgomery, is fairly routine.

According to sources, Al Coker is no longer handling marketing for The Stoneleigh Heritage Residences; Cynthia Pharr is handling media relations.

So Whatever Happened To P.M.I???

Did PMI have PMS? I actually had a dream last night about P.M.I. — that is, private mortgage insurance. (The trillion dollar bail-out is so mind-boggling I am dreaming about it.) I recall when we bought our first house we had to buy P.M.I. which was a sort of default insurance that would pay off the mortgage loan in case we didn’t. The bigger our equity has become over the years, the less we have had to pay.

But what about people who bought with zero down? Didn’t they have to pay P.M.I? Or were they, instead, encouraged to get second mortgages so that instead of having an insurance policy on default, they would screw over two banks instead of one?

May I make a modest suggestion: whoever initiated the dumping of P.M.I. helped make a significant contribution to the mortgage crisis and current financial meltdown. Agree?

Need A Painting Contractor?

Times are tough. The stock market is going deeper than the toilet. So maybe we need a painter without the frills? My favorite part about this contractor is the hand-painted line: “If You’re Piky Please Dont Call”

(Thanks to Ebby Southlake Realtor Patti Moore for sending me the photo).

Thank God We Live In Texas

While the rest of the nation lost jobs, we gained ‘em.

Inman: No Light At The End of the Tunnel

And moves by the Feds could even make this economic downturn worse, said a panel of national experts at the conclusion of day one at Inman Real Estate Connect .  This mess started, said one panelist, with a bunch of southern Californian banks who found it profitable to sell bundles of mortgage loans to investors seeking higher returns. That story is now so oft-repeated I recite it in my sleep:

“Loan originators were able to divorce themselves from risk by selling loans to Wall Street investment firms that bundled them into securities that were sought after by investors looking for better returns than Treasurys. When home prices collapsed and borrowers began defaulting, the losses on those investments and others tied to them rippled through the financial system, curtailing all types of lending.”

But I gasped yesterday when one panelist said that hidden in the fine print of the securitization process of the bundled ARMs was a non-default warranty from the loan originator of 90 days!   

November Home Sales: The Picture Isn’t Pretty

Today’s report on home sales may have us all pining for the New Year’s hangover headache, or bring on a new one: November national home sales plunged to their lowest rate since the National Association of Realtors have been keeping records. Lawrence Yun, NAR’s chief economist, says a home sales stimulus plan is sorely needed. I am off tomorrow morning bright and early to Inman Real Estate Connect in NYC where Robert Shiller will be speaking — as well as Mr. Yun. Coming on the heels of this downer report, it ought to be a very interesting meeting and I will keep you posted. Also at Inman: unveiling of new company launches such as Dwellicious, a social bookmarking site to help buyers search for their next home.

Mortgage Rates: What’s The Story, Glory Or Gory?

My prediction: glorious low rates in 6 months. Today was my last full day of class at Champion School of Real Estate before my elective and then — I take the state exam! I am getting my real estate license to be a better real estate reporter for the D Empire and our forthcoming new website. Learned a ton – have TOTAL new respect for agents and brokers. From remembering intermediary to sub agent to IABS forms always need to be in size 10 type to HB 489 to independent contractor status to TRELA and TREC, ostensible authority and agency by estoppel, MLS to agent with appointment, without appointment, all I know is HOW DO YOU AGENTS DO IT? And I need an appointment with a glass of wine!

But, while I was ensconced in academia, history was made in the interest-rate realm. Here a couple of takes on that, jump for one from Philip Walker, one of my favorite agents at Keller Williams Turtle Creek, who brought lunch to recruit the A-plus students. Mortgage rate comments are on and the meter is running:

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Dallas Fort Worth “Moderate” Risk of Mortgage Default And Pop Quiz

As usual, those bad boys of California, Arizona and Florida have major cities all ripe for more mortgage defaults. We are moderate, but look at McAllen-Edinburg-Mission, TX. Did an interview last week with someone who is developing in that area and in a word — HOT!

Pop-quiz: what is the one home market in the world where there is an under-supply of housing and the middle class is buying homes faster than the builders can build ‘em?

Have Dallas Condo Prices Increased?

Over on Frontburner, Wick Allison posted Case-Shiller’s not-so-gloomy home price numbers for Dallas — down far less than the rest of the world, as I told you. But he also found that average  Dallas condo prices were UP by 11.1 percent…which I find just plain curious.  That’s third quarter 2008 pricing with an average tag of $148,000 — ain’t exactly the Ritz. Still, any reason why coming on the heels of news that the Stoneleigh Heritage is on ice etc. etc? 

Breaking News: LFT To Close In Victory Park

Ort Barona is closing LFT at Victory January 1, starting their liquidation process sale tomorrow with merchandise — just unpacked merchandise — marked down by 25%. Chalk it up to what is quickly becoming worse than the worse four-letter word — the economy.

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