So do you think these homes are a good market indicator of Dallas tenants? I know exactly where 215 E. Woodfin is — pretty far west of Mr. Fountain’s home. Again, is Kreditor charging $829 a month for property taxes? That’s more than the rent!

“The “Had Enough? Vote Republican!” model is so popular this fall, you’d think a kind of amnesia gas is seeping out from our storm-sewer drains. But then a strong sense of the past has never been a signal feature of the Dallas psyche.”

The Fountains also live about a block from the tollway in a 1960′s era house, so the “amnesia gas” could be auto pollution.

I spent the better part of my day talking about “Z” sales with experts, because I have been concerned about them for awhile. But now I am more concerned. I received an email from my AOL HousingWatch editor asking for a story after they got Fountain’s piece through Google : what’s this Z price stuff? Is keeping low-selling prices out of the computer system building a level of unreality into Texas real estate, what Fountain calls “poisonous”?

“It’s poisonous,” my friend Mark Kreditor told me over lunch, speaking of the Z phenomenon. It might help support the market in the short term by keeping lower prices out of the system, “but it’s like a drug that keeps you pumped up — after a while it catches up with you.”

I don’t think Z sales are supporting the market at all, and neither do many of the people I spoke with. And I’m concerned that Fountain’s “reporting” has not been accurate. (Note to self: send letter to CU classmates at NYT.) Veteran appraiser DW Skelton has been talking about Z sales for years, saying they are hurting our market values, not keeping prices artificially high.  As I have told you before:  Realtors “Z” out a home’s selling price to keep it confidential, non-disclosed. The last listing price of the home goes into the computer. D.W. tells me appraisers are not permitted to use “Z” sales for a primary comparable unless the sales price is in a public data base. If “Z”d out, it’s not public. The new appraisal management companies that have come about as a result of the HVCC also do not use “Z”d sales. It can only be used on a HUD 1 secondary form. “Z” sales could, in fact, be slowing our market down.

Non-disclosure may very well be a Bible Belt leftover. It was intended, say experts, to keep the taxing authorities from knowing the price of the home for taxing purposes and also to keep homestead sellers from revealing to neighbors how much they paid for ranch land. Or, in later years, keep people at church or in the boardroom from knowing how much you paid for your mansion.

“At one time it worked, ” says Skelton. “In my opinion, it doesn’t, anymore.”

If a home sells for less than listed, MLS numbers do not reveal the actual sales price and are therefore not accurate. If the home sells for MORE than listed price, and the sale price is “Z”d, the market is also artificially, and incorrectly, low.

Bottom line: “Z”ing  is keeping appraisers from having accurate numbers, particularly in high-end sales. Would you buy a stock if you only know how much 50% of the buyers paid for it?

We looked at the MLS sales for Preston Hollow, 9/2009 to 9/2010: 27 sales over $2,000,000, 45% “Z”d out.  Park Cities, same time frame, 50 sales over $2 million, 25 or 50% “Z”d out.  The more expensive the property, the more “Z”d out sales: 8 properties $5 million and over sold in Highland Park in this time frame, 6 prices were “Z”d out.

So who cares, let the rich get screwed on their McMansions, they can afford it. The “Z” phenomenon is spreading, as Kreditor points out. Lakewood, area 12: 134 sales of homes $500,000 and above, and 18 were “Z”d sales. But of 10 homes that sold for $1,000,000 and more in Lakewood last year, half were not reported. Plano: 18 sales  over a  million last year, 7 or 40% “Z”d out.

So it looks like even homes in the $500K range can be ripped off by this non-disclosure. Another agent had more good points:

“As for the non-disclosure issue that this author brings up, with so few sales out there, it could cut both ways. If you don’t disclose because you’re trying to hide what you paid, you potentially could end up hurting your own value if you had to sell within a year or two. As an agent, I do use prior sales of a potential listing in order to get a feel for what it should expect to sell for now, depending on how long someone has owned it, that’s a helpful tool for the seller and myself. As an agent, it’s very hard to guide a seller if the best sales out there were not disclosed and obviously, when the appraisal is done, the appraiser can’t use those sales, either. I think as agents, we shouldn’t be encouraging this but as a buyer, it is your right.

I do take issue with the author saying that Dallas is “not a normal market”. I’d ask him to describe a “normal” market right now. Are Las Vegas or Phoenix where prices have plummeted, “normal”? None of the country is experiencing normalcy at the moment.

I also happen to think it makes a huge difference in the part of Dallas you’re investing in…in every city there are better parts of town to make an investment than others. I’m curious, if this is such a bad city to own rental properties in, why do it? Why hasn’t this person-Mark Kreditor (kinda a funny name considering the subject at hand)-sold his Dallas investments and gotten out of this “cesspool”? I assume there is some sort of upside or he wouldn’t own anything here at all. I mean, he’s had 20+ years owning property here according to the article, which one would think, is more than enough time to get a feel for the rental climate and practices of renters.

Another point is-do we want Dallas crawling with investors? I say-No. That’s how so many of these markets were so adversely affected by the downturn in the housing market. I don’t think we want speculators flocking here and buying everything in sight up. That might help temporarily but it isn’t a recipe for long term health.”

And this: I’m told that Realtor now must report ALL  sales figures in the North Texas MLS, or suffer a $1000 fine? Anyone know if this is actually happening?

When Preston Hollow became a separate town, it had no taxes at all.  They were going to do everything with donations.  That lasted about as long it took to build the city hall (now Ebby Halliday’s office building at NW Highway and Preston).  They became part of Dallas.   More importantly, I am fairly certain that to leave the City of Dallas, both Preston Hollow and the rest of Dallas would have to pass the move with a city-wide vote.  And how do you think that’s going to turn out?   Not to mention, by the time PH (and I live here) got through providing itself water, police, city hall, city  council, etc., and Dallas got through charging PH residents to use its streets, libraries, street lights, schools, rec centers, parks, buses, etc., Preston Hollow would be happy to pay its taxes and stop wanting everything without paying for any of it.

One of  the 15 — oh now 16 — “pro-divorce” writers gave me permission to post her email and name:

I read your article about Preston Hollow divorcing Dallas with great interest. I, too, have been frustrated, angry, and vocal about the increasing tax pressures that Preston Hollow and much of North Dallas face to support the infrastructure and services the entire city enjoys. I have been a Dallas Morning News “Community Voice” this past year and had an entire article devoted to this topic and the unfair levying of taxes through real estate property.

After living in Dallas for over 20 years, I am considering moving out to the suburbs where I can enjoy better services and cheaper taxes (both in rates and property valuation.) However, after reading your article, I have a hope that I can stay.
I would like to join your “exploratory” team. I honestly had no idea that de-annexing was a legal option. Even if it never came to pass, exploring this option could put pressure on city hall to understand the implications of what would happen without Preston Hollow’s taxes.

I look forward to hearing from you,
Stephanie Mueller

Make that 17 pro-divorce letters. Now.

“Because the rate increase will bring City Hall an additional $39.5 million in 2010-2011, just 46 of the city’s 13,400 employees were forced out of their city jobs on Oct. 1, the beginning of the new budget year.

Another 30 employees retired or resigned prior to the budget passing.

And libraries and parks, the two city departments that stood to take the hardest hits from budget cuts, ended up all but untouched.

The library lost no employees and parks lost a total of three. The services they provide, which were expected to be scaled back dramatically, should actually be enhanced in the coming year.

The department that lost the most employees was public works and transportation, where 20 people were laid off. No other department lost more four employees through layoffs.”

And you’ve got to see this cool map gizmo, (scroll down) where you can see how we add up property-tax-wise to the rest of the nation. Also good for checking out taxes in other states.

Another way to look at this is to compare property tax burdens to median homeowner’s household income. For this, the prize goes to Passaic, New Jersey where the median real estate tax bill in that county swallows $7,095  or  8.34 percent of the median household income. Lord that’s a lot. Together, New York and New Jersey together accounted for all of the top 10 highest median property tax burdens.

But guess who is right behind? Texas. From the Tax Foundation:

“The top 10 states for median real estate taxes as a percentage of median home value are, from 1 to 10: New Jersey (1.89%); New Hampshire (1.86%), Texas (1.81%); Wisconsin (1.76%); Nebraska (1.76%); Illinois (1.73%); Connecticut (1.63%); Michigan (1.62%); Vermont (1.59%); and North Dakota (1.42%).”

And don’t yell at me for saying it — blame the Dallas Business Journal. (We can never blame the politicians, of course.) Based on data from the Tax Foundation,  DBJ reports the median annual property tax payment in Texas for 2009 was $2275. For Dallas county in 2009, the property tax payment was 2 percent of the home’s value, or $2637.  And the DBJ says…

“The total property tax bill ranked Dallas County 193^rd among all counties surveyed, but as a percent of home value paid, the county came in at 53^rd.”

Looking at the reports for all the other counties in North Texas, yes, we are still less. But maybe not when you add on DISD and city of Dallas. And, of course, the new 6.5% take hike for the city of Dallas and the new tax hike for Dallas County…

The American Civil Liberties Union challenged Kennesaw’s law as unconstitutional, but the federal court let it stand, although the city did add a clause exempting conscientious objectors, criminals, the mentally disabled and people who could not afford a gun.

They added that clause after the fact. But do you see where I am going with this?

If Preston Hollow de-annexes from the city of Dallas, they will need their own police force.  Or they could just beef up the many already-in-place security patrols, like the Preston Hollow North patrol my husband and I helped found when we lived over there.

Or they could take a lesson from Kennesaw, and just make every household own a firearm. I’d wager half the homes in Preston Hollow already do, anyhow.

Think this might have stunted Kennesaw’s growth? Naw. And the town has a lower crime rate than surrounding communities:

“30 years after the law was passed, it is still in place and still popular, not least because Kennesaw’s crime rate has remained disproportionately low, even as the town’s population swelled from 5,000 in 1982 to almost 35,000 now. According to the latest FBI statistics, Kennesaw recorded 31 violent crimes – mainly robberies and aggravated assaults – during 2008. In other similar-sized local towns the figures were much higher – 127 in Dalton and 188 in Hinesville. For property crimes – largely burglaries and thefts – Kennesaw recorded 555 while Dalton had 1,124 and Hinesville 1,802.”

What I would have asked: has anyone accidentally shot someone with all those guns sitting around? (They ought to require gun locks.) In any case, from the looks of this crime map, Preston Hollow has little to worry about.

Margolin’s quoting from a letter sent to the council from D Mag’s Candy Evans, who writes about Dallas real estate. Guess how she wants people to vote? I bet you can. Evans warns that people will “freak out” when they see property tax rates in Dallas and then look to Plano.

(Okay guys, splain me this: you move to Dallas because you want to live in an urban center. You move to Frisco and Plano because you want to live in the suburbs, or at least don’t mind it because you’ve got kids or need room in your house for your Nickelback memorabilia. People who want to live in urban areas already know they’ll pay more for most everything. No shocker. That’s why some people prefer the suburbs. Is it property taxes that are turning people away, or are these already people who were amenable to suburban living, regardless?)

Posted On: Wednesday, Sep. 22 2010 @ 10:40AM

Andrea, here’s what happens:

Young couple starts looking for a house, all dreamy eyed, lists in hand. So cute. We want x, y, and z (basically, the world). Our budget is $200,000. We want to live CLOSE IN because we love Dallas and want to spend less time and fuel on the highways driving in. OK, fine. They look for a house in Midway Hills, Lakewood, Ravinia Heights and what they see in their price range , well, it’s not so hot. Fixer uppers the closer you get in.  Smells like geezer.  They do the math. They realize they may have to beg their parents or someone for help with the down payment if they cannot get an FHA, hell, will FHA even exist much longer? They realize they will need a couple thousand for new flooring and paint. All this rolls in. Then they figure their average monthly mortgage payment when they meet with the loan officer which includes TAXES and INSURANCE. Wow, that’s more than we expected. Gee. Let’s look for a smaller house. $150K. Somewhere along the line, an agent says the P word. Or A word. It goes like this: I know you guys want to be close in and really want to live in Dallas, but you get so much more for your money in Plano, Allen, and Frisco. Newer homes — means less remodeling. Bigger yards. (But no trees.) Yeah, you’ll have a commute but maybe you can telecommute one day a week. Let’s just go take a look.

And what do they see up there? New, clean, OK maybe boring shopping centers, a sense of safety, and oh yes really great schools just in case we have an “accident” (but no kids for five years, we swear). At this point they are mummified from looking at affordable geezer fixer-uppers close in and eyes are rolling thinking about paint colors. They just want to get this over with. They do the math and find it is cheaper to buy a home 30 miles outside of Dallas as long as the price of gas stays under $3 a gallon. So they do.

Not everyone feels this way, of course.  But what I hate the most about what happened in Dallas yesterday: we chipped away at Dallas a time when people need it least.  Fabulous urban cities are becoming unaffordable for the middle class. Would it have been so hard to take a hard, long look at the budget because of the Depression Recession and say let’s hold off ’till next year, let’s make do. No, we had the same old BORING “haves” versus “haves-not” argument that I have heard for 30 years: “South Dallas has been  holdin’ on for a long time” and we are sick and tired of it. Well, what do you think we all are?  Do we feel pain any less because we live north of the Trinity?  Oh you are “holdin on” no more.  PS: Bishop Arts District ROCKS.  The southern part of this town is about to take off like crazy. Talked to two developers last week, asked where they’d buy a small house now for maximum return, BOTH said south Dallas. (One said the Bird Streets.) And we’ve already had a tax increase. Property values are not going up anytime soon — unless we see inflation. I said no not because I want to be mean and selfish and limit library hours and close swimming pools. I love the library, I love the arts, kids need to cool off.  People who love the arts can support them, but why do we have to force everyone to support a Latin arts center (for example)? If things are tight, maybe we charge nominal admission to the pools just this year. As for infrastructure, it dawned on me tonight, as I drove east on Northwest Highway, that we DO have a lot of potholes. But I always drive around them, and I drive slower. (I drive like an old lady ’till I hit I-35. Then it’s pedal to the metal.)  If you are ruining your car racing over potholes, maybe you are driving too fast and need to slow down. You can kill tires by popping over speedbumps too fast, too — um, don’t ask how I know.

It’s all done now. This will cost the average ($212,000) home-owner in Dallas $64 a year. If you have a home valued at $600,000, that’s $192, plus however much the county taxes just went up. That’s a few less dinners and lunches out, less shopping, or as one reader said, fewer trips to Starbucks, big deal? We are going to have to re-adjust our budgets so the city doesn’t.

I just think this is a really bad time for consumers to be doing that.

Thank you.  I quoted your email during the debate.  Obviously, it mostly fell on deaf ears.

Best regards,

Ann Margolin

Council Member

District 13

ann.margolin@dallascityhall.com

214-670-3816

But here — U.S. News & World Report wrote up the ten places where you can own a home for less than $800 a month. What a great way to package it — I always want to know what something will cost me per month, not the grand total. So here’s the list, and guess which Texas town makes the cut? Austin. Yep, because don’t forget taxes and insurance figure into that monthly house payment. Dallas, sadly, did not make the list.

If you disagree with me, I challenge you: send me a home in Dallas that you can buy, taxes and insurance included, for less than $800 per month!

Montana is making national headlines lately, and for a very proud reason: We are one of only two states in America operating without a deficit.

The State of Montana has balanced its checkbook five years in a row with no tax increases, no cuts to education or other essential services, and with $327 million in cold hard cash left in the bank.   The Wall Street Journal, The New York Times, FOXNews, MSNBC and CNN (among others) have all taken notice, describing our work as a national example of fiscal discipline.

When people from out-of-state ask me why Montana is doing so well, I say it’s because we’re running government like a ranch.

They think I’m joking when I say that.  I’m not.  Since ranching is what I knew before running for governor, my administration uses the same basic common-sense principles that a rancher or farmer (or for that matter, any small businessman or household) must use in order to survive. It works surprisingly well.

The rules are:

1. Keep some grain in the bin. A few years ago when the economy was strong, like other states we ran a surplus.   We sent part of that money back to Montanans in the form of a $400 tax rebate — the largest tax relief in Montana history — and then put the remaining $250 million in the bank.  That money has allowed us to get through the recession in solid shape.  Contrast this to the behavior of 48 other states, not to mention the federal government. When they had extra cash, they found ways to spend it.  Now they are raising taxes or borrowing money–or both.

2.  Live within your means. When the recession hit, I told my cabinet members to cut their agency budgets by 5%.  Families and business are cutting back and the state of Montana should be no different.  But we didn’t cut essential services.  We looked for ways to save money by simply doing things with greater efficiency–and it worked.  As a result, those agencies are now providing the same essential services to Montana citizens–whether fighting forest fires, printing hunting licenses, paving roads or imprisoning criminals–for 5% less than before.

3. Challenge every expense, and do more with less. Where did we find these savings? It wasn’t easy. We spent five years coming up with ideas. We reviewed every single item that the state spends money on, and if we were buying something for 5 cents we tried to get it for 4.  In all, we trimmed about $80 million in costs.

We replaced employee travel with video-conferencing. We demanded rent reductions from our commercial landlords, or in some cases simply moved to cheaper premises. We turned down thermostats, auctioned off state vehicles, and stopped printing unnecessary items that can be viewed online, like the state phonebook or the Revenue Department tax booklet.  We even had a contest in which we solicited ideas from the public, with the winner receiving a shiny new coin made of Montana palladium.

And even though the state workforce was already very spare (this decade, Montana’s economy has grown 65% while the number of state workers has risen only 2.3%), we reduced it further by leaving jobs vacant if someone retired. We also froze state pay, and to set an example the Lieutenant Governor and I cut our salaries by $17,000.

4.  Don’t waste your time with people who say one thing, and do another.

If someone knocks on your door this fall looking for your vote and taking credit for our solid financial shape, make sure you do your research.  In the last several legislative sessions I’ve vetoed about $40 million in spending bills. And back when we set aside the surplus to prepare for an uncertain future (that safety cushion which has kept us afloat while almost all other states are drowning in red ink), Republican legislators loudly criticized me for it.

Now, even their own party leaders in Washington, including Newt Gingrich and Denny Rehberg, are praising us for what we did.

5.  Don’t rest on your laurels. Just because we have one of the most efficient state Governments in America, don’t think we aren’t still working every day to cut costs.  In fact, I want your help.  Go to www.governor.mt.gov <http://www.google.com/url?q=http%3A%2F%2Fwww.governor.mt.gov&sa=D&sntz=1&usg=AFQjCNEzDDWZwlx4Yu83LxWbr_VL3A-DQg>  and give me your own savings ideas, so that Montana can keep showing the rest of the country how it’s done.

The more I think about it, the more I see this as a WIN-WIN. Preston Hollow residents who send their children to DISD could just pay tuition to DISD — who I’m sure would lap it up. We could easily create and hire a security force by expanding the neighborhood patrols, that’s a couple thousand a year max. We could buy water from Dallas or whoever sells it to us at the best price.  Fort Worth, how much would you charge for water?

Now some on the city council are saying it’s time for places like Preston Hollow to “pay up” — as if they — we — have not been paying our fair share.

Until 1945, Preston Hollow was its own municipality. Preston Hollow residents agreed to be annexed by the city of Dallas in 1945 — I’ve been told the reason was primarily for water.

If this property tax hike is passed, Preston Hollow residents will see the biggest increase in property tax bills ever, from the empty nesters on fixed incomes in those 2400 square foot ranches to the 5500-square foot McMansion owners who are dreading the next rise in their adjustable rate mortgage. It is so easy to scream “make the rich pay”, but really it’s the median-price homeowners who always end up picking up the check, just like they will in every district in this city.

So I wonder, what’s the process to de-annex Preston Hollow from the city of Dallas?

“Eight [council members] are transfixed on increasing the rate to the maximum level, and six are transfixed on not raising it at all,” Neumann said.

“I am getting a cold reception from my fellow council members, but I’m undaunted in trying to find a compromise,” he said.

The chart I will post next shows that residents were polled in every city council district, and even those who own property in the districts where city council members want to raise taxes — such as Angela Hunt’s — overwhelmingly said no new taxes.

And it appears we can look forward to an increase in Dallas County taxes very soon, too.

Are our city leaders (except for Neumann)  deaf?