“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.

]]> http://dallasdirt.dmagazine.com/2010/06/16/not-such-happy-campers-nyc-protests-in-banking-district/feed/ 1 http://dallasdirt.dmagazine.com/2010/03/04/dallas-real-estate-news-citibank-is-back-trolling-for-bidness/ http://dallasdirt.dmagazine.com/2010/03/04/dallas-real-estate-news-citibank-is-back-trolling-for-bidness/#comments Thu, 04 Mar 2010 12:24:12 +0000 Candy Evans http://dallasdirt.dmagazine.com/?p=8323 I got a special delivery yesterday from Citibank and almost had a heart attack: the mortgage was paid, what could this be? Did the check bounce? Why would it bounce? Had someone stolen our identity? Why else would our dear mortgage company send us an overnight package?

They want us to refinance. They are offering a 4.375% interest rate if we qualify and $500 credit at closing.

Wow. The Citi never sleeps, and it likes to scare the beejesus out of it’s mortgage holders.

“…I started working on Fannie and Freddie reform from the day I arrived in Washington, and it took the impending failure of those two institutions to get the authorities (we needed at Treasury).”

Paulson confirms that he did indeed get down on his knees to Nancy Pelosi, but only to break the tension. Oh and Vanity Fair’s Todd Purdum got it wrong: he did not have a stomach virus. Enjoy.

As much as folks were bragging about their private jet “wheels up” trips a few years ago, I predict that everyone will be soon playing a game of my bankruptcy lawyer’s better than yours:

“My lawyer got my $60,000 credit Citibank bill down to $5,000.”

“Yeah, well we threw $150K in medical expenses on our Chase card and guess what, we didn’t pay one penny of it.”

By the way, non-recourse means that the lenders cannot come after your other assets for what you owe. So your lender gets the property but that’s it. Seems like our era of “free credit” is going to bring us an era of “no credit”.

However, the White House is mulling requiring ALL foreclosure candidates to  get into the HAMP program, the Home Affordable Modification Program that has thus far helped only 116,297 underwater homeowners in a year, before filing any foreclosure.

Maybe we can just bury all the unpaid debt like we do toxic waste?

Paulson: “Basically I found economics pretty much worthless during this thing. Now that’s an overstatement — Bernanke’s skill as an economist and practical skill and knowledge of economic history was incredibly valuable. But the economic models were worthless. The economist’s ability to predict what was going to happen when we were in the middle of a crisis was just…”

Tapper: “Very few of them saw it coming.

Paulson: Yeah.

It reminded me of last week’s crazy real estate headlines:

Home sales plunge 7.2% lowest since  June 2009

Dallas home prices up 3% in December.

Housing Continues Weak

Dallas/Fort Worth Foreclosures at Lowest Levels in Three Years

Northeast Home Sales Up 7% From Year Ago Levels, Prices Up 9%

Let’s look at the indicators.

Commerce Department’s January New Home Sales report was flat out terrible this morning: down more than 11 percent from the prior month, significantly worse than the 3.5 percent RISE economists had expected. New home sales, as I told you yesterday, at the lowest levels on record since 1963, when many of you weren’t even yet around!

This despite extending the homebuyer tax credit.

I know Case-Shiller said San Francisco, Dallas and San Diego area home pricing (existing homes, no condos) was up 2.7%, but honestly, really? Please tell me if you have sold a home recently for more than it was listed for last year. Commerce Department also reported that  median home prices for new homes last month fell 5.6 percent from December.

And good old Commerce Department telling us the brutal truth: contrary to hopes of getting supply levels down further, inventory levels of new homes have been slowly creeping up to a  9.1 months supply in January, up from 8.0 months in December and 7.8 months in November. That’s national, and way below the record high level of 12.4 months back in January 2009. Locally, Collin County reported 69 days on the market Q4 of 2009, down from 71 in Q4 of 2008, Dallas County 81 days on market versus 77 in Q4 2008.

See how much better off we are?

The Mortgage Bankers Association (MBA) reports that applications for home mortgages have fallen and notes weakness in mortgage applications for purchasing homes. Applications for purchases of homes fell 7.3 percent to its lowest level in nearly 13 years. (MBA blamed it on the weather, OK.) But the Association also admitted that it’s “another indication that housing demand remains relatively weak.”

And I’m looking at another press release from the MBA announcing a new program to allow qualified homeowners/borrowers who have lost their jobs to stay in their homes while they seek employment. Loan servicers would reduce the borrower’s mortgage payment to an affordable amount (based on household income) for up to nine months while they job hunt. Wow – -when have you heard of mortgage bankers being this touchy-feely? Once employed, the borrower would be evaluated for a loan mod under the Obama administration’s HAMP program. (And then it gets tacked on to the life of the mortgage but hey, better than losing your home.)

But here’s what sends the biggest chill down my spine: mortgage rates. I cringe when I think of April Fools Day, when the Fed ends its program of purchasing mortgage securities in March. Several mortgage brokers have said that anyone looking to buy or refinance might do better to get it done before April 1.

Are the drugs making me euphoric? Tell me what you think?

Folks, we are back in business!

Do you agree?

What I don’t understand is why buyers and Realtors are not telling the second guys to take a hike. ( Apparently, though, the feds are getting tough.) Perhaps the second lien holders threaten to jam up the sale somehow, which jeopardizes the Realtor’s commission, the buyer’s deal, so everyone just  pays to get the deal done?

Can someone explain? And is this happening here in Dallas or even Texas? If so, please contact me (off the record)!

That’s right. Once again, same story: what is killing this real estate market is the buyer’s inability to obtain financing, even after all the bail-outs.

Of course, maybe it didn’t help that the Wall Street guy already had three homes!

PS:  Her home in Southlake: the builder threw in the pool!

So here’s the deal, Steve. You buy drinks and I’ll give you the run-down on what I’ve got on tap for next week, and all your real estate stories will be sewn up for the year!