It's All About Perspective

I was just reading this post on Dallas Dirt where an ignorant real estate jockey think they know more about the real estate market than the experts. So I bristled up and needed to blog on this New Years Eve Eve.

I will be running year end sales statistics after the New Year so we can put all of the stories to bed and you can make up your own mind how "bad" 2007 was for real estate in Dallas. But I couldn't wait to post this from a great blog straight out of Irvine, CA that dedicates itself to sharing stories about sellers who are losing their asses. Here is basically the whole post.

ZIP
92602 $662,000 -78.4%
92603 $760,000 -31.3%
92604 $630,000 -31.3%
92606 $867,500 -56.0%
92612 $397,500 -14.3%
92614 $650,000 -63.6%
92618 $742,000 23.5%
92620 $892,250 -66.7%

This is the first median I have seen reported under $400K (92612).

I'm not sure if these are year-over-year statistics and there are some other numbers he includes in the post that I didn't know what to make of them. But that's not the point. Here's what you should take away from this.

1. Dallas will never see 60% percentages in appreciation year-over-year which means we will never see these percentages in depreciation as well.

2. Dallas is doing very well heading for a 5% appreciation overall for 2007. Compare that with the -78% depreciation of zip code 92602 in Irvine, CA. We need to be grateful and put our great real estate market in perspective.

3. There is a zip code in CA with an average sales price under $400K. Investment opportunity? I think so.

Am I off base in my thinking? Am I being overly optomistic? I dont' think so. I think I am being realistic. Most important, what do you think?

University Park Sales Stats

My one and only DREB reader other than my mother, Jim, asked for some UP stats so here you go. Note: All of these numbers apply to homes over $1 million. There are currently 96 homes on the market over $1 million. Of the 46 homes on the market built after 2005 only 2 are resales and the other 44 have never been lived in or purchased.

Eight homes sold in November (only 1 built after 2005) which at that rate would take 11 months to deplete the current inventory on the market.

Now for some sales numbers year-over-year. I used median instead of averages since there can be some huge sales that can throw off the averages.

2005 - No. of homes sold: 108 over $1 million
Median sales price: $1.369 million
Median DOM: 50 days

2006 - No. of homes sold: 122 over $1 million
Median sales price: $1.399 million
Median DOM: 30 days

2007 - No. of homes sold: 146 over $1 million
Median sales price: $1.498 million
Median DOM: 40 days

In 2005, 16 homes built that same year sold. In 2006, 16 homes built that same year sold. Currently in 2007 only 10 homes built this year have sold. (And we know there are at least 7 homes still on the market built in 2006)

So what does this mean for the UP market? The good news is 26% more homes over $1 million have sold this year than in 2005 and the median sales price has increased by 9% since 2005. Some people might be wondering where the double digit price appreciation is? My explanation would be since there is a large number of homes for buyers to choose from and more homes selling each year, the supply is keeping demand down which keeps prices from sky rocketing. Is that a good thing? Probably. Just as long as supply doesn't get so large demand diminishes far enough to start pushing prices down.

Well Are They Or Aren't They?

I stumbled across this blog entry out of Irvine, CA and found it to be well thought out and made a lot of sense in terms of explaining why we’ve recently seen such astronomical real estate highs - and lows - across the country. Although it goes against what I learned in the Power Pricing Course and is titled “Houses Should Not Be a Commodity”, I think it has some pretty good information. It has some intriguing graphs and charts predicting how all this will play out and is a pretty long read so here’s an excerpt:

“…once houses become an investment, the prices of houses begin to behave like an investment, and volatility is introduced into the system. You do not want houses to trade with the volatility of a commodities market. It causes more harm than good.”

He goes on to say,

“In a commodities or securities market, you simply cannot have a rally, unsupported by valuation measures, without a crash back to fundamental value. It is very clear the rally in house prices was not caused by a rally in the fundamental valuation measures of rent or income. This was documented in How Inflated are House Prices? and The Anatomy of a Credit Bubble. Many people forgot the primary purpose of a house is to provide shelter — something which can be obtained without ownership by renting. Ownership ceased to be about providing shelter and instead became a way to access one of the world’s largest and most highly leveraged commodity markets: residential real estate.”

Even though Dallas/Ft. Worth doesn’t see huge gains or losses like California, etc. I think there’s a lot of truth and value in what he’s saying and it’s definitely an interesting perspective. And I don’t think this guy is saying houses should be treated as a product either. He kind of invokes Maslow’s hierarchy of needs by saying shelter has always been a basic human need and now we’re in a time where many people are treating it as a commodity and most are losing (just as they would if they tried to beat the stock market).

I’d love to hear your thoughts.

The Dallas Real Estate Market Summed Up

I used a quote a while back in one of my previous posts to explain much of what is going on in our current Dallas real estate market. But here's an equation I like that sums it up nicely.

Seller greed (uneducated sellers) leads to overpriced listings;

Overpriced listings don't sell because buyers don't perceive value;

When buyers don't buy, inventory increases;

Increased inventory over time leads to a decrease in sales prices.

You can take this to the bank. Buyers aren't stupid and don't really care about your "upgrades" if the price doesn't make sense to them. Like it or not, buyers are not willing to pay your asking price just because you "need to make $X amount of dollars" when selling your house. That is what we mean when we say "the market is telling you your house is not worth what you're asking". Buyers determine value and they are always out there looking. Serious buyers are educated about asking prices in the areas they want to buy. They will not waste their time making an offer on a home they feel is over priced.

And don't kid yourself by saying, "Buyers just aren't looking right now" because they very much are. They just aren't seeing value in the homes that are currently on the market. Realtors that understand this and the above equation and how it applies to their clients aren't whining about a terrible real estate market because they're too busy attending closings.

Again With The Quotes

Taken from this article these are great quotes and hold a lot of truth in today's real estate market. So pay attention!

A combination of lower prices, a large inventory and mortgage rates well below 7 percent offer buyers a terrific opportunity. Real estate truly is a long-term investment.

And,

It really doesn't matter if we're at the bottom [of the market cycle] yet. What matters is, can you find what you want? If you wait till it's a good market and everyone's buying, you won't have as much choice.

See? I Told You So

This article from Realty Times discusses overbuilding right on the tail of my previous post about overbuilding in Preston Hollow. The take away line of the article is near the end.

"...homebuilding is still outpacing household formation, which means some areas will continue to have more new homes than they need. "

Yes Preston Hollow, we're talking to you.

Preston Hollow Has a Few Vacancies

Seriously builders. Stop! Right now in MLS Area 11, AKA Preston Hollow to area Realtors, there are 140 homes available that were built in 2005 or after. Moreover, there are 213 homes available over $1 million. The kicker is that only 15 sold last month. My fuzzy math tells me that is almost 15 months of inventory currently sitting on the market which is muy malo. But that's great compared with the 33 months of inventory that was available in September. Yes, you heard that right. What's even more disturbing is that 106 of the homes currently available were built in 2007, 22 homes built in 2006 have never sold to anyone and 5 homes built in 2005 have still not sold. That means that only 7 homes (give or take) actually have real owners that need to sell. Every other home is builder owned and most likely sitting there vacant.

The law of supply and demand says, and I repeat, when inventory is on the rise, prices go down. I have personally sold a few homes in Preston Hollow where the sellers have taken a loss at closing. In November of '05, '06 and '07, 119, 187 and 227 homes were available over $1 million, respectively. That is a 64% increase in the number of $1 million homes available since November 2005. With that said, prices should be going down, right?

In 2005 the average sales price for homes over $1 million was $1.614 million and in 2007 the average sales price is $1,898,966. That's about a 15% rise in sales price over 2 years. What does this mean for the future? I think unless some of these builders scale back, poor Preston Hollow's $1 million and up new and resale market is going to tank. (It already has if you ask some of the current sellers whose asking price is below what they paid in 2001) My advice to buyers right now would be to check out some of the 130 new construction homes and throw offers at these builders. Those carrying costs start to add up after 2 years sitting vacant!

$65 Million California Flip? Seriously?

Courtesy of The Real Estalker, a well-to-do couple purchased a home in Belvedere, CA in 1995 for $5.5 million and put an eye-popping $32 million into the property. Now the 11,000 sf home on 1.2 acres is on the market for a staggering $65 million. Check it out.

Amazing Hip Pocket For Sale...Secretly of Course

(Not actual photo of course)




If you're in the market for a seriously amazing estate property in Old Preston Hollow built in 2006 on a .7 acre lot (closer to .9 per seller) let me know. Whose is it? Where in Old Preston Hollow, you ask? I'm not saying. But the sellers are willing to show the home to the right buyers and I can get you in. Once you see this 7,000+ sf home on this HUGE stunning lot and feel the heated marble floors in the master bathroom, you'll want to make and offer on the spot.

Special Feature: Market Statistics for Your Enjoyment

So I've decided to start posting statistics from different market areas such as average sales price, price per square foot, inventory currently on the market, how many homes are pending, sold, etc.

I'll be giving my interpretation of the data but I'd love to hear how others interpret the numbers as well.

Enjoy!

Price Reductions: Naughty or Nice?

Good article in DMN today. My good friend and fellow Realtor, Lydia Player, gets it right in the article with this quote, "You don't need to wait around for six months to decide if your price is right," said Dallas agent Lydia Player. "If we don't get an offer in the first few weeks, we need a price reduction."

People that stick with the same price for 6 months are asking for trouble and an even lower sales price. Do you really think a buyer that knows your home has been on the market for over 200 days is willing to pay you what you're asking? Think about that. So if your house has been on the market for 3 weeks and 15 agents have shown the property but no offers, guess what? The market is telling you your house is overpriced. Yes, we know you added a pool and a Viking range and faux finished the dining room but again, the market is telling you your home is not priced correctly for the current market. And 3 things affect value. Price, Condition and Location. If your home is in a good location and in good condition then that leaves...the price.

And don't blame your agent for asking to reduce the price. They are doing their job by communicating what the market is saying about your home. That is the sign of a good agent to have the cojones to call you up and say, "We missed the mark on price and now we need to make an adjustment." I could end this by using Dr. Phil's "It's time to get real" mantra. So I won't. But you should!

Problem With Contemporary Homes According to Santa Clause

What I Learned in Class: Part II

Is real estate a product or a commodity? A product's price can be influenced by marketing and advertising and the seller sets the price. Think products that are advertised during the Super Bowl. A commodity's price is set by the buyer and no amount of marketing or advertising affects the price of a commodity. Think the price of gold, for example.

Realtors and our clients have been treating a home as a product instead of a commodity and unfortunately we are not doing ourselves any favors. Think about it. You bought a stock at $100/share and then 1 year later that stock is at $50/share. So you turn to me to sell it for you for $100/share. But since I have a fee you want me to add that fee on top of the price you want. So even though no one is buying this stock over $50/share you have asked me to sell it for you at $115/share. Does this make any sense? Not really. Even if I advertised your stock on TV during the Super Bowl no one will buy the stock over the market value. Why? Because it is a commodity and not a product.

This is exactly what is happening in our real estate market today. Sellers who bought at the height of the market and have only been in their homes for a year or two are putting their homes on the market at inflated asking prices to recoup their costs. The problem is that buyers are seeing right through this. There is no perception of value. And when there is no perception of value there will be no sales.

Many agents and sellers are saying "There just aren't any buyers out there looking!". This is a myth and here's why. If a home's market value is $500,000 and that home lists for $450,000 how long do you think it will stay on the market? Not long at all. This is because buyers know when a good deal presents itself. The bottom line is that there are just as many buyers out there today as there were in 2005. The only difference is that today's buyers don't see the value in many of the homes on the market because the sellers are asking inflated prices to recoup their costs. And where there is no perception of value there will be no sales.

To wrap up, seller greed is due to being uneducated about the current market conditions which leads to overpriced listings, which means few or little sales, which leads to increased inventory, and when inventory rises, consumers push prices downward. (Supply and demand)

So if someone is thinking of selling their home and they need to ask top dollar to get out of the home without paying money at closing, I would tell them to stay in the home until they can ask a fair price. Otherwise, they will not only be wasting their Realtor's time, they will be wasting their own time and effort showing the home for 6 months or longer.

What I Learned in Class: Part I

The purpose of the class I attended last week was to help agents price their client's listings according to the market they are in using classic economic supply and demand logic. When inventory trends downward, consumers push prices up. Which means the opposite is true or when inventory trends up, consumers push prices down. Eric Celeste over at Frontburner blogged this earlier today by way of the DMN and Steve Brown which is a prime example of real estate "experts" not giving the full picture. Here are a couple graphs taken from Trendgraphix using NTREIS statistics from all North Texas areas to form charts and graphs so people like me can look at pretty pictures and learn at the same time.






So what market are we in here in North Texas? According to these graphs the number of home sales is down from the previous year (6,583 in 11/06 to 5,157 in 11/07) but sales prices are up from $184K in November '06 to $204K in November '07. That is approximately a 10% rate of appreciation. Not too bad. But how can inventory be up AND prices rise? Hmmmm. So what does this mean and where are we headed? How do we interpret the fact that less homes are selling than the previous year, inventory is rising slightly yet home values are increasing?

No, we're not defying the laws of economics. I believe we are at a tipping point of sorts. The laws of economics do apply to our market but we don't fluctuate as much as other states including the outlandish California and Flordia real estate markets. With that said, inventory will continue to increase and prices may drop in certain areas due to overbuilding, short sales, foreclosures in the subprime market, etc. But I believe we will simply see a flattening market meaning prices won't go up, but they won't go down either. Inventory will not reach astronomical levels like the 29 months worth of inventory in some California cities.

In closing, these numbers are for ALL OF NORTH TEXAS AND NOT YOUR NEIGHBORHOOD! Many areas in North Texas will see price appreciation and will always see price appreciation no matter what regional statistics say. So talk with a local Realtor who knows your neighborhood before you start spreading doom and gloom to your friends.

And Speaking of Rates

This is a great article from Realty Times giving us the low down on how 30-Year Fixed-Rate interest rates have fluctuated since 1971. Cick here for the awesome info.

As many people have been trying to tell those scaredy cat buyers out there for a while now, "Rates are great and if you're waiting for rates to go below 5% you're going to be waiting for a while." These stats show that the average interest rate for a 30-Year Fixed-Rate loan between 1971 and today is 9.31%! But since 1998 we have had interest rates hovering around 6% so if people can't get the 6% or 5.85% rate they are upset and think they can wait until they drop further. This is poor business decision making logic and if they're not careful they are going to miss the boat and then what? Probably complain some more to their Realtor.

Can you tell I'm in a good mood today?

Rates Are Still Going Strong for Buyers

This just in. The principal and interest payment on a $250,000 loan has dropped by $117.44 per month since August 3rd on the 30 yr fixed.

According to Freddie Mac the 30-year fixed-rate mortgage (FRM) averaged 5.96 percent with an average 0.4 point for the week ending December 6, 2007, down from last week when it averaged 6.10 percent . Last year at this time, the 30-year FRM averaged 6.11 percent. The 30-year FRM has not been lower since the week ending September 29, 2005, when it averaged 5.91 percent.

Will they drop any lower? I have absolutely no idea so stop asking. Ask a mortgage lender or a financial analyst. Just kidding. You can ask me. But I'll just tell you to ask a mortgage lender or a financial analyst.

I'm Back in School

Well, not really. But I am currently in the middle of a continuing education class that is actually providing useful information I can share with my clients and the general public. Because I am all about educating the general public in the ways of real estate. So hold on to your hats because I plan on boggling your minds with some mind boggling information once I graduate.

Developing.

I Love Quotes

Knowledge is power!

“What consumers see in the newspapers and online is based on the view of the national market from 50,000 feet. Those numbers don’t reflect the true story in any single marketplace.”

and,

“We have to get localized and start showing consumers that real people just like them are successfully buying and selling homes in this market. The price range has nothing to do with it; it’s all relative to what you do with it.”

and,

"For the people that have been in their homes for four years or longer, the possibilities of what they can do in this marketplace are tremendous – especially if they look in their own market.”

and,

“I always urge consumers to talk with a professional, and to look at their individual situation. You never know what you can do until you ask and investigate.”

Dallas Still One of The Strongest Metros in U.S. for Real Estate

Sixty-one percent (or 19) of the Top 31 "core based statistical areas" saw price declines from September 2006 to September 2007. Dallas was not one of these and rounded out the Top 10 major metros to see a rise in sales prices during this time period. Texas represented by having 4 out of the Top 10 cities to see price growth. Another reason why Texas is better than every other state.

Thanks to Top Producer for linking to the Inman News article that you would otherwise have to subscribe to.

Hollywood Here I Come

After Wick Allison of D Magazine linked to my blog last Wednesday morning, I received a call from local news station CW33 asking if they could interview me for a real estate piece they were going to air that evening on their 9 o'clock news. I happily obliged and think it turned out well, if I do say so myself.

Click Here to watch the clip.

Listen to Frontburner. They're Smart.

The DMN's Steve Brown strikes yet again perpetuating national real estate doom and gloom. "U.S. home sales will hit 5-year low in 2007", ugh. That may be true but how does that apply to Dallas/Ft. Worth? Oh, that's right, it doesn't. Brown even writes "[Housing analyst, John Tucillo,] agreed that market conditions vary dramatically by city.” Brown obviously disagrees with this assessment. I mean, is he trying to give Jim Schutze over at the Observer a run for his money by being such a muckraker? Publisher and editor of D Magazine, Wick Allison, takes Brown and the DMN editors to task on Frontburner for his incessant prattlings about how the real estate boat is sinking faster than the Titanic. (A big thanks to Frontburner and Wick for linking to my blog post about how Dallas/ Ft. Worth real estate is on track to have the 2nd best year in real estate sales ever.) And then I stumble upon this article by Brown that reluctantly tries to take a positive spin on our local market using many of the same statements and stats from the doom and gloom article referenced earlier. I think I can actually feel him squirming as he lifts his pen to write something positive about our local real estate market. He references how Realtors have largely blamed the media for our real estate woes but quickly gets his revenge by ending the article with a nice jab by making sure Realtors take part of the blame as well. I don't know Steve Brown personally but I'm not sure where all this negativity is stemming from? I mean seriously, did you have a bad real estate experience back in the day? What I do know about Steve Brown is that when you drive by his East Dallas home it looks like his yard hasn't been trimmed in ages and is literally trying to eat his house. Honestly. The fence is leaning, the trees haven't been trimmed since 'Nam and forget about actually using the detached garage as, well, a garage. I'm not saying this to be (completely) vindictive but our Dallas/Ft. Worth real estate columnist is responsible for swaying our city's opinions and has a honest-to-goodness “tear down” that looks as though it is uninhabitable and certainly not up to city code by a long shot. The irony of this is not lost on me. So my challenge to Mr. Brown would be to either 1. Start talking about LOCAL real estate issues and numbers or at least put our market into perspective with California and Vegas; or 2. Clean up your yard and maintain your house. Because why should we listen to what you say about real estate when you can’t even take care of your own.

Selling Solo is a No, No!

There is an awesome article in the Park Cities People about For Sale by Owners. Part of the reason I think it is so awesome is because it includes some insightful snippets from yours truly. So go here, take notes and pass this along to your friends who are thinking about selling their homes by themselves.

Keep Your Friends Close and Your Personal Assistants Closer

I heard about the terrible story regarding an immensely successful Realtor in New York who was murdered in a Park Ave. apartment. Apparently the culprit was arrested. Note to self, give personal assistant a pay raise and show more appreciation.

Haunting Reality?

Now everyone knows I don't like to spread doom and gloom real estate lies but I couldn't resist posting this. I can't take credit for this so thanks to BlownMortgage.com. Love it!

Barbie Not Exempt From Real Estate Woes Either

I doubt that my brother reads my blog but if he did he would be so proud of this link.

Hilarious!

Real Estate Stats You Need to Know

Recently, the President of my company, Sue Meyer, wrote a letter to the Dallas Morning News and the Star Telegram encouraging them to write more positive articles about our local real estate market. In this letter she uses statistics that some people will find startling. As you all know, I have been a consistent advocate for our local real estate market trying to make sure people understand Dallas/Ft. Worth is doing fine amidst all of the doom and gloom real estate markets around the country. “Real estate is local” has been my mantra for many months. What is happening in Florida has no effect on your home’s sales price. The only effect these stories have had is only on our psyche. So now it’s time to put my money where my mouth is, so to speak, and show you those statistics Sue Meyer showed all 1,300 agents with Coldwell Banker Dallas/Ft. Worth.

2006 was the best year for real estate sales ever in the North Texas region with a sales volume of $18.2 billion dollars. If North Texas sales continue at their current pace (5% appreciation overall), even with the slight dip in sales numbers we have seen recently, we are still going to have the second best year for real estate sales ever! These are very impressive statistics but I have yet to see any of our local newspapers put these numbers in writing and into perspective. It is true our sales have declined. But is that really a bad thing when compared to the best year in the history of real estate? I don’t think so.

So now that you are adequately armed with knowledge, go tell your friends and family. The more people think our real estate market is doing poorly, it is only a matter of time before we make that a reality. We are our own worst enemy. So the next time someone tells you real estate in North Texas is headed South, quote these numbers taken straight for the North Texas Real Estate Information System. Not only will they be impressed, your local real estate market will thank you.

"Fish or Cut Bait" Among Other Things

Dallas is suffering from buyer paralysis. Home buyers have heard about the horrific real estate doom and gloom for so long that now they now are going to "wait it out". Question: What are you waiting for? Interest rates to rise? Inventory to get smaller. Which means not only less homes to choose from but possible multiple offer situations. This article from Realtytimes.com addresses this issue.

"...you have plenty of housing inventory from which to choose. Sales are slow, so sellers are offering thousands of dollars in incentives to tempt you to buy. Prices are flat. Interest rates are still historically low. Sounds to me like the buyer who has been waiting on the sidelines needs to get off the fence and pull out his checkbook."

I couldn't have said it better myself.

Best Real Estate Quote of 2007

Beautifully stated. This quote by Michael Bizenov, president of Sterling National Mortgage, has Dallas written all over it.

"The sellers are still looking at the price their neighbor got two years ago, and the buyers are looking for the mythical 30 percent price cut [the media keeps ranting about] and they're both wrong," he said. "It'll take some time for the stalemate to end."

Preach on!

I'm Right and You're Wrong

I've been saying this for a while but it's good to see some positive publicity that speaks the truth.

Dallas has largely avoided the boom-and-bust cycle, which is one reason this market is on track to post the best returns on housing of any major U.S. city during the next two years.

So rock on Dallas!

Realtors Are Our Own Worst Enemies

Now Realtors are giving into terrible real estate market hype which is REALLY bad! Check out this email I just got from an agent representing a buyer on one of my listings. They made an offer, we countered and now the buyer is having “second thoughts” about raising his offer. Here is the agent’s email to me:

I just don't think my client will come up that high. He really feels it's a declining market. I would love to make this work too but we feel $XXX,XXX is a bit high. I'll let you know when I hear back from my buyer as to if he wants to come up. some. Thanks

Now I could get into how justified my clients asking price is (and it really is) but that’s not the point. The point is that we all know buyers think the real estate market is tanking but if Realtors start buying into the hype then we’re all in big trouble. So consider this a prime example of why the real estate market IS tanking. It’s because buyers aren’t even willing to pay market value for a home and their agents don’t have the wherewithal to educate them. Notice how the agent said “we” feel the price is too high. Not just her client, but the agent who should know the market!

The issues:

· Buyers want to buy below market value or else they move on to the next one.
· Agents aren’t properly educating their clients that not every property for sale is a foreclosure or short sale so they can’t expect sellers to give away their homes for lower than market value.
· Agents blindly let their clients lead them from house to house making offer after offer that is not accepted. After 4 to 6 months of searching the buyer decides to stay in his lease and renew or stay in his house until the market “gets better”.
· Buyers and sellers think they know the real estate market better than the experts which should be local Realtors.
· Local Realtors are letting their clients tell them how bad the market is and Realtors aren’t standing up for themselves and educating their clients.

My question to the buyers out there is what are you going to do when the market gets better? There will be less inventory and chances are you’ll be paying more for the home than if you were to buy it now. So you are willing to potentially pay a premium for the same home years from now rather than to buy it at market value right now? Makes perfect sense to me. (Sarcasm)

My theory on the real culprit behind this? Immediate equity. Too many home improvement shows have shown how young couples live in a home for 2 years and make $100,000 without drastically improving the home. That has never been the case in Dallas and never will be. So I think the buyers are afraid of the commitment a home offers. The average person needs to live in the home for at least 3 years and put at least 5% down (or 5 years if they put nothing down) if he or she wants to sell and break even. But buyers don’t want to hear this. Sellers have put their home on the market after living in it for 2 years with very little equity and can’t sell it at a premium and get stuck. Buyers are catching on to this so they don’t want to “overpay” since they may or may not want to sell within 2 to 3 years and if they “overpay” then they won’t have immediate equity just in case they need to sell and get out.

Dallas Thinks; Therefore It Is

I admittedly don’t keep track of mortgage rates regularly. (I let my client’s lenders handle that part of the transaction) But while having lunch with a lender friend yesterday he said he is closing deals at interest rates under 6%! Yet people still want to perpetuate what a terrible real estate market we are in? It is getting more and more frustrating to repeat the same information to my clients here in Dallas trying to educate them about the real estate market. I guess I’ll continue to sound like a broken record by repeating the 2 main reasons why it’s a good time to buy.

1. Rates are amazingly low.
2. Inventory is great meaning buyers have a lot of homes to choose from. If you don’t want to get into a multiple offer situation then you don’t have to. There’s plenty of fish in the sea.

So I ask my buyers, “What exactly are you waiting for?” and here’s what some of them are saying followed by my official response.

“Rates might go down!” – Uh, like to what? 4.5%? I doubt it. Some people might be able to get a 5.5% interest rate but if it goes any lower than that I will very surprised. But think about the opposite. If you wait too long you might be looking at a 7% interest rate. If you want to play the wait and see game then you might get burned.

“Inventory is high and I keep hearing how bad the real estate market is so sellers should be negotiating down off their asking price!” – Do you know the sellers financial situation? In all price ranges sellers move for different reasons. If you happen to get lucky and make an offer on a home where the owners are getting a divorce and want to ditch the home for next to nothing then congrats. But just because there is an abundance of inventory don’t expect EVERY seller to give away their home to you because YOU think the real estate market is bad. And what’s the alternative? Wait until there is a small amount inventory on the market? That means multiple offers and paying top dollar. So let me know how that works out for you.

“I keep hearing about all of the foreclosures and pending foreclosures. Find me one of those!” – This is my pet peeve and I could spend an hour answering this but the quick answer is that there are literally THOUSANDS of investors combing the Dallas real estate market for foreclosure deals. So when a true foreclosure deal comes on the market there are multiple offers on the property for over list price and the investors are paying in cash which means they can close quickly. But your typical buyer doesn’t want to pay list price (they want to negotiate) and are financing their loan thus needing at least 20 days to close the loan. Which offer do you think the banks are going to accept? My advice is get over the foreclosures and look for a home you want to live in, not the deal of the century.

People don’t realize real estate is local and not dependant on other states. North Texas has been and is doing just fine. But the national media attention has crept into our minds and we can’t shake it. While pondering the phenomenon we are experiencing with everyone and their dog believing the real estate market is bad, I thought of a real estate analogy. There is a house in your neighborhood. Just your average home and the owners keep to themselves. Not many neighbors have seen the inside of the home but it looks to be in average condition. So one day the neighborhood gossip sees the For Sale sign in the yard and the owners packing outside. She skips over to offer her goodbyes and they politely invite her into their home. Meanwhile she sees a couple stress cracks over a few door and window jambs. “The home obviously has serious foundation problems and I think I smelled mold too!” she says to anyone who will listen. Then they tell someone who tells someone else – you get the point. Even when people are looking at the home neighbors feel the need to tell them about the problems the home has and therefore the home lingers on the market and sells for pennies. But guess what? They actually just brought down their own property values by spreading these untruths.

Dallas has bought into the woes of California, Las Vegas and Florida and is actually hurting itself by perpetuating the bad real estate market story. Our city does NOT have foundation or mold problems yet the terrible rumors persist and only time will tell how our own foolish beliefs will affect our real estate market. In the end we only have ourselves to blame.

Subprime Woes Not Felt in Dallas Like Rest of Country

Could this actually be a positive report about real estate in the Dallas area? Why yes it is. Although everyone is still scared of what the future holds it's still nice to show that we are insulated from the doom and gloom of the Florida and California real estate markets. Dallas was 1 of 5 real estate markets in the country in the second quarter to see a gain in sales prices. I like these two takeaway quotes from the story.

"In a lot of places in Dallas, home prices are still going up by double
digits. "In other neighborhoods, they are actually falling. But across the board, the gainers outweigh the losers,"

And,

"The mortgage shakeout is affecting other parts of the country a lot more than it is Texas. We didn't have anywhere near the level or magnitude of subprime loans that other markets did. But that doesn't mean that Dallas-Fort Worth homeowners aren't going to be hammered with a steady diet of bad news about the U.S. housing market. Those negative reports weigh on consumer psychology."

But then this isn't news to me.

Tax Appraisal, Shmax Appraisal

While many of us fight our tax appraisals every year because we don't want to pay more taxes than we have to, some people are enjoying more than a $4 million gap in their favor when it comes to how much the city of Dallas thinks their home is worth.

Check out this story that gives some nice examples of this serious oversight by the city of Dallas. I could go down the list of D-Magazine's 100 Most Expensive Homes list and come up with enough tax dollars that'll make your head spin. But honestly, the people I would be tattling on have a lot more money than me and I am scared of them and the people they could hire to shut me up.

Paris Hilton's Home Up For Sale

So I’m a little behind the times on this one but apparently (I had heard) Paris was cut off financially from her Grandfather due to her “bad behavior” and almost immediately she put her home on the market for $4.25 million. The house boasts 4 bedrooms, 3 1/2 bathrooms and a separate guest quarter and office. One bedroom was converted into the “ultimate closet.”

Looking at the pictures of all the white and grays and black I guess I expected, oh, I don’t know…a little more pink!

Kitchens That'll Make Your Mama Wanna Cook

Nice.

Dead People are Selling Thier Homes Too

Ok seriously. This is the second story involving a real estate agent discovering a dead body while showing a home since May.

I think we should investigate whether or not the sellers were using organic or conventional pest control methods. Someone should look into this. This could be ground breaking.

Dallas Suburbs Still Sprawling

NEW YORK (Forbes) – Twenty Texas cities sprawled into Forbes’ latest “100 Fastest-Growing Suburbs” survey, the most of any state making the list.

Frisco, ranked 7th, grew at a galloping 128 percent while Wylie, ranked 8th, grew at just over 109 percent, according to Forbes.

Other Texas cities making the list were Cedar Park (11), McKinney (13), Rockwall (21), Sachse (22), Pflugerville (23), Corinth (30), Allen (33), Pearland (34), The Colony (47), Round Rock (49), Saginaw (50), Mansfield (54), Georgetown (55), Burleson (58), League City (65), Missouri City (78), Schertz (91) and Terrell (96).

The fastest growing suburb in the country was Lincoln, Calif., which grew last year by almost 237 percent.

$165 million estate for sale...nuff said

Apparently "The Beverly House Compound," the fabled estate of William Randolph Hearst and Marion Davies in Beverly Hills, CA, has just officially been put on the market for $165 million. Take that Highland Park and your silly little $15 million lot! Here are some stats on this little cottage.

• Located on 6.5 acres
• 29 bedrooms
• 72,000 square feet
• 2 tennis courts

Ok, I just can't talk about this anymore without my head spinning. The listing broker is Westside Estate Agency Realtors but the listing is not yet on their website. But they did have this nice $75 million, 12,000 square foot "gated beach front compound" available in case you need to scale down. So the commission on $165 million sale would be...????

There's "HOPE" for the "F" Word

NeighborWorks America and The Ad Council have launched a National Foreclosure Prevention Awareness Campaign.

NeighborWorks® America, one of the nation’s largest housing and community development organizations, announced a new public awareness campaign today with the Ad Council aimed at preventing home foreclosure that urges homeowners in financial trouble to call 888-995-HOPE. The Homeowner’s HOPE hotline, provided by the Homeownership Preservation Foundation, is the cornerstone of a foreclosure prevention effort involving many of the country’s largest mortgage market companies. The public awareness campaign strives to reduce the number of homes entering the foreclosure process, which is expected to exceed one million households in 2007.

Is this because they just nice people and care about the national overall real estate market? No. Here's the real reason why as stated in the release.

Given that each foreclosure costs $30,000 or more, the total cost to the housing finance system of one million foreclosures could approach $30 billion.

Basically they're trying to save their own behinds. Which they should seeing as how their poor predatory lending practices are the reason this HOPE number is even necessary in the first place. Shame on them.

And on a self serving note, good agents will help their clients avoid "creative" financing which ends up hurting thier clients in the long run. In my experience, those people who purchase homes without using a Realtor are the ones who get srewed the worst. IJS.

Harry Potter Is Coming!!!

Just in case you haven't heard. Book number 7 (the final book?), Harry Potter & the Deathly Hollows, is due to be released July 21st at 12:01am. By printing 12 million copies in anticipation of the book's release I would say Harry's publishing company, Scholastic, is pretty confident it will do well. If it's any past indication of how this release will go, when book number 6 was released in July 2005 it sold 6.9 million copies in the first 24 hours. Take that iPhone with your measly forecasted 4.5 million units in it's first year! But then again, one book doesn't set you back $500. Ouch!



Get this and other HP countdowns at LeakyNews.com




And then there's the movie for book number 5, Harry Potter and the Order of the Phoenix, which can be seen July 13th. One week before the book is released. See the trailer here.







J.K. Rowling is counting her billions all the way to the bank. Nice!

Traditional Living Room = Functional Obsolescence

Many of us have noticed this trend specifically with new construction but as this article points out, the older homes are getting rid of their traditional living rooms as well.

Informal living styles, with eating, cooking and living spaces combined so thatfamily members and visiting friends could congregate together through various activities are popular. Open floor plans and voluminous space were desired more by baby boomer buyers.

Preston Hollow, known for the 50's ranch style home, has an abundance of unused living rooms which is why many families are opting to knock down walls and raise the ceilings to give the home a more "open" floorplan. Anyone out there still have furniture in theirs??

What a Gem

Jeff Janus of Keller Williams shares his real estate profile and impresses us all with his tagline "Life is short. Get a divorce. Let me sell your house." His clients must be very proud to work with such a fine professional. Keller Williams must also be proud to claim him as one of their own. Kudos to you, Jeff Janus. You are a great example to your fellow Realtors. Not to mention the real estate consumer.

Real Estate Quote of the Day

I couldn’t resist sharing this excerpt from a book I’m reading titled Rant by Chuck Palahniuk:

“The young hang mirrors in their homes. [Uptown] The elderlyhang paintings. [Old HP/Preston Hollow] And, if I may make an ungenerous observation, residents of rural communities [Rowlett, Ft. Worth, etc.] display crafts – those dubious products of spare time, limited motor skill, and inexpensive yarn.”

As someone who has shown all of the above I cannot tell you the profound truth this quote holds.

Texas Surpasses National Home Appreciation Rate

Just came across this bit of information from the Real Estate Center at Texas A&M University. California, Florida and Las Vegas are VERY jealous.

COLLEGE STATION (Office of Federal Housing Enterprise Oversight, Real Estate Center) – According to recent figures from the Office of Federal Housing Enterprise Oversight, home prices in Texas increased 6.8 percent during first quarter 2007, well above the 4.3 percent national average.

“Despite the national slowdown, Texas is still strong,” said Dr. James Gaines, research economist with the Real Estate Center at Texas A&M University. “There’s no reason prices shouldn't continue to rise despite the increase in foreclosures and the slowdown in transactions, construction and new home starts.”

By comparison, home appreciation slowed to 1.2 percent in California and 3 percent in New York. Nevada price increases virtually disappeared at just .6 percent. Even rapidly growing Florida and Arizona reported value increases of 4.3 percent and 5.2 percent, respectively.

Within Texas, there is a wide variation in appreciation rates in the 25 metropolitan areas. Among the state’s large metro areas, Austin and San Antonio are seeing the strongest rate increases at more than 10 percent.

Meanwhile, the energy industry is fueling strong housing markets in some smaller metros. Home prices are up more than 21 percent in Midland and 16 percent in Odessa. Victoria prices are up 8.3 percent.

Some border communities are on fire as well, thanks to a surge in government hiring and business activity. Laredo is up 16.6 percent, while El Paso is up 11.2 percent.

Is it really all "Doom & Gloom" for Dallas Real Estate?

This is an email I sent out to my friends and past clients and thought it blogworthy…

A few years ago it seemed the whole nation began to show concern that real estate bubbles throughout the country were about to burst and I tried my best to keep my friends and past clients informed by letting them know Dallas is not directly affected by the decline in home prices in locations such as Miami, Las Vegas and California. Ever since that time negative real estate statistics continued to be published in the media about the declining national real estate market and I continued to defend our local real estate market. I am frequently asked, “Jeff, how is your business doing with the real estate market doing as poorly as it is?” So let me—yet again—answer that question and hopefully quell your fears.

First of all, my business has never been better and thanks to all of you I finished 2006 as the 63rd most productive agent in my company out of 1,300 other agents. This equates to ranking in the Top 7% of Realtors nationwide. Again, a sincere thank you for your support and confidence in my abilities as a real estate professional. I hope to continue that success in 2007...so keep the referrals coming! :)

Second, I would like to address our “poor real estate market”. Brace yourself for this mind boggling statement I am about to make. Many of the doom and gloom real estate reports that are published address NATIONAL real estate statistics and not LOCAL real estate statistics. The average Joe in Dallas reads one of these reports in the Wall Street Journal and thinks his home in North Dallas is immediately worth less. This is ridiculous and I question their intellectual fortitude. Furthermore, the real estate numbers Dallas is producing this year when compared with 2006 might come up short by 2% here and 3% there. (Note: Number of sales are down in many areas but prices are going up!) But remember, 2006 year was the 3rd best year for real estate EVER in our country’s history. So by those standards, 2007 might end up in the top 10 best years for real estate EVER. That doesn’t sound so bad, does it? Which leads me to this recent report from CNNMoney.com. Out of the 100 largest markets in the country Dallas ranks 9th in projected appreciation (3.6%) from April 2007 to April 2008. Our worst one-year decline of –7.7% occurred in ‘87-’88. Dallas does not see 20% fluctuations which allows our growth to remain strong and steady.

So the next time someone starts telling you how bad our Dallas real estate market is, you can tell them with confidence that Dallas is one of the strongest real estate markets in the country. And if they’re looking to buy or sell you can tell them to call me!

Redfin Real Estate fined days after appearing on 60 minutes segment

By now you might have heard about the controversial 60 Minutes segment that aired this past Sunday that examined how online real estate brokerages are impacting the real estate industry. It turns out Redfin, one of the companies that was interviewed for the segment, was fined $50,000 big ones for violating its local MLS rules. Redfin claims they were not trying to “stir the pot”. I think they were trying to stir the pot. IJS

Realogy's response to 60 minutes segment

This is a letter written to one of the CBS producers from the President of Realogy, Alex Periello. Which so happens to be the parent company of Coldwell Banker Dallas-Ft. Worth. Thought it was well put. Basically it says the consumers will decide which business models are successful and which are not. Coldwell Banker has been around since 1906. So I’m not too worried.

Dear Mr. Fager:
Your story on the real estate industry that aired on May 13th had more holes than a leaky roof.
Putting aside the inaccuracies regarding "sacrosanct" commission rates, lack of industry oversight and state governments conspiring to stifle competition, the segment grossly oversimplified the complexity of buying and selling a property.
Real estate brokerage is a performance-based industry. Clearly, not all real estate companies are alike. Results will vary dramatically based on a variety of factors, including the experience and track record of the professional you select. Picking an agent to represent you based solely on discount, rebate or other cash back scheme may seem like a good idea at first glance, but not always at the closing table when all is said and done.
The bottom line is that consumers have ample choice when deciding which real estate company and business model they prefer to represent them in a transaction. Competition is good for the consumer and the industry and is the basis of our free market economy. At the end of the day, the companies that offer the best value proposition to home buyers and sellers will prosper.
Respectfully,
Alex Perriello
President & CEO
Realogy Franchise Group

We have a new real estate record!

7037 Vassar Avenue closed May 14^th with an undisclosed sales price. Of course. Ginger Nobles of Briggs-Freeman brought the buyer. I want to see that commission check. Cha-ching! This is certainly Dallas’ most expensive sale EVER according to North Texas Real Estate Information Systems. The next 2 most expensive sales in the last 5 years are pretty impressive too. But not anywhere close to this one! Anyone know the scoop on the buyer??

Stupid seller makes $6,000 mistake

True story that happened a few days ago. Some past clients and good friends of mine called me because they wanted to purchase an investment property in their neighborhood that had just been listed with this discount brokerage. They asked if I would simply draw up the paperwork for them to make sure the contract was written correctly but not to ask for a commission so that the offer will look more attractive to the seller (they would virtually save 3%). Being good friends and past clients I had no problem doing this so I typed up the contract for them and they submitted the offer. My client’s informed me a day or so later the sellers accepted an offer from a builder who was requesting a commission at the same exact price my clients had offered! Then I received this email correspondence in which my clients are explaining to the seller they really just accepted a lower offer. Painful.

Buyer/my clients: “Well congrats on selling your home so quickly. I did want to mention that even though I had a broker draw up the offer contract, if you take a look at the broker section of the contract, our broker was not seeking commission from the $217K offer.”

Seller: “ouch! double ouch! i did look through the contract but didn't notice that part of it -- i guess i just cued on what you and i had discussed and assumed he would want the commission. i thought i was making the best business decision... but perhaps it was not.”

Yeah. A $6,000 bad decision. The seller’s REALTOR® probably never even saw the contract although I can’t blame the REALTOR® completely. This seller wanted to save some money on their commission so they exercised their right to hire a REALTOR® of their choosing whose website states, “We have saved our "smartsellers" over SEVEN MILLION DOLLARS in needless real estate fees.” I’d be more interested in how much money they have LOST for their “smartsellers”.

Discount Brokers

The CBS show 60 minutes aired a piece Sunday evening that is certainly causing a stir within the real estate community. But first let me clear up something that absolutely gets under my skin. The word REALTOR® is pronounced ‘REAL-tor’ NOT ‘Real-a-ter’. Tell your friends. Furthermore, a REALTOR® is someone who is a member of the National Association of REALTORS®. REALTOR®" is a trademarked term and should never be used synonymously with "real estate agent”. So now that we have cleared that up. I did not watch the show but feel inclined to throw in my two cents based on the flurry of blogs and emails I have read regarding the show. The CBS segment led by Lesley Stahl was supposed to examine the impact of online brokerages on the real estate industry. The show featured interviews with a representative from the now-defunct eRealty and the president and CEO of Redfin. Both of these companies are flat fee brokerages which are more commonly known as “discount brokers”. A discount brokerage’s philosophy is to give the real estate consumer full service at a discounted price. On the program they stated the 6% broker commission is “sacrosanct” among REALTORS® and the NAR feels threatened by these new online brokerage business models. They feel the NAR is pressuring the public to pay the full 6% commissions and is at the same time trying to force these online brokerage businesses out of the real estate industry thus limiting the consumer’s choices. Interesting that the Dept. of Justice and Federal Trade Commission released this report showing a 5.02% commission nationwide and still said commissions have been relatively inflexible. Leslie Stahl conveniently did not ask the National Association of REALTORS® to be a part of the program. NAR is America’s largest trade organization with over 1.3 million members. There are 2 main reasons for this.

1) NAR has consistently pursued minimum service laws for real estate agents across the country. Eight states, including Texas, have "minimum service laws" that require REALTORS® to provide a minimum level of service for their clients. i.e. If your home is listed with a REALTOR® all negotiations must go through your listing broker as it is unlawful for the seller to negotiate directly with the buyer’s agent. The discount brokerages certainly did not cheer when Gov. Perry passed this bill in 2005. Can you feel the love from this discount broker’s website?

2) Real estate commissions are 100% negotiable (again, look at the DOJ/FTC report). People have a plethora of choices when it comes to listing their home. These discount broker business models began popping up all over the country 3 to 5 years ago so I don’t understand the attack on commissions. Here in Dallas if you want to list your home in the MLS and get it on Realtor.com then go here. For $299 (plus the buyer’s agent commission) you’ll only have 1 picture and it doesn’t come with a lock box or a sign. Or you can go to this brokerage and for as little as $495 (plus the buyer’s agent commission) you can get your home in the MLS and a “for sale” sign but no Realtor.com presence.

So if I listed my home for $200,000 in the MLS for $495 and offered a 3% commission to the buyer’s agent I would save $5,505. But I would have to meet every showing since there is no key box. And with only 1 picture on the internet people are passing right by it in their nightly internet searches. Those looking for homes on Realtor.com expect multiple photos so when a property only has 1 photo, chances are they’ve already moved on to one of the other 68 listings with multiple photos. And with no sign in the yard weekend drivers casing the neighborhood for new listings have no idea it is on the market. One can only assume a home listed this way will result in many months on the market. When you calculate your monthly mortgage, taxes, etc. the $5,505 you saved by listing with a discount brokerage doesn’t seem like a savings anymore after 5 months on the market. Check out this listing. $2.9 million with no pictures and a poor description. This isn’t service but it’s what the consumer paid for. Have you ever heard of the old phrase, “You get what you pay for?” However we’re not talking about the discount tile guys you called in the Yellow pages to retile your bathroom for $500, did a terrible job then spent an additional $1,500 having it done right. We’re talking about what is most likely your largest financial asset EVER. So although I don’t understand why a person who obviously has the business sense to own a $2.9 million home would want to try to sell his home without pictures and a limited amount of service, I do understand it is his choice to do so. Click here for a true story and a perfect example how a discount broker can actually lose you money.

Redonkulous!

The U.S. Federal Trade Commission and U.S. Department of Justice just released a "Competition in the Real Estate Brokerage Industry" report that calls for a repeal of real estate laws, rules and regulations that limit choices for consumers, limit competition for new brokerage models and don't appear to provide any justifiable benefits for consumers. The report also suggests that industry commission rates have been relatively inflexible and calls for an in-depth study of commission rates and fees.

(Written with sarcasm) I can certainly see why! The commission fees in 1991 were $9,389. In 2006 they were a whopping $11,549! And when that 5.02% commission is split between 2 cooperating brokers that is a mind boggling $1,080 raise for each broker after 15 years. This is an outrage and real estate agents certainly do not deserve such a lucrative increase in income. It is very clear why our federal tax dollars should be spent on such an in depth - and expensive - study. Kudos to you DOJ & FTC. Kudos.

What's behind door number three? A dead body

There are so many things wrong with this story I don't even know where to begin. Ok I'll give it a shot:

A Janesville [Wisconsin] real estate agent can't believe she didn't realize that a form on the bed at a house she showed Monday night was a woman who apparently had been dead for two weeks."I've smelled death. I know what death smells like," she said. "I can't believe my sinuses were that bad."

What??? Who says that??? Then the agent had to be coerced to "call someone" so naturally she calls - no not the police - but the listing agent. Wait. It gets better. The Realtor's client was the one who eventually called the police hours after spotting the corpse. So did they make an offer or what?

Mark Cuban gets deep

Cuban gives us his take - albeit not a new one - on today's online society and how our memories and past experiences are constantly being recorded and documented which may actually a good thing.

Lead: "You are what your search results return. We are living in an age where Life is an Open Book Test. Like the open book test in school where you just needed to know where to look to find an answer, today everything we need or might want to know is presumed to be a Search Engine Query away."

Thought provoking? Not really. Our reality? Yup.

Size does matter

When it comes to pools that is. Gone are the days of the 8 to 12 foot deep monstrosities. Not only is the functionality of such a pool obsolete who wants the maintenance? This is a trend we have all seen growing in the past few years but this article reiterates the point quite nicely.

So you wanna be a "flipper"?

Check out this poor guy's trials and tribulations of real estate flipping. If flipping homes has ever crossed your mind then this is definitely a must read.

Greetings from Hill Country

Their real estate is booming. The people are laid back. And they have Town Lake. What a great place for a second home. Don't you think?

Any takers?

If you liked this home then you'll surely love this one. You would think the listing agent of a $3 million home would make sure the pictures weren't blurry. Sellers, am I right?

More homes you can't afford

Yesterday I walked through Allie Beth’s new listing on Hunters Glen. For a cool $18,500,000 it could’ve been mine. But the kitchen (remodeled in 1990) needed a little updating and that’s just too much work for me. While walking through the home I overheard news that Cynthia Beaird’s listing on Vassar - $22,500,000 –just went under contract and a home on Baltimore recently closed for over $18 million. This is all in the last few weeks. Slow market in Dallas??? I don't think so.

Homes you can't afford

Check these out. If you like any of them and you can afford them. Shoot me an email ASAP. Enjoy!

Here goes nothing!

This is my official debut into the world of blogging. So bring on the questions and I might bring on some answers. Otherwise, I will just pass on information that might come in handy to those looking to buy or sell some real estate. I might also pass on juicy bits of Dallas real estate gossip as I get them. I'll let the people decide which they prefer. Here we go!