New Texas Mortgage Lending Standards Slow Home Sales

El Paso’s hot real estate market has cooled a bit in the past couple of months, in part due to tighter Texas mortgage financing requirements caused by the growing number of foreclosures nationwide, many in the real estate industry reported.

Sales of existing homes in El Paso declined 16.5 percent in March compared with sales a year ago, and declined almost 5 percent in February, data from the El Paso Association of Realtors show.

“The market has slowed some. The inventory (of homes on the market) is increasing significantly across the city,” said Charles DeWetter, president of Coldwell Banker DeWetter Hovious, one of El Paso’s largest real estate firms. “The pace of the last two or three years - you list a home and sell it in a few days - those days are gone. We’re back to a more normal market with a balanced inventory.”

One reason for the sales decline is tighter mortgage financing requirements in the bad credit mortgage market, DeWetter and others said. People with poor credit or high debt ratios are now unable to get mortgage loans with no down payments as they had in the past, he said.

Loans for people with good credit and stable employment continue to be easy to get, he said.
The number of out-of-town investors coming into the market to buy homes has also slowed.

No data were readily available for new home sales in El Paso, but Ray Adauto, executive vice president of the El Paso Association of Builders, El Paso’s home builders group, said home construction and sales have slowed from last year’s booming industry.

However, Desert View Homes, one of the city’s largest home builders, has seen sales increase from last year, and hasn’t ran into mortgage financing problems, reported Steve Power, Desert View marketing director.

Mike Santamaria, president of the El Paso Association of Builders and vice president of Mountain Vista Builders, said higher lot prices have helped increase new home prices, which “knocks out a certain segment of the population.”

Mountain Vista’s home sales are down a bit from sales last year, in part because it’s selling more higher-priced homes and fewer available buyers are in that market, Santamaria said.

Sonja Van Nortwick, president of the Greater El Paso Association of Realtors and home mortgage broker-owner of ERA Sellers, Buyers & Associates, said El Paso is still a strong real estate market “because of the growth we’re anticipating,” particularly tied to Fort Bliss. Sales at her company are about the same as last year, she

Elizabeth Leal, a Realtor for Options Realty, said: “Last year, I closed on over $10 million (in home sales). It was just crazy. This year, I’ve got houses, but not enough buyers.”

Seven of Leal’s deals fell through this year because the buyers couldn’t get the 100 percent loans - loans with no down payments - they were seeking, Leal said. Jackie York, a Realtor for ERA Priority One Real Estate Services, said she’s had four deals collapse this year for the same reason.

Elena Mata, president of EMC Services, an El Paso mortgage brokerage firm, said that mortgage underwriters tightened lending rules in recent weeks, and that many subprime lenders have shut down.

“All the underwriting rules have changed. It’s harder to get a [no money down mortgage] now,” Mata said. “If you can’t verify income, you need to have a down payment.” Many home buyers EMC works with are self-employed or do work outside their regular jobs, and their income is difficult to verify, she said.

Last week, 3,264 homes were listed for sale on the El Paso Multiple Listing Service, which includes most existing homes on the El Paso market, and some new homes. DeWetter said probably half that number of homes were on the market a year ago.

Sales prices are still well above last year’s prices, Realtors Association data show. In March, the median sales price was $128,900, compared with $119,000 a year ago.

DeWetter said, “If inventory continues to increase, then we’ll see a slowing in the rate of (price) appreciation.” But it’s too early in the year to know what the trend will be, he said.

Yvonne and Owen Corkran expected to have their home sold by now. Instead, they’ve had to drop the price of their four-bedroom, 2,350-square-foot East Side home from $212,000 when they put it on the market in August to $179,900 today. They plan to move to a newly constructed home in May.

“I think if we had done it (put house on the market) sooner, I think it would have gone,” Yvonne Corkran said. “Now, there’s more to choose from. Two new homes just popped up for sale” near their house, and many new homes are being built on the far East Side, she said. “It’s been kind of a nightmare.”

The Corkrans had the opposite experience with a small rental home, which they sold quickly in March without even listing it for sale in the Texas housing market.
The Corkrans’ home in the Indian Ridge Middle School area may be a tougher sell because it was expanded, making it larger and more expensive than the neighborhood norm, Corkran said.

“We buried (a statue of) St. Joseph in the backyard, and blessed the house with holy water” to get some spiritual help with the sale process, she said. “We’ve done everything we could think of.”

SOURCE: The El Paso Times