For the first time in more than three years, Houston home sales fell last month, a possible sign that the area housing market’s heady days may be coming to an end.
Home builders hit the brakes in the first quarter, cutting Dallas housing market starts almost 35 percent.
Central Texas’ job market continues to be strong, thanks in large part to a hot Texas housing market and growth in government jobs, the Texas Workforce Commission reports.
The five-county region added 32,600 jobs in February, a 4.6 percent growth rate compared with the same month a year ago. Low Texas mortgage costs and a booming economy continue to make the area desirable.
The jobless rate remained unchanged from the previous month at 3.8 percent. Overall, the total work force reached 736,800 in Travis, Williamson, Hays, Bastrop and Caldwell counties.
There was good news on the statewide front as well. Texas posted a 3.8 percent job growth rate, adding 213,200 jobs during the past 12 months.
The jobless rate was 4.5 percent, down from 5.1 percent a year ago. Real estate markets from Dallas to Houston continue to boom as the economy and cost of living make the Lone Star State a sought-after destination.
Unlike the local figure, statewide jobless numbers are adjusted to account for seasonal changes such as government hiring for the income tax season.
“The Texas labor market continues to grow at a rapid pace across many different industries,” said Workforce Commission Chair Diane Rath.
“Broad-based job growth and an unemployment rate in line with the national rate of 4.5 percent are clear signs of our state’s robust economy.”
The nation’s unemployment rate, also seasonally adjusted, fell to 4.5 percent in February, down from 4.6 percent a month earlier.
Locally, with home loan rates hovering near record lows, nearly all of the region’s major job sectors from government to manufacturing added workers in the past year.
The government sector has seen the biggest annual gain with 6,200 jobs, up in part with temporary IRS jobs for the tax season, for a total work force of 159,300. The retail trade saw the next largest jump for the year, with 5,800 new jobs for a total work force of 128,500.
The construction sector, buoyed by the robust Austin housing market, added 5,000 jobs over the year for a total of 46,900 jobs.
SOURCE: Austin American-Statesman
Rising foreclosures and the near-collapse of the Texas mortgage market to those with bad credit have triggered a flood of proposals from state lawmakers.
The suggested reforms range from requiring consumer education to making mortgage fraud easier to prosecute in a state that, according to RealtyTrac, had the fourth-highest rate of foreclosures in 2006.
Although the measures have the momentum of rising home loan defaults and worrisome news out of the subprime market, some still face resistance.
Much of the opposition is from mortgage brokers, those who help borrowers shop for loans, because many of the bills aim to change how they do business in the state. In recent years, mortgage brokers have been responsible for an increasing number of mortgages and today arrange more than 50 percent of loans, according to trade groups.
Lawmakers also are focusing on brokers instead of the banks that make the loans because the state can’t regulate all banks, because some are nationally chartered, state regulators said.
“Based on the bills that are currently in the hopper, it looks like there are some real proactive things being done,” said John Fleming, general counsel for the Texas Department of Savings and Mortgage Lending.
One of the more controversial proposals, House Bill 3762 by Rep. Norma Chavez, D-El Paso, would create a fiduciary duty for brokers toward borrowers, meaning they’d have to ensure any home purchase loan they offer is affordable and make an effort to see that the buyer’s getting the most favorable terms available.
If someone is home mortgage refinancing, the new loans would also have to have a net benefit for the borrower. The bill would force brokers to disclose the best loan terms they find after conducting a search and not, as consumer advocates complain, push the loan that pays the broker the most commission.
“People have been running to them for a long time thinking that’s the brokers’ job, and it wasn’t,” said Robert Doggett, an Austin attorney for the Texas Low-Income Housing Information Service. “Ultimately the broker who may have obtained a better loan for you doesn’t have to tell you about it. Brokers will say they just have to give you a fair deal, not the best deal. This bill changes that.”
The Texas Mortgage Brokers Association says it’s not that simple.
Brokers, the trade group says, should not be held to a higher standard than their competitors — bankers and mortgage bankers.
Brokers also have to comply with contracts they have with lenders, said Everett Ives of the Texas Association of Mortgage Brokers.
Once a home mortgage broker accepts, or “locks in,” a loan offer for a borrower, it triggers a trade on Wall Street. If a better offer comes along and the broker drops the initial lock, lenders will start to think the broker’s unreliable, Ives said, and that would hurt business.
Click here to read the rest of this Houston Chronicle article.
Subprime lenders, who market to home buyers with low credit ratings, have been in distress nationwide and in Texas.
More than a couple have gone out of business or scaled back operations, the Dallas Morning News notes.
“We’re going to see about a 10 percent correction in our business over the next two months,” said Kevin Miller, CEO of TexasLending.com, a mortgage banker in Dallas.
That company does about 25 percent of its business in subprime lending, making what are often termed bad credit mortgages.
Subprime loans account for about 13 percent of residential Texas mortgage loans, and nearly 16 percent of those are currently past due.
The percentage of mortgage loan foreclosure in the state of Texas rose to 4.3 percent at the end of December, compared with 4.1 percent at the end of September.
The situation is apt to get worse before it gets better. Only six states had a higher overall home loan delinquency rate than Texas’ 7.4 percent.
“The number of foreclosures is going to increase this year and next year,” said Jim Gaines, an economist at Texas A&M University’s Real Estate Center.
“We’ve undergone a big social experiment in the last three or four years, where we have found ways to finance people to buy a home, who historically had not been able to finance a home before. But by definition a lot of these people were of risky credit in the first place.”
Lenders said they’re tightening up on who gets approved for mortgages.
“We’re just being real about what we’re writing,” said Stewart Hunter, co-founder of Benchmark Mortgage in Dallas. “We’ve always had a very sound underwriting process in place. If anything, it’s just a gut check right now and being honest with ourselves.”
Miller said that nowadays, rather than just stated income, “you’re going to have full documentation of income now if you want 100 percent financing.”
He added that buyers must also have a month or two of payment reserves sitting in the bank to cover principal, interest, property tax payments and insurance.
Still, area mortgage lenders say most of the effects of this widespread slowdown are generally limited to the subprime market.
Philip Schneider, owner of Dallas Mortgage Associates, a small mortgage broker, said he did not think the subprime meltdown would devastate his main business of extending prime mortgages.
“Interest rates are still very attractive,” he said. “Will it be my best year? Probably not. But there’s still plenty of business out there.”
Nationally, loan delinquency and foreclosure rates increased during the last three months of 2006, according to the Mortgage Bankers Association.
At the end of 2006, 5 percent of residential loans were delinquent on a seasonally adjusted basis, compared with 4.7 percent at the end of September and at the end of 2005.
The delinquency rate for subprime loans rose to 13.3 percent from 12.6 percent at the end of September. The delinquency rate for prime rate mortgages rose to 2.6 percent from 2.4 percent.
SOURCE: Dallas Morning News
First American Title Insurance Company announced the recent opening of an office that caters specifically to San Antonio’s Hispanic home buying community. First American kicked off the new office opening with a reception for real estate agents and mortgage lenders earlier today.
The new location provides resources dedicated to assisting real estate professionals focused on the traditionally under-served Hispanic community and employs a talented staff fluent in Spanish and with a deep understanding of Latin culture. In addition, Spanish-style architecture and accents were incorporated throughout the new office’s design to help Hispanic home buyers feel more comfortable during the home buying process.
“We are excited to be the first title company to offer this level of service directly to San Antonio’s Latino community,” said Luis Yeager, First American Title vice president and sales manager. “It is my firm belief that the success of this new location will come not only from a strategically placed branch, but also our personal involvement in the Hispanic community in which we are located.”
Recent U.S. Census statistics indicate that Hispanic homeownership rates lag behind that of non-minorities by 27%. The national homeownership rate of non-Hispanic whites is 76%, while Hispanic homeownership continues to hover just under 50% nationally.
First American’s statewide multicultural homeownership solutions program is aimed at helping to break down the cultural and financial barriers that often arise when members of minority communities enter the Texas mortgage process.
It is comprised of consumer-focused outreach and educational events, specialized programs for real estate professionals and the hiring and training of key First American staff to better service ethnically diverse communities.
Specifically, the Hispanic marketing program helps buyers, many of whom are not native English speakers, understand complex home purchase loan and closing documents and empowers them to take decisive steps toward the financial security and wealth-building opportunities that homeownership can offer.
“The opening of our new San Antonio office is yet another example of First American’s dedication and unwavering commitment to the multicultural community,” said Jessica S. Verduzco, Texas Strategic Markets director for First American Title Insurance Company.
“Through these efforts, and in partnership with others in the industry, we have the potential to create tens of thousands of new homeowners in the state of Texas.”
The new office in San Antonio is First American’s second Hispanic-focused office in the Texas housing market. The first opened in northwest Houston last year.
SOURCE: RISMedia
Dallas home prices fell during the fourth quarter - but this region was far from alone; at least six dozen other U.S. housing markets witnessed prices plummet.
Pre-owned home sales prices in the Dallas-Fort Worth (DFW) area dropped almost 4 percent in the final months of 2006, the National Association of Realtors said in its benchmark survey, which was released Thursday.
It’s the first time in more than a decade that D-FW home prices have dropped that much in the quarterly report. This does at least mean that it’s an ideal time for a Texas mortgage seeker to apply and make an offer on a house.
Nationwide, the median price of U.S. homes fell 2.7 percent in the fourth quarter – the third consecutive quarter of declining prices.
Builders and mortgage economists expect the slowdown to last several more months, but the Realtors Association predicts that the worst of the housing slump is over.
“Hopefully the fourth quarter was the bottom of this current business cycle,” the Realtors’ chief economist, David Lereah, said in a statement. “When we get the figures for this spring, I expect to see a discernable improvement in both sales and prices.”
Housing prices were down in more than half the cities the Realtors surveyed in the fourth quarter.
The biggest drops were in Florida cities, including the Sarasota housing market, which was down 18 percent, and Palm Bay, down 17 percent from the fourth quarter of 2005.
Atlantic City, N.J., had the greatest price hike, up almost 26 percent from a year earlier.
In Texas, the biggest price decline among the cities the Realtors surveyed was 3.9 percent in Dallas, where the median stood at $144,300 at year-end. Prices were also down slightly in Corpus Christi.
The Austin housing market had the greatest price increase, 4.9 percent.
Texas did enjoy the nation’s third-highest increase in pre-owned home sales during the fourth quarter. Demand for home mortgage loans in the state is always fairly strong.
Are you at risk of losing your home?
Right now, a record number of people in the state capital are facing default on their Texas mortgages. But a couple of Austin realtors are sharing their solution for saving homeowners from foreclosure.
As a husband-and-wife realtor team, Stacey and Michael Spickes spend a lot of their time helping homeowners avoid foreclosure.
“And when you help one family after another after another avoid foreclosure how can you be stingy with the tools and the knowledge that we’ve developed over the last four years?” said Stacey Spickes.
The couple is now sharing the strategy they’ve developed for carrying out a short sale.
In class, Michael tells students, “A short sale occurs when a homeowner owes more on the property than the property is actually worth.”
Naturally, this is a problem. It begins the long, difficut process of defaulting on a home mortgage loan for many owners.
In addition to teaching classes, the Spickes have also published a book. What started as a way to buy property below market, has grown into a successful strategy that other realtors are eager to learn. Realtors in turn use short sale skills to help clients facing hardship situations often known as the 3 D’s: death, divorce or disease.
“Years ago, I was in a position where I almost lost my house,” said Debra Lief, a successful realtor who traveled from Dallas to attend the class in Austin. “I’m hopeful that I can give people an avenue that they would not normally know about or know that they have recourse.”
Short sales work for homeowners who are upside down on their mortgages - meaning they owe more than their house is worth. The bank agrees to accept less than what is owed as payment in full, and that prevents foreclosure.
“And by replicating what we’re doing, so many more people are being able to be helped now and that’s the whole idea,” Spickes said.
Despite all this advice, though, there’s a good chance record foreclosures will continue as bad credit home loans are applied for … and then adjusted before borrowers are prepared.
A building boom in teardown homes has left the Dallas area with a growing inventory of unsold new homes in older neighborhoods. The Dallas Morning News had the report.
At the end of 2006, almost 875 new houses were finished and vacant or under construction in several Dallas and Park Cities neighborhoods, according to a survey by Residential Strategies Inc.
Builders closed sales of only about 600 homes in so-called teardown neighborhoods last year. The number of unsold finished homes has more than tripled in the past year.
The volume of homes in the construction pipeline in these areas is “way up,” said Residential Strategies’ Ted Wilson. At the same time, Texas mortgage demand for all new homes in the Dallas area has softened.
“They have probably overdone it a little bit,” Mr. Wilson said. “I think they need to wait a little bit in some markets before they start more new homes.”
During the last few years, an influx of buyers wanting new houses in old neighborhoods has fueled a surge in construction in the North and East Dallas housing market.
Demand for these high-end homes has caused a flurry of teardowns in several close-in residential districts. But the bulldozers may be getting ahead of the sold signs, the latest survey reveals.
The inventories of unsold new homes are highest in the popular housing enclaves just east of North Central Expressway where small houses built in the 1920s, 1930s and 1940s are being plowed under to make way for bigger homes.
Almost half of the unsold new houses – more than 130 units – are located in three districts in East Dallas, including Lakewood Heights, the M Streets and Lakewood, Residential Strategies said.
“We may temporarily have too much inventory on the ground,” Mr. Wilson said. “It’s not the end of the world – it can be worked through.
“But there is quite a bit of construction under way in these markets, and it’s not going to go away.”
Builders say they recognize that home construction may be outpacing Texas home sales in some areas.”We have definitely seen the inventory levels grow in the last 12 months,” said Jeff Dworkin, who builds homes ranging from $375,000 to over $450,000 in East Dallas neighborhoods.
The Texas condo market is hot because it caters to all classes.
Conversely, the area’s luxury housing market is hot because those who can afford large dwellings are taking out mortgages in the state at a record-breaking pace.
In its January issue, Unique Homes Magazine listed what its editors expect will be the top 25 luxury housing markets for 2007. Austin ranked No. 5 on the list, beating out places such as Beverly Hills and the Manhattan housing market, which ranked seventh and 10th, respectively.
“Lots of untapped potential for luxury exists in this Texas Hill Country city, which posted record gains for much of 2006,” editors wrote in describing what helped Austin make the list. “The University of Texas, two lakes and the bragging rights to the ‘Music Capital of the World’ bring a mix of newcomers.”
Housing has grown to a nearly $4.3 billion industry in the Austin metropolitan area, according to stats from research firm Residential Strategies Inc. And these aren’t exactly bad credit home loans being applied for; it’s an upper class-dominated city.
Data from that company shows that one of the fastest growing segments of the market in recent years has been the $300,000 to $500,000 arena. Also gaining steadily is the $500,000 and over segment, as Austin mortgage activy remained active.