Jacobs & Mikeska Realtors Blog

Buffett: No double-dip recession

2010-09-14T07:23:00.001-07:00

Warren Buffett ruled out a second recession in the U.S. and said businesses owned by his Berkshire Hathaway Inc. are growing.

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“I am a huge bull on this country,” Buffett, Berkshire's CEO, said Monday in remarks to the Montana Economic Development Summit. “We will not have a double-dip recession at all. I see our businesses coming back almost across the board.

“I've seen sentiment turn sour in the last three months or so, generally in the media. I don't see that in our businesses. I see we're employing more people than a month ago, two months ago.”

Buffett, who spoke via video connection to an assembly in Butte, Mont., said U.S. banks were ready to boost lending, and he encouraged entrepreneurs to seek financing for their business ideas. Berkshire is the biggest shareholder of Wells Fargo & Co., the top U.S. home lender.

“It's night and day from a year, year and a half ago,” Buffett said. “I know Wells Fargo, they would love to have $50 billion more of loans now. Go in and talk to the banker.”

Microsoft Corp. CEO Steve Ballmer and General Electric Co. Chairman Jeff Immelt also told the nearly 2,000 business leaders, government officials, aspiring entrepreneurs and others at the summit that things were getting better.

Ballmer said there soon will be more technological advancement and invention than there was during the Internet era. That will help drive business growth, he said.

“I am very enthusiastic what the future holds for our industry and what our industry will mean for growth in other industries,” said Ballmer, whose company is based in Seattle.

“All areas of science today are moving forward more quickly,” Ballmer said. “The speed of scientific breakthrough is accelerating.”

Immelt said that angry political rhetoric is not helpful and that headlines are too focused on finding negative indicators. He said business at GE, one of the world's largest companies, is improving.

Immelt said the country is going to need to adjust, though. The economy since the 1970s has been driven by consumer credit and a misguided notion in building a “lazy” service economy, he said. The key to recovery, he said, is manufacturing, with an aim to reduce the trade deficit.

“It was just wrong. It was stupid. It was insane,” Immelt said of the push for a service-based economy. “The future of the economy has to be as an exporter.”

This report includes material from the Associated Press.

Bloomberg News

Real Estate Update

2010-06-16T06:56:00.000-07:00

First-time homebuyers looking to land an $8,000 federal income tax credit may have a little more time to close on their purchases if a Senate amendment unveiled Thursday makes it into law. As it stands now, homebuyers must have signed contracts by April 30 and must close the deal by June 30. They could be eligible for an $8,000 tax credit if they are first-time buyers or a $6,500 credit if they owned and lived in their previous home for five of the last eight years. The closing deadline, however, could be pushed back to Sept. 30 under an amendment offered by Senate Majority Leader Harry Reid, D-Nev., Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn. The senators said they want to make sure banks have time to process the transactions, especially short-sales, which is a more involved process. "By extending the transaction deadline, we can ensure that everyone taking advantage of this credit can complete the purchase of their new home, Reid said. It remains to be seen, however, whether the amendment will go anywhere. It’s part of a controversial jobs and tax bill that may be radically changed before the Senate approves it. Lawmakers are not scheduled to vote on the bill until next week at the earliest. Source: CNNMoney.com

Builders, designers, and architects say now is a great time to build a new custom home or remodel an existing one. Not only are there plenty of unemployed and under-employed workers available, but also property is for sale at bargain prices and construction materials are at bargain levels. "It makes a lot of sense right now," said Stephen Melman, director of economic services for the National Association of Home Builders. "People are available to do the work. They are going to bid competitively so I’m sure that will drive the price down." The only problem could be financing, which can be hard to arrange. Source: Investor’s Business Daily

The vast majority of potential home buyers – 87 percent – plan to use a Federal Housing Administration home loan to finance their purchases, according to a new survey from the Home Buying Institute, a consulting service. In a survey of 12,000 home shoppers consisting of two-thirds first-time buyers, nearly 54 percent said they preferred an FHA loan because it requires a small down payment. The remainder chose an FHA loan for these reasons: 19.2 percent thought the qualification process would be easier; 13.5 percent said they didn’t think they could qualify for a conventional loan; 7.7 percent said they had bad credit; 5.8 percent said their income was too low to qualify for a conventional loan. Source: Home Buying Institute

Did Someone Say Double Dip?

2010-06-16T06:53:00.000-07:00

We are not talking ice cream here. However, one must admit that the market’s recent reaction to bad news seems to have many thinking that the economy could slip back into recession. Remember, we had plenty of bad news last year and early this year, but the markets kept on advancing. Just last week, CNN/Money addressed this possibility in an article. The findings? "Some economists think a double dip is even less likely than it was earlier this year. David Wyss, chief economist with Standard & Poor’s, said that even though he thinks slower U.S. growth is practically a sure thing, the odds of a double-dip actually have shrunk to 20% from 25% earlier this year. Same goes for Derek Hoffman, founder and editor of The Wall Street Cheat Sheet, who also puts the odds of a double dip at 20%, when just a few months earlier he saw them at 50-50."

We keep pointing out that the economic news continues to be positive. The Federal Reserve Board’s "Beige Book" indicated continued strength across the nation. However, some districts are experiencing a slowdown and the latest retail sales release confirms these findings. So it begs the question: is the economy’s growth slowing in an example of a recovery experiencing "stops and starts" or is it possible that we will slip into recession? For now, the experts are telling us that a recovery is continuing. However, with stubbornly high unemployment rates and a struggling real estate sector, it just does not feel good. Meanwhile, the markets continue to bounce around violently. For those who are invested in stocks, real estate or any other form of commodity, these are not times for the faint of heart. For those with weak hearts, we suggest you go on vacation for a few months and then go back and read the box scores.

MICHAEL CLAWSON
Fairway Independent Mortgage

Congress Extends Housing Tax Credit

2009-11-06T08:41:00.001-08:00

Congress gave final approval Thursday for an additional $24 billion to help the jobless and support the housing market. According to the Washington Post article below, there are three main provisions to the bill being sent to the President to sign:
1) Unemployment Benefits. The bill would prolong benefits for at least 14 weeks for people out of work. The jobless in more than two dozen states where unemployment rates exceed 8.5 percent would receive up to 20 additional weeks of benefits. With more than 15 million Americans unemployed, a third of whom have been out of work for more than six months, benefits for more than 1 million people would have ended without the extension, according to the National Employment Law Project, a nonpartisan group that tracks the issue.

2) Housing Tax Credit. Under the housing program, people buying a home for the first time in three years would receive an $8,000 tax credit if they sign a contract by April 30 and close by June 30. The timing is more flexible for military families who have been deployed overseas for 90 days or more in 2008 or 2009. They would have until April 30, 2011, to sign a contract. Homeowners who are buying a new primary residence would be eligible for a $6,500 tax credit beginning Dec. 1 if they owned their home for five consecutive years in the previous eight. To qualify, the home must be no more than $800,000. The program also restricts eligibility to individuals who make no more than $125,000 annually and couples who make no more than $225,000. Anyone who collects the tax credit but sells the home within three years of buying it must return the refund. The housing program is estimated to cost $10.8 billion.

3) Tax Refunds for Business Losses. Another provision allows businesses that had operating losses in 2008 and 2009 to seek refunds for taxes paid on profits over the past five years. The hope is that those refunds will allow businesses more flexibility to retain employees or make new investments to bolster the economy in the future.

The Washington Post

Senate likely to extend homebuyers' tax credit

2009-10-29T13:09:00.001-07:00

October 28, 2009 8:36 pm

Washington (CNN) -- Senate leaders have reached a tentative deal to extend the first-time homebuyers' tax credit that was originally passed earlier this year as part of the stimulus bill, Republican and Democratic sources told CNN on Wednesday.

The agreement would extend and expand the credit to include current homeowners who want to move, according to the sources.

The original credit in the stimulus bill is set to expire at the end of November and offers a tax credit of $8,000 to first-time homebuyers.

Senate sources told CNN they have tentatively agreed to extend that $8,000 credit for first-time buyers until the end of April. In addition, they are adding a $6,500 credit for some current homeowners who buy a new residence by then.

To qualify, current homeowners must have lived in their primary residence for five continuous years.

Senators have not agreed on how the tentative deal would come up for a vote, but sources from both parties said they are considering adding the housing credit to a bill that would extend unemployment benefits.

House Speaker Nancy Pelosi has indicated she also is interested in extending the homeowner credit, but House leaders have yet to endorse any one bill.

Neal Spelce Austin Letter

2009-10-28T14:25:00.001-07:00

October 23, 2009

A recent national report says the recession in Austin ended in August. If true, what happened in 2009 through August could portend great things for the Austin area in the months and years ahead.

Moody’s Economy.com and MSNBC.com’s latest Adversity Index moved Austin from “recession” into “recovery,” indicating the data on jobs, manufacturing and housing grew from six months earlier. The Austin metro was not alone. Out of the nation’s 384 metro areas, 79 moved into the “recovery” stage. The report also noted that this initial recovery is going to be slow.

Three things have to happen before the current national recession can be declared ended and only one is underway, reports Dr. Mark Dotzour, chief economist for the Real Estate Center at TexasA&M. “I think the economy will begin to turn for the better once the health care and the cap-and-trade issues are settled,” says Dotzour. “Those two political debates are creating substantial uncertainty for business owners and investors.”

The second trend to watch is consumer spending, which is more than 70% of the US economy. Watch for when consumer spending starts to increase again. Increased corporate profits are the third trend and Dotzour says there is some indication that this has already begun.

Back to the Austin metro. During all of the hand-wringing over the national recession, Austin has remained resoundingly resilient – at least when compared to the rest of the nation. For instance, FORTUNE magazine recently named the Austin area as the nation’s 8th best place to start a small business. This is an important designation during economic down times, as entrepreneurship spikes dramatically during tough times.

This recent designation triggered a thought. It seems throughout the economic distress of 2009, the Austin metro has been uniquely singled out time and time again for accolades compared to the rest of the nation’s major metros.

As a result, we’re devoting the remainder of this edition to list some, not all, of the national recognitions accorded Austin through August 2009. It’s quite an impressive list.

If it seems to you that we frequently report on the “best this” or “best that” rankings in which Austin is among the nation’s leaders, well, that’s accurate. And it’s significant in its scope.

It is amazing the number of mentions the Austin area has received just this year. For the record, here’s an extensive list for your edification, starting in January 2009.

Austin named one of America’s 25 Strongest Housing Markets. Forbes worked with Moody’s Economy.com to compile a list of the country’s real estate markets that are nearest to recovery. 1/7/09.

Austin named one of 15 Coolest North American cities. MSN Travel cited Tex-Mex food, music, the state capitol and “its laid-back atmosphere.” 1/22/09.

Austin named one of America’s Top 30 Most Wired Cities. Since 2007, Forbes has measured cities’ wired quotient by computing the percentage of Internet users with high-speed connections and the number of companies providing high-speed Internet. 1/22/09.

Austin named #2 Healthiest Housing Market for 2009. Builderonline.com selected markets with the best and least potential based on population trends and job growth -- perennial drivers of housing demand and other key factors. 2/17/09.

Austin 10th Best City for Moviemakers. MovieMaker magazine says Austin is once again one of the cities that offer moviemakers the best all-around chance for finding success during these tough economic times. 2/18/09.

Austin-Bergstrom International among Top Performing Airports. Airports Council International ranked Austin’s airport 3rd in North America. 3/10/09.

Austin & Raleigh are Fastest-Growing Metro Areas. The US Census Bureau named these as the top two metros for growth between 2007 and 2008. 3/19/09.

Austin among top 20 Best Places for Business and Careers. Forbes looked at 200 largest metro areas based on 11 different criteria. 3/25/09.

Austin comes in 2nd in Top Ten Cities where Americans are Relocating. Another ranking by Forbes. 3/30/09.

Austin named #1 Big City for Jobs. “Understanding what makes this attractive, fast-growing city tick can tell us much about what urban growth will look like in the coming decades.” Forbes, 4/12/09; also New Geography, 4/15/09.

This isn’t all. There’s much more. See the next item.

The top national rankings for the Austin area continued throughout 2009. Here’s more.

Austin is a City of the Future. fDi Magazine ranked Austin #5 – behind New York, Chicago, Houston & San Francisco – using seven categories. April/May 09.

Austin Named One of the Ten Best Cities of 2009. Austin ranks #8 on Kiplinger’s Personal Finance’s Ten Best Cities of 2009. 5/09.

Austin Best Bargain City in the US. Forbes looked at the country’s 50 largest metros and Austin earned high marks across the board. 5/09.

Austin Chosen as one of Top 20 Places to Thrive. BestBoomerTowns.com picked Austin as one of its top places in the US to thrive in retirement. 5/7/09.

Austin #7 Tech Center. Austin ranks #7 on bizjournal.com’s list of the nation’s biggest tech cities. 5/11/09.

Austin ranked 11th Best City for the Outdoors. Forbes used data from the Trust for Public Land, the Environmental Protection Agency and the National Oceanic and Atmospheric Administration to compile is list of 40 cities. 5/12/09.

Austin the Nation’s Best City for a Fresh Start. According to Relocation.com, Austin is the best city to start over and seek new economic opportunities. 5/21/09.

Austin Ranks 9th on American Fitness Index. The American College of Sports Medicine compiled this ranking of the nation’s 50 largest metros. 5/26/09.

Austin Projected to be among 5 Fastest Growing Metros. Bizjournals.com projected populations for nation’s 250 largest metros out to 2025. 6/1/09.

Austin Ranked in Top 20 High Tech Metro Area. In research by the Milken Institute, Austin was #20 while San Jose and Seattle were #1 and #2. 6/2/09.

Austin one of Ten Best Places to Live. USNews&WorldReport ranked affordable communities with strong economies and fun things to do. 6/8/09.

Austin Ranked Best City for Recession Recovery. Forbes picked Austin as the best in its Top Ten Cities poised for a rebound. 6/10/09.

Austin is the 3rd Strongest US Metro Economy. The Brookings Institution kicked off a quarterly monitoring effort by naming Austin #3. 6/16/09.

Is there another metro in the country with all these designations? Not likely.

Accolades for Austin continued throughout the downturn of 2009.

Austin tapped as the nation’s 2nd most affordable city. Forbes calculated the average Austin family budget was 72% of median family income. 6/29/09.

Austin near the top for Most Job Postings Per Capita. USNews&WorldReport named Austin as 4th healthiest big-city job market in the US. 7/10/09.

Austin is the #3 Best City for High-Paying Jobs. Forbes based this list on trends in “business and professional services” as the fastest growing sector in the high wage economy. 7/14/09.

Austin a Top Ten Start-Up City. Entrepreneur magazine ranked Austin among 10 cities that embody the entrepreneurial spirit. 8/09.

Austin #2 Best City For Working Moms. ForbesWoman’s first-ever list of the “Best Cities for Working Mothers” ranks Austin 2nd, just behind New York City in a study that examined the 50 largest US cities. 8/4/09.

Austin named the Top City for Your Career. SalesHQ.com put Austin at the top of this list because of its robust projected growth and one of the lowest changes in unemployment rate since the onset of the recession. 8/25/09.

This is not a complete summary of all the national “Top” rankings for the Austin metro through August 2009. And it doesn’t include a number of rankings for the state of Texas that significantly reinforce Austin’s position because of Austin’s role as an economic leader in the state. But taken in its totality, you can see why we suggested that – if these accolades came Austin’s way during the downturn, and the metro has now been labeled as moving from “recession” to “recovery” -- great things could be on the horizon.

Big Rebound in Existing Home Sales

2009-10-28T14:21:00.000-07:00

Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of REALTORS®.

Existing-home sales—including single-family, townhomes, condominiums, and co-ops—jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in more than two years, since it hit 5.73 million in July 2007.

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home-owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said.

Conditions for First-Time Buyers
Early information from a large annual consumer study to be released on Nov. 13, the 2009 National Association of REALTORS® Profile of Home Buyers and Sellers,shows that first-time home buyers accounted for more than 45 percent of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29 percent of transactions in September.

NAR President Charles McMillan said affordability conditions remain historically high. “Potential first-time buyers can take heart in that affordability conditions this year are the highest on record dating back to 1970, but with the first-time buyer tax credit scheduled to expire at the end of next month, people could hold back from entering the market,” he said. “Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average.”

Inventory Falls
Total housing inventory at the end of September fell 7.5 percent to 3.63 million existing homes available for sale, which represents an 7.8-month supply at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0 percent below a year ago.

“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06 percent in September from 5.19 percent in August; the rate was 6.04 percent in September 2008.

Home Sales Breakdown
The national median existing-home price for all housing types was $174,900 in September, which is 8.5 percent lower than September 2008. Distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area.

Single-family home sales rose 9.4 percent to a seasonally adjusted annual rate of 4.89 million in September from a pace of 4.47 million in August, and are 7.7 percent above the 4.54 million-unit level in September 2008. The median existing single-family home price was $174,900 in September, which is 8.1 percent below a year ago.

Existing condominium and co-op sales jumped 9.7 percent to a seasonally adjusted annual rate of 680,000 units in September from 620,000 in August, and are 9.7 percent above the 561,000-unit pace a year ago. The median existing condo price was $175,100 in September, down 11.7 percent from September 2008.

Here’s the region-by-region picture:

Northeast: Existing-home sales increased 4.4 percent to an annual level of 950,000 in September, and are 11.8 percent higher than September 2008. The median price was $234,700, down 7.0 percent from a year ago.
Midwest: Existing-home sales jumped 9.6 percent in September to a pace of 1.25 million and are 7.8 percent above a year ago. The median price was $147,600, which is 1.0 percent below September 2008.
South: Existing-home sales rose 9.0 percent to an annual level of 2.06 million in September and are 10.8 percent higher than September 2008. The median price was $153,500, down 7.6 percent from a year ago.
West: Existing-home sales surged 13.0 percent to an annual rate of 1.30 million in September and are 5.7 percent above a year ago. The median price in the West was $219,000, which is 15.0 percent below September 2008.

Source: NAR

NAR: Housing Tax Credit is Working

2009-10-28T14:20:00.000-07:00

Consumers are just starting to see the first glimmers of a bright future for the housing market and the overall economy. It’s up to Congress to make that glimmer a reality by building on the momentum created by the $8,000 home buyer tax credit. That's what National Association of REALTORS® First Vice President Ron Phipps, told the Senate Banking, Housing and Urban Affairs Committee Tuesday during a hearing on “The State of the Nation’s Housing Market.”

One of the key ways to do that is for Congress to extend the home buyer tax credit, “The data on the present home buyer tax credit show that the credit has had its intended impact—sales have jumped in recent months to a projected 5.1 million for the year and housing inventory has been trimmed, thus stabilizing home prices noticeably,” Phipps said. He also pointed out that each home sale generates approximately $63,000 in additional economic activity, providing a tremendous economic boost to the national economy.

“But it is a fragile recovery, and now is the time to build on home sales momentum by extending the tax credit throughout 2010 and expanding it to all home buyers,” he said. The present credit, due to expire on November 30, cannot help new purchasers now who write a contract today—they won’t be able to close before the deadline, and will lose out on the credit, said Phipps. “Without congressional action now, the market and our national economy may freeze again—possibly as soon as this month.”

Make Loan Limits Permanent
Phipps called upon Congress to take action on a number of additional fronts to strengthen the recovery. First, make the FHA and Fannie Mae/Freddie Mac loan limits permanent; these are set to expire on December 31. “Maintaining current loan limits would ensure that families have access to low-cost financing to purchase homes and can refinance problematic loans into safer, more affordable mortgages,” Phipps said.

Secondary Mortgage Markets
In addition, Congress should continue the federal government's involvement in the secondary mortgage market. “Without the government’s involvement in the secondary mortgage market, market participants will have no incentive to reach out to lower-income, creditworthy consumers. We must ensure that the housing market works in all markets and at all times, and that mortgage capital is provided to all potential and qualified purchasers in a way that promotes sustainable homeownership,” said Phipps.

—NAR

Feds Call Housing Upturn a Good Sign

2009-10-28T14:19:00.000-07:00

The Federal Reserve's “Beige Book” report, released Wednesday, points to housing as a bright spot in the economic landscape and applauds banks that lent to first-time homebuyers.

It calls commercial real estate a consistently weak sector, weighed down by business closures and the difficulty in refinancing.

In a separate report Wednesday, the U.S. Labor Department said the number of jobs fell in 43 states and the District of Columbia, with the unemployment rate rising in 23 states.

Industries with the strongest economic gains were residential real estate and manufacturing.

Source: Washington Post, Neil Irwin (10/22/2009)

Housing Starts Rise

2009-10-28T14:12:00.000-07:00

Housing starts rose 0.5 percent in September compared to August to an annual rate of 590,000, according to a report released Tuesday by the U.S. Commerce Department. Single-family home construction, which accounts for 85 percent of the market, increased 3.9 percent to a 501,000 annual rate. Multi-family housing fell 15 percent to an 89,000 rate. Building permits, an indicator of future construction, declined 1.2 percent from the August rate to a 573,000 annual rate in September. Most of the gain in single-family starts was attributable to a 7.1 percent increase in the South. The other regions fell with the West declining 8.8 percent.
Source: Bloomberg News, Courtney Schlisserman (10/20/2009)

Yes, the Housing Market Has Rarely Looked Better

2009-09-10T15:43:00.000-07:00

By JAMES B. STEWART

Passing through the Fort Myers, Fla., airport a few weeks ago, I noticed people eagerly signing up for a free bus tour of foreclosed real estate—with all properties offering water views. During the ride to my hotel, the young driver volunteered that he had just bought his first house, paying $65,000 for a foreclosed property in nearby Cape Coral that last sold for over $250,000. He said he had never expected to be able to buy anything on a driver's salary, let alone something that nice.

Last week, Standard & Poor's reported that its S&P/Case-Shiller U.S. National Home Price index of real-estate values increased this past quarter over the first quarter of 2009, the first quarter-on-quarter increase in three years. Its index of 20 major cities also rose for the three months ended June 30 over the three months ended May 31, with only hard-hit Detroit and Las Vegas experiencing declines. The week before that, the National Association of Realtors reported that sales volume of existing homes was up 7.2% in July from June.

In short, the data suggest that real-estate prices hit a bottom some time during the second quarter, and have now begun to rise. There's no way to be certain that this marks the end of the long, painful correction that followed the real-estate bubble, but clearly prices are no longer in free-fall. That means if you've been sitting on the fence, it's time to act.

Ordinarily I'd never try to time the real-estate market, but I can understand why buyers have been cautious. Few want to buy in down markets, just as stock buyers avoid bear markets. And for most people, of course, buying a house is a much bigger decision than buying a stock. But with real-estate prices nationally now down about 30% from their 2006 peak and showing signs of turning up, the prices aren't likely to go much lower. Every real-estate market is local, and so there may be a few exceptions. Overall, though, I can't imagine a better time to buy than now.

In addition to bargain prices, buyers also should find plenty of homes to choose from. The inventory of unsold homes was 4.09 million units in July, up 7.3% from June, according to the National Association of Realtors. And mortgage rates this week were at a two-month low of close to 5%, according to Zillow. Even the stricter appraisal process is working to the advantage of buyers. Appraisals are coming in far lower than most sellers have been expecting, forcing them to face the new reality of sharply lower prices. And with stricter standards, lenders aren't going to let buyers borrow more than they can afford, which protects buyers and helps to keep prices down.

Unless you're really prepared to accept the demands (and headaches) of being a landlord, I don't recommend direct ownership of real estate as an investment. The days of buyers lining up to flip Miami Beach and Las Vegas condos are mercifully gone.

There are much easier ways to make money in real estate, such as real-estate investment trusts or buying shares in home builders and other housing-related businesses (such as Home Depot). Historically, the mean rate of return on real estate has been around 3%, according to research from Yale economist Robert Shiller, who co-developed the Case-Shiller index. Shares in REITs and other stocks have often done much better.

But there's a good reason homeownership has been such a central part of the American dream. It delivers security, pride of ownership, a sense of community and decent investment returns as a bonus. I felt glad for my driver in Florida. He represents the other side of the foreclosure crisis. For every hardship story, and no doubt there are many, others are realizing their dreams of home ownership and getting what may well turn out to be the deals of their lives.

James B. Stewart, a columnist for SmartMoney magazine and SmartMoney.com, writes weekly about his personal investing strategy. Unlike Dow Jones reporters, he may have positions in the stocks he writes about.

TEXAS' EXISTING HOME SALES DROP, PRICES RISE

2009-09-02T08:01:00.001-07:00

TEXAS (Real Estate Center, CNNMoney.com) – A total of 22,511 existing homes were sold in Texas last month, a 4.8 percent decline from July 2008, according to MLS data compiled by the Real Estate Center at Texas A&M University. The median price increased 0.6 percent to $153,800 during the same period, and the state finished the month with a 7.4-month inventory of existing homes.

Here is how select Texas cities fared in July (data current as of Aug. 28, 2009):

	Sales	Change from Last Year	Median Price	Change from Last Year	Months' Inventory
Amarillo	254	down 21.6%	$124,600	up 1.2%	7.2
Austin	2,288	down 0.2%	$189,700	down 0.6%	7
College Station–Bryan	304	down 15.1%	$151,000	down 2.3%	6.8
Dallas	4,815	down 6%	$164,800	up 0.8%	6.5
El Paso	478	down 4.8%	$135,200	down 2.4%	9.1
Fort Worth	840	down 12.3%	$118,700	down 1.1%	6.6
Harlingen	78	up 20%	$95,000	up 13.6%	28.7
Houston	6,393	down 4.8%	$161,900	up 1.3%	6.8
Killeen–Fort Hood	257	down 6.2%	$124,800	down 0.9%	10
Laredo	91	up 11%	$122,800	up 2.3%	9
Lubbock	348	up 0.9%	$110,300	up 0.3%	5.5
Palestine	21	down 16%	$102,500	down 2.4%	10.1
San Angelo	125	down 5.3 %	$121,700	up 10.6%	5.6
San Antonio	2,040	up 7.9%	$156,900	up 2.3%	8.4
Waco	213	down 14.5%	$114,600	down 1.4%	8.4

Additional home sales data for these and other major Texas cities are available on the Center’s website.

Nationally, sales of existing single-family homes last month were up 5 percent from July 2008, according to the National Association of Realtors.

TEXAS BANKS FAIRING BETTER THAN OTHERS

2009-09-02T07:57:00.000-07:00

AUSTIN (Austin American Statesman) – Texas banks are in better condition than others across the nation, according to a new report from Sheshunoff & Co. Investment Banking, an Austin-based financial industry consulting firm.

Compared with the national median on several key measures of bank health, Texas institutions have been more profitable and had stronger asset quality and healthier levels of capital, said John Blaylock, associate director of Sheshunoff. Those higher levels of capital, combined with a lower level of bad assets than banks nationwide, have given Lone Star banks more money to absorb losses in this recession.

The report said Texas banks are well diversified, doing significant business in energy, health care and agriculture, all of which have fared better than most other sectors.

Texas banks’ profitability declined from the first quarter to 0.69 percent in the second but was still higher than the national average of 0.49 percent.

Profitability levels have been rising for Austin-based banks since third quarter 2008 and hit 0.74 percent in the second quarter of this year. Area banks have been buoyed by the economic activity that revolves around the University of Texas and the state government.

Banks in the Dallas–Fort Worth and Houston areas had returns on average assets below the national median.

Fed Chair Says the Worst Is Over

2009-08-31T21:54:00.000-07:00

Federal Reserve Chair Ben Bernanke said on Friday that he was optimistic the economy is about to take off. Bernanke acknowledged that credit is still tight, especially for businesses, but he told an audience of bankers, academics, and economists that the worst is over."Although we have avoided the worst, difficult challenges still lie ahead," Bernanke said. "We must work together to build on the gains already made to secure a sustained economic recovery."Bernanke called for stronger regulation of financial rules "to ensure that the enormous costs of the past two years will not be borne again."Source: The Associated Press, Jeannine Aversa (08/21/2009)

Now Is the Time to Buy in Real Estate

2009-08-31T21:53:00.000-07:00

Investors are returning as the real estate market recovers. BusinessWeek’s real estate guru Marc Roth points out these opportunities, which he says make sense if investors are willing to look over the property carefully and ask tough questions. Options they might consider including:
Buying a single-family house. This could be a first home, dream home, or a home to rent out.
Buying a multi-family investment property.
Snapping up a vacation property. There are deep discounts to be found in high-end resort areas.
Investing in a Real Estate Investment Trust. REITs were hit hard in the downturn, but many are on their way back.Source: BusinessWeek, Marc Roth (08/26/2009)

First-Time Buyer Credit Extension Possible

2009-08-31T21:50:00.000-07:00

Bills to extend the maximum $8,000 tax credit for first-time home buyers, which expires Nov. 30, are pending in both the U.S. House and the Senate.Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate Banking, Housing, and Urban Affairs Committee, is co-sponsor of a bill with Georgia Republican Sen. Johnny Isakson that would raise the credit amount to a maximum of $15,000.Senate Majority Leader Harry M. Reid of Nevada favors an extension of the current credit. He was quoted by the Las Vegas Sun saying, "It's something we can get done."Odds are that the credit will be extended and broadened to cover all buyers next year, but the chances of the amount increasing aren’t as good, observers say.Source: Washington Post Writers Group, Kenneth R. Harney (08/22/2009)

National Association of Realtors: Existing-Home Sales Rise Again

2009-08-13T17:07:00.000-07:00

Existing-home sales rose for the third consecutive month with inventory easing and home prices declining less sharply in June, according to the National Association of REALTORS®.

Existing-home sales — including single-family, townhomes, condominiums, and co-ops — increased 3.6 percent to a seasonally adjusted annual rate of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2 percent lower than the 4.90 million-unit level in June 2008.

Lawrence Yun, NAR chief economist, is hopeful about the gain.

“The increase in existing-home sales occurred in all major regions of the country,” he says. “We expect a gradual uptrend in sales to continue due to tax-credit incentives and historically high affordability conditions. Despite the rise in closed transactions, many REALTORS® are reporting lost sales as a result of new appraisal standards that went into effect May 1 of this year.”

HVCC Issues

A June survey of NAR members shows 37 percent experienced at least one lost sale as a result of the new Home Valuation Code of Conduct, with seven out of 10 reporting an increased use of out-of-area appraisers. Seventy percent of NAR appraiser members said consumers were paying higher fees, while 85 percent report a perceived reduction in appraisal quality.

“Clearly the process needs to be revised, but the most logical approach is to use appraisers with local expertise, industry designations, and access to local data, who make a physical examination of the property and use apples-to-apples comparisons with nearby home sales,” Yun says. “In many cases, normal homes are being compared with distressed homes sold at a discount, which often are in subpar condition – this is causing real harm to both buyers and sellers.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.42 percent in June from 4.86 percent in May; the rate was 6.32 percent in June 2008. Mortgage interest rates have trended lower in recent weeks.

Inventory Declines

Total housing inventory at the end of June fell 0.7 percent to 3.82 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, down from a 9.8-month supply in May. Raw inventory totals are 14.9 percent below a year ago.

“This is another hopeful sign — if we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” Yun says.

An NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May, and that the number of buyers looking at homes is up nearly 12 percentage points from June 2008.

NAR President Charles McMillan notes that there are very good opportunities. “Despite some of the challenges, the housing market continues to demonstrate signs of recovery,” he says. “The temporary first-time buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact, but since it’s taking longer to close transactions, many would-be beneficiaries may not be able to take advantage of the credit before the Dec. 1 expiration date."

The national median existing-home price for all housing types was $181,800 in June, which is 15.4 percent below June 2008. Distressed properties, which accounted for 31 percent of sales in June, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.32 million in June from a level of 4.22 million in May, and are 0.2 percent higher than the 4.31 million-unit pace a year ago. The median existing single-family home price was $181,600 in June, which is 15.0 percent below June 2008.

Existing condominium and co-op sales jumped 14.0 percent to a seasonally adjusted annual rate of 570,000 units in June from 500,000 in May, but are 3.1 percent below the 588,000-unit level in June 2008. The median existing condo price was $183,300 in June, down 18.9 percent from a year ago.

By Region

Northeast: Regionally, existing-home sales in the Northeast rose 2.5 percent to an annual pace of 820,000 in June, but are 4.7 percent below a year ago. The median price in the Northeast was $249,400, down 5.9 percent from June 2008.
Midwest: Existing-home sales in the Midwest increased 0.9 percent in June to a level of 1.10 million but are 1.8 percent lower than June 2008. The median price in the Midwest was $157,000, which is 9.1 percent below a year ago.
South: In the South, existing-home sales rose 4.0 percent to an annual pace of 1.81 million in June but are 3.7 percent below a year ago. The median price in the South was $163,200, down 11.9 percent from June 2008.
West: Existing-home sales in the West improved by 6.4 percent to an annual rate of 1.16 million in June, and are 11.5 percent higher than June 2008. The median price in the West was $214,800, which is 24.9 percent below a year ago.

Source: NAR

Investors Drive Foreclosure Prices Up

2009-08-13T17:03:00.002-07:00

Home shoppers in parts of the country with lots of foreclosures are finding it increasingly difficult to buy. Investors are bidding up prices thousands above the original asking price.

Federal legislation slowing the number of foreclosures is adding to the problem by reducing the number of homes on the market. For instance, in Las Vegas, one of the areas where the bidding problem is greatest, home inventories are down 10 percent since March, according to the Las Vegas Association of REALTORS®.

When a bidding war erupts, the problem is particularly difficult for traditional buyers because investors are usually cash purchasers. They can bid up a property without concern whether the appraisal will prevent them from getting a loan.

Experts say the problem is not unlike the situation at the height of the housing bubble.

"This market is about as abnormal as the hypermarket that we came out of a few years ago," says Jay Butler, director of the Realty Studies program at Arizona State University.

Source: The Associated Press, Jonathan J. Cooper

Housing Experts: Now Is a Perfect Time to Buy

2009-08-13T17:03:00.001-07:00

Don’t forget to remind potential buyers of something that is obvious to real estate professionals: Now is the time to buy, but that opportunity may be slipping away.

For people who have a job and money, a dream house is within reach, writes Marc Roth, founder of Home Warranty of America and a columnist for BusinessWeek.

He points out that mortgage rates remain low, prices are still at historic lows, and the government is offering incentives for first-time homebuyers.

He also adds that the inventory of homes to buy is still large, but it is shrinking. According to the NATIONAL ASSOCIATION OF REALTORS®, the housing inventory peaked in November 2008 at an 11-month supply. At the end of May 2009, it had fallen to a 9.6-month supply.

Roth says anyone who dallies will miss a good opportunity to buy a first home at a terrific price or go shopping for a move-up property that is a great buy.

Source: BusinessWeek.com, Marc Roth

Home Hunting Without Fear

2009-08-13T17:00:00.001-07:00

As any daredevil, extreme sports addict or adrenaline junkie knows, well-grounded preparation for the specific task at hand is what takes the fear out of trying.

The sometimes risky sport of home buying is no different.

Those who've suffered the agony of defeat in what's likely the most dangerous consumer game, learned the hard way that sheer fearlessness isn't enough to become and remain a homeowner -- through good times and bad.

With the rules of the housing game changed forever, preparing to just squeak by the home buying ordeal isn't enough to achieve a decisive and lasting victory.

The idea isn't just to buy a home. The goal is to keep your own roof over your head.

Preparation is key, according to the National Association of Realtors (NAR).

From NAR, here's how to get ready to be and remain a homeowner.

Create a wish list. Write down housing wants and needs. Include all the physical characteristics you want or need. Include style, size, layout and room configuration. Look at the number of bedrooms and bathrooms, and the basic amenities you must have. Include critical features such as location and services and a home's proximity to good schools or public transportation lines.

Browse for housing. Realtor.com and other Web sites offer home valuation features and neighborhood data on trends in local markets. Use features to determine how a listing compares with nearby, comparable properties in terms of value, actual sales prices, home features, neighborhood characteristics, and more.

Work with an expert. Finding a professional real estate agent who will represent your best interests can make the difference in location, negotiating the best offer, and closing the home of your dreams. Look for a full time real estate agent, who has uploaded telling photos and videos of their listings and look for agents with good Web sites to market your listing.

Get the complete picture before you visit. You can't know everything about a community from an online listing. Schools, crime, and proximity to shopping and work all impact property values. NAR says talk to a Realtor and go to Realtor.com to explore communities.

Make sure the property details are reliable. Buyers need know when a listing has experienced a price change. Look for Web sites like Realtor.com that updates listings frequently, including price changes. Fresh and reliable information is critical. Realtor.com time stamps listings to help buyers make better informed decisions. Get email alerts and stay on top of changes so you can be first to act.

Written by Broderick Perkins

Moving Made Easy, Keep It Simple

2009-08-13T16:59:00.001-07:00

The moving industry is complicated.

It uses a lot of lingo that most consumers don't understand: You get your estimates as "binding" or "non-binding"; movers use a "tariff" to determine rates; when the mover ships your goods, you receive a "bill of lading."

And when you go to check out your mover, you run into a mass of regulations. If you're moving within your state, your state government regulates your move; if you're moving across the country, the Federal Motor Carrier Safety Administration does. Finding (and understanding) information about your mover on either of these agencies' Web sites can be hard, too.

It's understandable, then, that most people don't put in this kind of gumshoe work. However, there are three basic moving pitfalls that, if avoided, can help save you from a lousy experience with poor moving companies.

1. Not getting an in-home estimate.

The moving company needs to see exactly what they need to move. If they don't, it's near impossible to derive accurate moving quotes for your move.

Have them come to your home to see exactly what you need moved; otherwise, you could be in for a nasty surprise on moving day if they claim you have more belongings than you indicated on your inventory.

Don't give an inventory over the phone or complete one online. You will have a hard time putting together an accurate inventory on your own, and it also gives unscrupulous moving companies the opportunity to claim that your inventory was incorrect and void the estimate – on moving day, no less.

While on the subject of unscrupulous moving companies, one easy way to decrease your chances of hiring one is to start your search using a database of pre-screened, pre-qualified movers. Check out Web sites such as MovingQuotes.com, which matches consumers with pre-screened, competent movers.

2. Not choosing a mover with a local presence.

There are many reasons for this.

First, it's a good idea to visit the moving company offices to ensure they're a legitimate mover and not just a broker that's going to give your move to someone else.

Second, it will put your mind at ease to see the moving company's facilities, its names on the trucks, etcetera.

Third, logistically, it's just easier. If you're moving from Texas to Seattle, how can a moving company in Ohio do your move? Will that moving company really be handling your move?

Finally, if you must follow up with the moving company for a damage claim or something else after the move, having them nearby makes that process much easier.

3. Going with a low-ball bid.

Beware of an offer that sounds too good to be true. You will almost certainly pay for it in some other way.

True, some companies might offer a lower price, but make sure it's a reasonable discount. First, you should get at least three moving quotes for your move. If two of the movers are priced around the same level, and the third comes in with a price that's 30 percent less, you need to be skeptical.

All moving companies face the same costs, so if someone is telling you they can do your move for a lot less, it's probably because they will make up the difference by larding on a bunch of ridiculous charges later, such as excess packing charges, or claims that you added stuff to be moved after you got your estimate.

Packing up and moving – whether across town or across the country – is always a nerve-racking experience. The thought of dealing with a potentially disreputable moving company adds another layer of unnecessary complexity. By avoiding these three common mistakes, you will increase your chances of having an easier, less stressful moving experience, and move on to enjoying your new home.

Written by Tim Johnson

IN CASE YOU MISSED IT: National Review: Going Alamo: Why jobs and companies are flocking to a big small-government state

2009-08-03T16:32:00.000-07:00

If you want to know where the future is headed, look where the people are going. And if you want to know where the people are going, check with U-Haul. Here's an interesting indicator, first noted by the legendary economist Arthur Laffer: Renting a 26-foot U-Haul truck to go from Austin to San Francisco this July would cost you about $900. Renting the same truck to go from San Francisco to Austin? About $3,000. In the great balance of supply and demand, California has a large supply of people who are demanding to move to Texas. There's a reason for this.

Continue Reading...

http://governor.state.tx.us/news/press-release/13234/

Austin Housing Market Shows Signs of Life

2009-08-02T15:41:00.000-07:00

AUSTIN (Austin Board of Realtors) – Just over 2,100 single-family homes were sold last month, according to the June 2009 Multiple Listing Service report by the Austin Board of Realtors. That’s 4 percent less than a year ago. Meanwhile, the median price was $199,900, unchanged from last year.

"We've seen the year-over-year gap in sales volume close steadily throughout 2009, and that momentum continues this month," said Jay Gohil, chairman of the Austin Board of Realtors.
Home prices in the Austin area have continued gaining momentum since the beginning of the year. Over the first two quarters of 2009, the average sale price for a single-family home has increased $20,824, while median sales price has increased $24,400.

Also, since January 2009, sales volume is up 61 percent, and active listings are up 14 percent.

Which cities will, and won’t, recover the fastest?

2009-08-02T15:30:00.000-07:00

WASHINGTON - The three most important things in real estate: location, location, location.

It's true for recovery from a real estate bubble too. Overall, many economists expect the national economy to return to growth later in 2009, perhaps as soon as this summer. But that won't be the case everywhere. While some cities are poised for a quick rebound, others face a slog to recovery that could take years.

Poised for swift recovery are many Texas cities, such as Austin, San Antonio, Dallas and McAllen. These areas did not see the massive real estate bubble that formed in states like California, Nevada and Florida. The economy is diverse, with heavy growth coming from education and health care in recent years.
Many of the cities with the longest road to recovery are California cities, where home prices rocketed out of control, and entire economies were supported largely by a real estate bubble. Fresno, Modesto, Salinas, Bakersfield, Stockton and Los Angeles all saw home prices soar to unsustainable levels and then begin their inevitable plunge. The collapse of the housing markets pushed unemployment rates in these cities above 10 percent.

Even as a flood of foreclosures makes home prices look affordable again, a sign that some of the worst real estate markets may be finding their bottom, it will still take years for unemployment rates as high as 16.8 percent in Modesto or 15.5 percent in Fresno to return to healthy levels.

Cities for recovery:
According to Forbes, here are cities that should turn around sooner rather than later
Austin-Round Rock, Texas
Fayetteville-Springdale-Rogers, Ark.
Boulder, Colo.
Huntsville, Ala.
San Antonio, Texas

"Avoiding the housing bubble helped Texas, will keep California languishing"

To find the 10 cities that look best poised for recovery (and the 10 cities likely looking at the longest climb back), we examined estimates from data provider Moody's Economy.com of the projected gross domestic product of metropolitan areas across the U.S., as well as unemployment figures from the Bureau of Labor Statistics and home prices, incomes and affordability data from the National Association of Home Builders. Because, in general, healthy cities were not victims of as severe a housing collapse, home prices were not used in ranking the cities poised for recovery.

The analysis also shows the importance of a city's economic make-up. Manufacturing has been battered by the recession, leaving cities like Detroit and Flint, Mich., or Youngstown, Ohio, with bad unemployment and a changing economy that's unlikely to replace the lost jobs. Moody's projects the economy in Flint, for example, will decrease by 16 percent from the start of recession to the end of 2010. (One commonly cited rule of thumb for depression is a decline of 10 percent.) Flint might never return to its original size.

New York City, too, once the capital of finance, is now saddled with Wall Street-induced unemployment and homes that are completely unaffordable for most of the region's residents. The NAHB's Housing Opportunity Index reports that only 14 percent of homes in the New York-White Plains-Wayne area are affordable on the area's median income — by far the least affordable region measured by NAHB.

Cities with robust technology sectors are poised for stronger recoveries than manufacturing or finance centers. Cities with high-tech capabilities like Seattle, Huntsville, Ala., or Boulder, Colo., could see quick recovery in coming months.

Link to MSNBC report >>> http://www.msnbc.msn.com/id/31372693/ns/business-forbescom?GT1=43001from/ET

Forbes: Austin Poised for Fastest Recovery!

2009-08-02T15:25:00.000-07:00

From now until the end of 2010, the Austin economy is projected to grow by $5 billion. That, coupled with relatively subdued unemployment, has the Texas Capital poised for the quickest economic rebound in the nation, according to Forbes.com.

Overall, many economists expect the national economy to return to growth later in 2009, perhaps as soon as this summer. But, as the Forbes writers point out, that won't be the case everywhere. While some cities are positioned for a quick rebound, others face a slow crawl to recovery that could take years.

Texas cities such as Austin, San Antonio, Dallas and McAllen are in a good position, Forbes' analysis found. That's due in part to the fact that Texas did not see the massive real estate bubble that formed in states like California, Nevada and Florida.

To determine the 10 cities that look best poised for recovery, Forbes examined estimates from data provider Moody's Economy.com of the projected gross domestic product of metropolitan areas across the U.S., as well as unemployment figures from the Bureau of Labor Statistics and home prices, incomes and affordability data from the National Association of Home Builders.

The analysis shows the importance of a city's economic make-up. In essence, the more diverse the industry base is in a particular city, the better off that city is when it comes to quick recovery.

The top five cities for recovery, in order, are Austin; Fayetteville, Ark.; Boulder, Colo.; Huntsville, Ala.; and San Antonio.

To view Austin Business Journal article, click here >>> http://austin.bizjournals.com/austin/stories/2009/07/20/daily35.html