Plano's Current Real Estate Market

Posted on Saturday, December 6, 2008 at 01:05PM by Bill Webb Post a Comment So, what is going on in our market? Many of you are seeing the national news every evening and seeing the situation as painted by the media. It is important that you understand what is going on in the Dallas area as well as the particular community that you are located. November, as expected, was not kind to the real estate market. As we saw the financial markets melt and become chaotic, we saw real estate transactions slow down dramatically. I did some research and the local zip codes with the greatest amount of income are the zip codes that slowed the most. In other words, those most affected by the stock market’s demise were the quickest to act in real estate. This was not unexpected, given the severity of the financial mess. It has taken a few weeks for potential buyers to become adjusted to the economy. As confidence is re-established with the economy we are seeing buyers starting to return to the market. What we also know is that our local market is quite different from the national market. Here is a sampling of what is going on in our local market at this time. The Dallas area enjoys an employment growth rate of 2.3%, which is far ahead of the national average. Of the twenty largest cities Dallas ranks number one in the category of most affordable homes. The North Dallas area (which is where most of you are) has a job growth rate of 2.6% which was the highest gain of the thirty-two metro areas that were surveyed. Home prices have declined slightly in the Metroplex. Our market shows a decline of about 2.6% as compared to a national average of over 16%(this is the number you see on the nightly news). To summarize our situation I believe that we have seen the worst of it. That is providing our national economic scene does not deteriorate further. I do think we will start to see a rise in home sales locally. Interest rates are now in the 5.5% range and are trending lower. I believe that we will see lower rates in the near future as lending practices start to loosen a bit. I also believe that the government is making the housing industry a major focus of its recovery plan. I still believe that homes in this market need to be priced right and in the best condition possible to make sure that they get sold. We must make sure that the buyer can see value.

Will Mortgage Rates Go Lower

I have received many calls today from agents and consumers alike who are hearing news reports of fixed rate mortgages being reduced by the government to 4.5%. While rates are very, very low right now, they are not at the 4.5% level. More importantly, they may or may not be headed in that direction. As you are aware, interest rates are driven by market forces and respond to bond market issues in response to daily eco­nomic news and, occasionally, whims. The government does not “set” the interest rates. Accordingly, this news story is not factually accurate. Having said this, could there be days in the coming weeks or months that we have ac­cess to interest rates at these levels? Yes, this is possible. However, it is far from cer­tain and should, therefore, be considered with great caution. It is important that con­sumers understand that current interest rates are in the low to mid 5’s which is histori­cally extremely low. A client who chooses to wait on his/her buying decision until rates hit “bottom” will likely end up missing the great opportunities of today…and miss the bottom as well. History has taught us that the bottom typically lasts for a period of hours, not days, and is quite elusive. Please read the opinion of the mortgage analyst below. Larry Baer does a wonderful job of explaining the discrepancies between the news media and the markets. As he says: “The markets are always right. You and I are some of the time.” I think most readers would agree there is a big difference between talking the talk - and actually walking the walk. The Wall Street Journal and Reuters News Service really got the rumor mills buzzing yesterday when they claimed their "sources" within the U.S. Treasury Department are whispering insider knowledge that indicates the government is considering reducing residential mortgage rates to 4.5% by upping investment in mortgage-backed securities. The plan would be for Fannie Mae and Freddie Mac to buy up more mortgage-backed securities to help drive borrowing costs roughly 1.0% lower than last week's U.S. average of 5.53% for a 30-year fixed mortgage. I certainly don't want to rain on anybody's parade here - but there are a couple of things I think you ought to consider in order to put this story into perspective. The Treasury Department already has authority to buy billions of dollars of mortgage-backed securities - it has yet to use that authority to any large degree. Does additional purchase authority suddenly create a storm of mortgage-backed security purchase ac­tivity that didn't exist before? How much additional buying power is necessary to push 30-year fixed-rate mortgage-backed securities down to 4.5%? The Federal Reserve announced plans to buy $500 billion of mortgage-backed securities from Fannie and Freddie on Monday - which did cause rates to spike lower - for a couple of hours - be­fore mortgage interest rates finished flat to slightly higher through this morning. As I write, 30-year fixed rate mortgages in most of the country are trading at or near levels last experienced in June 2003 - when they touched 5.25%. It is unlikely any co­ordinated effort by the government to push 30-year mortgage interest rates to 4.5% or lower will occur until at least January 20th - there's probably too much "political hay" to be made by the majority party to make this event happen any earlier. Last but not lest, in my 30-years of managing mortgage market risk on a daily basis I've never seen mortgage interest rates sustain a dramatic move to lower levels when Uncle Sam is dumping huge amounts of supply into the credit markets. Current esti­mates indicate Uncle Sam has an immediate borrowing need that is multiples of his previous all-time record. So in a nutshell, we're talking about a program that doesn't even exist, that has no qualifying parameters, no timeline for implementation if it actually takes form and that will - at best - offer a note rate that is roughly 50 basis-points less than is immediately available in the market today. I hate these "two in the bush versus one in the hand" dilemmas - don't you? Shifting gears a little bit, I want to remind you that the economic "biggie" of the week is on tap tomorrow morning at 8:30 a.m. ET. The employment report is expected to show the economy shed 320,000 jobs in November, accelerating the labor market decline from the 240,000 jobs lost in October. In my judgment a dismal nonfarm payroll report is already priced into the mortgage market. As desensitized as mortgage investors have become to miserable macro-economic data it will likely take a November job loss figure greater than 350,000 and/or a national jobless rate higher than 6.9% to support a rally in the mortgage market. Numbers that match the consensus estimates for the November nonfarm payroll data will likely have little, if any significant impact on the near-term direction of mortgage interest rates. The above article was contributed by Tish Ashley of The Funding Source

First Time Homebuyer Credit

Posted on Wednesday, November 26, 2008 at 12:02PM by Bill Webb Post a Comment MONDAY, NOVEMBER 10, 2008 First Time Buyer Credit The tax credit may be enough of an incentive for potential buyers to jump off the fence. That is, if they know about it. By Robert Freedman November 2008 The $7,500 home ownership tax credit that the federal government created earlier this year as part of the Housing and Economic Recovery Act (H.R. 3221) is another tool at your disposal to encourage potential buyers to jump off the fence and get into the real estate market. When you combine the tax credit with today’s low interest rates, wide selection of for-sale inventory, and affordable home prices, many of the pieces are in place for your customers to buy now. But tax credits can be confusing. To help your clients understand how the credit works and why it would help them, you must learn the details. Here are 6 things you should be able to explain to prospects and clients: 1. Buyers have until July 2009 to make a purchase that qualifies. The tax credit was passed in July of this year as part of the Housing and Economic Recovery Act (H.R. 3221). It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if your customers wait to buy in the first half of 2009 they can take the credit on their 2009 tax return. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9. 2. Buyers don't really have to be "first-timers." The tax credit is actually available to any individual or household that hasn’t owned a home for at least three years. And the NATIONAL ASSOCIATION OF REALTORS® has asked Congress to expand the credit to all buyers, not just those who haven't owned a primary residence in recent years. 3. Even if buyers exceed the income limit, they can benefit from the credit. The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so your customers can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500. Sounds like a great deal. But what if your clients make more money than the income limit of $75,000 for individuals and $150,000 for households? Good news: Individuals whose income exceeds the $75,000 limit but don't make more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000. By the way, any house is eligible as long as it’s a primary residence and is in the United States. 4. Think of it as an interest-free loan. The federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable. NAR is pushing congress to remove the repayment provision, making this tax credit a true tax credit rather than an interest-free loan. 5. You don't have to be authorized before making a home purchase. There is no pre-purchase authorization, application, or other approval process. Eligible buyers simply have to claim the credit on their IRS Form 1040 tax return and/or any form that the IRS might devise. 6. New-home construction qualifies. For a home that a buyer constructs, the purchase date is the first date the buyer occupies the home.However, any home that is not a primary residence, such as a vacation home or income property, does not qualify. NAR Asking Congress to Expand Credit As mentioned above, NAR has asked Congress to do away with the repayment provision of the first-time buyer tax credit and expand the credit to all home buyers, not just first-timers. The proposals were part of a four-point housing stimulus plan the association submitted in mid-October. “Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible,” said NAR President Richard F. Gaylord. “It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans. Article courtesy of Realtor Magazine

New Case Shiller Data Shows only Slight Change for DFW

Posted on Tuesday, October 28, 2008 at 05:27PM by Bill Webb 1 Comment The latest data from the Case-Shiller report on home prices shows that while home prices in the 20 largest markets continues to decline, the Dallas market has shown a slow down in the rate of decline and is in fact up for the year to date. The Dallas market continues to be one of the most stable markets in the country. The Dallas market enjoys a 2.3% job growth rate which is well above last year's U.S growth rate of 1.5% . The Dallas area leads the nation along with other Texas cities. The job growth rate would appear to be strong for the remainder of 2008 and into 2009. Dallas new home starts are down 34.8%. This represents a concerted effort by builders to keep inventories at low levels when compared to years past. This will continue to support the re-sale market in the area. When looking at existing home sales it is important to break the Dallas metroplex into it's smaller community parts. When we do this we see that there can be a wide swing in home sales from north to south or east to west. That is why this blog continues to focus on the communities to the north of Dallas in particular. The DFW foreclosure rate is also low at 1.4%. Again, you must look at particular communities in order to get a true picture of how the foreclosure rate is affecting the area. The pink elephant that is in the room with us is the U.S economy. Many consumers are frozen because of the media's portrait of an economy where credit is unattainable. This is not the case at all. Frankly, it is no harder to obtain a mortgage today than it was two months ago. If you are a borrower with good credit, a job, and have some money for a down payment then you can obtain a mortgage at historically low interest rates. With home prices on the lower end when compared to recent years, it is an excellent time to make a purchase or to move up into a larger home. If you have specific questions about your personal situation please contact me. I will be more than happy to help with the decision making process.

Is The Plano Real Estate Maket Warming Up

Posted on Wednesday, September 10, 2008 at 01:52PM by Bill Webb Post a Comment The latest statistics show that the local real estate market in the North Dallas Suburbs may be starting to turn. The shift in the local market has been swift in comparison to other markets and certainly not as severe as some. While the roots of the downturn showed up in 2006, we did not see the full effect of the pressure on the market until the sub-prime crisis of 2007. In the last year we have seen home sales down about 13-35%(depending an area) for year to date. The monthly pending sale numbers for the five areas that I follow are actually better for the month of August. Prices remain steady with only Allen and McKinney showing a decrease in the average price versus a year ago. Plano, Richardson, and Frisco all show a slight increase. That being said, I would suggest that prices are simply flat. Note also that the months of inventory for each area is down for the month as compared to the year to date average. This is certainly a good sign. A big part of the reason for this is that there are fewer homes for sale in the marketplace. In all areas that i cover the decrease in homes for sale is a good bit steeper in August than for the year to date. This suggests that there is more price resistance from the seller side at this time than earlier in the year. Plano, for instance, shows only a 4.6 month supply of homes on the market in August. This is down from 4.9 the previous month and 5months supply year to date. On the demand side of the equation we have a Dallas job market that leads the nation in job growth. We have a strong local economy and we are in generally good economic condition. The Dallas area continues to shine as an affordable housing market. While I am not sure that we can declare that our housing market has turned and indeed headed upward. I do think we are seeing some signs that suggest a sustained recovery is not far off.

North Dallas Suburb Housing Markets Turn Upward

Posted on Monday, October 20, 2008 at 02:13PM by Bill Webb Post a Comment On September 10th I wrote about a possible turn in the housing statistics in Plano and other North Dallas Suburbs. Those numbers were confirmed by the September statistics as Plano, and Allen lead the way to a significant change in pending sales, active listings and the months supply of inventory. For instance, Plano has a pending sales to active listing ratio of over 23%. This is up from 18% in August. Allen was even more dramatic in going to 23% from 16%. This show a definite narrowing of the available supply to the existing demand. Richardson numbers also showed improvment. While McKinney and Frisco also improved, the numbers for those two areas are still lower than they showed be in order to proclaim an end to the housing slump. All of this may be tempered by the financial mess of the last two weeks. We will almost certainly see weaker numbers in October. As we work through the financial maze we should see stronger housing market in the months to come. Bear in mind that we can change directions in a minute depending on the direction our overall economy takes. I do believe that the relative strength of the Dallas economy is contributing to this housing turnaround. Dallas builders have also done a fairly good job of reducing inventories to manageable levels. As it stands now I think we will see a stronger housing market starting with November and carrying through to 2009. If you would like clarification of the numbers below or have secific questions about your area or neighborhood please email me or call. We would be happy to help you with information about your area.

Great Places to Retire - Plano Texas

Posted on Wednesday, March 5, 2008 at 03:44PM by Bill Webb Post a Comment When I think of retirement (which is not that far away) I always think of that place at the beach overlooking the ocean. How I will get up every morning and walk my dod down the beach and then go play a round of golf or some tennis with my friends. I recently have had to rethink that position. My parents lived on the outer banks of North Carolina and they loved the area. The ability to be so close to the ocean in a laid back community seemed like the perfect place to retire. That is until my father's health started to fail. A trip to the doctor was a 45 minute one way trip. The grocery store was 20 minutes away and even the closed bank, post office or gas station was 15-20 minutes away. When his health got really bad we had a problem with getting specialists that understood his illness. The community being small simply did not have the infrastructure that seniors really need. Why Plano is a great place to retire: What I learned from that experience was that I need to take a look at the retirement issue and make some decisions as to what might be the best fit for my wife and me. Having great health facilities that are close by is a great benefit. As we age we develop aches and pains that occasionally need to be attended to. Having a number of restaurants, banks, gas stations, auto mechanics, grocery stores and world class shopping within a few miles is also a huge plus. This is not to mention the cost of living. The Dallas area is one of the most affordable cities in the country to have the facilities and infrastructure that it has. Property values here are among the most undervalued in the nation. With no state income tax the area affords retirees with a tremendous value when compared to other areas. The wide range of entertainment, performing arts, lakes, parks and other facilities make this area a great place for the empty nester or retiree to live. When I look at all the things that are available to do I see no reason to leave this area. The only negative that I can see is the summer temperature. It can get to 100 degrees. But then when it does I am usually inside or I am in my pool enjoying the water. The winters are actually quite mild with not too many days under 30 degrees and rarely are their any lows under 20. All in all, the Plano area offers the retiree a great place to live:1) Great healthcare - Three major hospitals with others coming. Private clinics and physiscians are in plentiful supply.2) Major financial center with every bank immaginable available within a few miles.3) World Class shopping with both high end and more modest shopping readily available4) At two hundred fifty thousand people, Plano enjoys all the benefits of being a suburb of Dallas without the congestion. Traffic moves easily throughout the city.5) Very affordable housing - Plano's housing market is one of the most undervalued in the nation.6) Great schools - The perfect place for your kids to move with their family. You will be close without having to move to them.7) Great weather - Lots of sunshine and warm days in winter. Playing golf in January is very doable.8) The Dallas metroplex is a major cultural center with the largest performing arts district in the nation currently under construction. All of this makes the Plano area a can't miss area for the empty nester or retiree.