Is DFW Residential Real Estate Market Spring-Loaded?

6506 Robin Road, (the Inwood and Mockingbird area of Dallas)is zoned for 10,000' single-family lots.
Lot shown is 212' x 200' per DCAD.

By Troy Corman, www.t2realestate.com

Is the Dallas-Fort Worth residential real estate market spring-loaded? Over the past few months, the big news in the residential real estate market is that there are fewer Dallas area homes for sale. In some sought-after neighborhoods, local title companies and Dallas real estate brokers are witnessing multiple offers and bidding wars.

Nothing creates higher prices like scarcity, when demand exceeds supply. And that appears to be happening in Big D as we speak. As the nationally noted Case-Shiller Index reported for June, Dallas home prices were up 3.7% versus June of 2011. It was Dallas' fourth straight month of year-over-year increases.

David Brown who heads up housing consultant Metrostudy locally, was quoted by the Dallas Morning News this week saying "absolutely, our view is that the market has turned." Furthermore, he quipped, "my expectation is that we'll see increasing appreciation in the second half of the year locally, and in a lot of markets around the country." He went on to say that there are currently about 29,000 homes listed for sale in the DFW area, but he expects that number to drop to 22,000 homes by years' end. If that happens, it would mark the lowest level of homes for sale in the Dallas-Fort Worth metro since 2000, when 1.5 million fewer people resided in the metroplex. "That's a recipe for higher prices," Brown said.

Through the first eight months of this year, 52,851 DFW area homes have been sold versus 47,611 in 2011, a 11% increase. Surprisingly, new home sales are about 2% below last year, with NTREIS (North Texas Real Estate Information System) reporting 4,273 new homes sold in 2012 versus 4,358 in 2011. Lots booked as sold are up 9% year-to-date year-over-year, as builder confidence is at a 5-year high and new home construction is picking up across north Texas. Let's hope the positive momentum continues to build!

Troy Corman is the founder of t2 Real Estate LLC, a Dallas real estate firm providing specialized knowledge with a hands-on approach. Specialties include residential real estate brokerage, land and acreage, and commercial real estate services. Contact us today at 214.827.1200 if you need to sell, buy or get your DFW property leased.

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Fannie Mae Offering 3.5% Of Final Sales Price Back To Owner-Occupant Home Buyers.

WASHINGTON, DC — Fannie Mae (FNM/NYSE) announced today that people purchasing a Fannie Mae-owned HomePath® property will receive up to 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010.

"Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover. Many families are taking advantage of the federal homebuyer tax credit to buy a new home so this is a great time for Fannie Mae to offer some additional help," said Terry Edwards, Executive Vice President of Credit Portfolio Management. "Homebuyers have the option to choose between financial assistance toward closing costs or new appliances for their home."

Properties eligible for this incentive are listed on HomePath.com and most listings include detailed property descriptions, photographs, community and school information and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing which offers homebuyers an opportunity to purchase with as little as 3 percent down.

First Look Program Allows Owner-Occupants 15 Days To Bid On Fannie Mae REOS.

By Troy Corman, t2realestate.com

Fannie Mae has implemented it's "First Look" initiative to allow owner-occupants a chance to buy Fannie Mae foreclosures the first 15 days they're on the market. Investors and those not intending to live in the home can only make an offer after the first 15 days have passed.

Fannie Mae is also allowing owner occupant buyers up to 45 days to close, 15 days more than normal. The First Look initiative is intended to help owner-occupant buyers and low-income buyers.

This initiative will probably help a few buyers but it will undoubtedly slow down the foreclosure purging process that needs to take place. The sooner we can purge the foreclosures, the sooner ALL home owners can benefit.

Dallas home prices drop in one survey, rise in another

The latest research on Dallas-area home prices will cause a lot of head scratching.

One report released Tuesday says local home prices were down at the end of the year, while a second benchmark national survey found they were still rising.

"Which one do you believe?" asked Texas A&M University economist James Gaines. "We researchers are confused, too."

According to the monthly S&P/Case-Shiller home price index, Dallas-area home prices fell 2.4 percent in December from a year earlier – the biggest drop yet in this closely watched housing study.

The Dallas numbers were still much better than the almost 9 percent nationwide decline in Case-Shiller's report.

But another respected home-price survey came up with the exact opposite conclusion about the Dallas-area housing market.

The Office of Federal Housing Enterprise Oversight's numbers say that home prices here in the fourth quarter were 2.95 percent higher than a year earlier.

And nationwide, the federal agency estimates that prices inched up 0.84 percent.

Disagreement among analysts is nothing new, and most housing studies have subtle differences in their conclusions, depending upon how the research is done.

But rarely do two such important home price gauges released on the same day provide such dramatically different data.

"I track four or five of these things, and most of the time, they are not that far apart," said Dr. Gaines, who is in Texas A&M's Real Estate Center.

The volatility of many housing markets caused by falling sales and rising foreclosures is making it harder for analysts, he said.

"These indexes have trouble when things are changing," Dr. Gaines said. "When things are nice and smooth and steady, they are consistent.

"But when the market is going up or down, they can get the data off."

Case-Shiller and the federal housing office take different routes to formulate their home price indexes.

Case-Shiller says it tracks the prices of typical single-family homes in 20 metropolitan areas. The survey does not include condominiums and townhouses. It only covers pre-owned properties – no new construction.

The Case-Shiller researchers say they compare "arms-length sales" of specific single-family homes.

The agency's index, on the other hand, is a weighted, seasonally adjusted measure of home prices based on data received from Freddie Mac and Fannie Mae, the government-sponsored mortgage investors. It doesn't include any information on homes priced above $417,000. And it includes information from all home purchases and refinancings.

Another commonly quoted home price gauge – the National Association of Realtors' quarterly home price report – just looks at changes in median sales prices on the Realtors' multiple listing services.

That survey found that Dallas-Fort Worth home prices were up 0.5 percent in the fourth quarter and fell more than 5 percent nationwide.

"That doesn't mean every house in America just went down 5 percent," Dr. Gaines said.

But the broad conclusion should be that home prices are flat to declining in North Texas.

"I don't think there is any doubt that the market is slowing down."

But not every neighborhood is acting the same, Dr. Gaines said.

"Dallas is a huge market," he said. "Within Dallas there are some submarkets which are doing very well and some areas which are doing very poorly."

The best way to use home price studies is to look at the overall trends, said William B. Brueggeman, chairman of Southern Methodist University's Real Estate Department.

Getting the surveys to agree "has been a problem for some time," said Dr. Brueggeman.

"In a perfect world if you had a constant stream of information on every transaction you could do it.

"But reality is not that way."

He said that the Case-Shiller index is more mathematical and statistical while reports such as the Realtors' survey just combine all the sales data and pick a median.

Even though their numbers are different, both Case-Shiller and the federal housing office have more somber takes on nationwide housing.

"Home prices across the nation and in most metro areas are significantly lower than where they were a year ago," Robert J. Shiller, professor at Yale University and one of the developers of the index, said in a statement. "Wherever you look, things look bleak."

Office of Federal Housing Enterprise Oversight Director James B. Lockhart said in his report that "prices for home purchases in the quarter fell in every state except Maine."

"While the market weakness is most significant in areas that saw the greatest price run-ups during the boom, other states have clearly not been immune to recent declines," he said.

METRO-AREA HOME PRICES

Area	4Q Index Level	1-Year Change
Atlanta	129.43	-3.4%
Boston	164.59	-3.4%
Charlotte	131.90	2.3%
Chicago	160.03	-4.5%
Cleveland	112.07	-6.3%
Dallas	120.77	-2.4%
Denver	130.98	-4.5%
Detroit	103.30	-13.6%
Las Vegas	196.05	-15.3%
Los Angeles	233.03	-13.7%
Miami	231.71	-17.5%
Minneapolis	155.37	-8.0%
New York	201.80	-5.6%
Phoenix	187.67	-15.3%
Portland	182.47	1.2%
San Diego	202.45	-15.0%
San Francisco	189.23	-10.8%
Seattle	184.88	0.5%
Tampa	200.13	-13.3%
Washington	217.78	-9.4%
Composite-10	200.55	-9.8%
Composite-20	184.86	-9.1%
SOURCE: Standard & Poor's