Surging Interest Rates Will Not Slow Market

Just the Facts

Rates Will Have to Pass 7% Before Housing Slows

The rise in interest rates may only accelerate the market as buyers on the fence begin to buy, feeling the pressure of rising interest rates.  Major economists agree that rates will have to surpass 7% before there is a slow-down in the real estate market.  And even then with the pent-up demand, the market should continue briskly.   History shows that when rates went from 7% to 18% in 1979-1981, the housing market showed no signs of slowdown until about 12%.

-          Dallas Morning News, June 21, 2013 (excerpts)

Surging Interest Rates Will Not Slow Market

Surging mortgage rates may have little effect on the housing market, at least in the near term, housing experts say.  Mortgage rates rose sharply last week following comments from Federal Reserve Chairman Ben Bernanke that the Fed will begin tapering off its assets purchases later this year if incoming data continues to show the economy is on the mend.  The average cost of a 30-year fixed-rate mortgage loan increased to 4.36% on June 21^st, from 3.94% on June 14^th, and a record low of 3.36% in December according to Bankrate.com.

-          Inman News, June 24, 2013

Which Real Estate Brand Comes to Mind?

The Texas Boom is Here to Stay!

Just the Facts

The Texas Boom is Here to Stay!

Texas Net Job Gain:  1,068,900

The Other 49 States Net Job Gain:   1,244,700

The Texas boon has only begun.  Virtually all economists agree that Texas has so many things going for it that the extraordinary growth of Texas will continue for many years.  Our governor touts the Texas story all over the nation, much to the chagrine of numerous other governors.  But the facts are clear.  Low taxes, low regulation and a balance budget brings jobs, not to mention the pro-business, can-do attitude in Texas.   And jobs bring people.

-          Facebook, June 15, 2013

The Texas Housing Rebound to Continue

The Texas housing rebound shows no sign of letting up, but the rapid rise in home prices could taper off, according to a new report by the Federal Reserve Bank of Dallas.  “Stronger-than-average employment growth and consistent in-migration should continue boosting demand for homes,” business economist D’Ann Peterson said in the Dallas Fed’s Southwest Economy quarterly report.

-          Dallas Morning News, June 15, 2013

DFW Area Gains One Million Every 7 Years

The U.S. Census reports that the DFW Metro, now the 4^th largest in the nation, is set to have a net gain of over one million people every seven years.   This is expected to continue for the next 25 years.

-          U.S. Census

America’s Highest Earning Cities

America’s Highest Earning Cities

Survey of 562 cities, population over 50,000

Congratulations to Flower Mound, Frisco and Allen

There are 16 cities in the United State with populations over 50,000 where more than 50% of the households in the city earn more than $100,000 per year.  California and Texas dominate this list of high-earners.  Most of these cities are well-to-do suburbs of large metro areas, including Dallas-Ft Worth, San Francisco, Atlanta and Chicago.

Rank	City/CDP	Larger metro area	Percentage of households making over $100,000	Percentage of households making less than $100,000	Percentage of households making $100,000 to $149,999	Percentage of households making $150,000 to $199,999	Percentage of households making $200,000 or more
1	San Ramon, California	San Francisco	63.50%	36.50%	22.10%	16.40%	25.00%
2	Flower Mound, Texas	Dallas-Fort Worth	62.80%	37.10%	28.30%	15.90%	18.60%
3	Pleasanton, California	San Francisco	59.80%	40.00%	22.80%	14.70%	22.30%
4	Yorba Linda, California	Los Angeles	58.80%	41.20%	23.50%	16.70%	18.60%
5	Carmel, Indiana	Indianapolis	58.40%	41.60%	20.90%	14.30%	23.20%
6	Palo Alto, California	San Francisco	57.80%	42.10%	17.70%	11.90%	28.20%
7	Newton, Massachusetts	Boston	55.40%	44.60%	18.00%	11.70%	25.70%
8	Naperville, Illinois	Chicago	54.80%	45.10%	18.50%	13.50%	22.80%
9	Frisco, Texas	Dallas-Fort Worth	53.70%	46.30%	25.70%	14.70%	13.30%
10	The Woodlands CDP, Texas	Houston	53.40%	46.70%	24.70%	13.40%	15.30%
11	Johns Creek, Georgia	Atlanta	52.10%	48.00%	21.20%	10.40%	20.50%
12	Ellicott City CDP, Maryland	Baltimore	51.70%	48.30%	16.80%	16.40%	18.50%
13	Allen, Texas	Dallas-Fort Worth	51.20%	48.90%	24.50%	16.10%	10.60%
14	Lake Forest, California	Los Angeles	50.70%	49.30%	26.70%	13.70%	10.30%
15	Highlands Ranch CDP, Colorado	Denver	50.50%	49.40%	25.60%	12.70%	12.20%
16	Arlington CDP, Virginia	Washington, DC	50.30%	49.80%	18.10%	12.90%	19.30%

Data was obtained from the U.S. Census. 562 cities were included in this analysis.

-          NerdWallet, April 29, 2013

Benefits of Buying New Construction

Benefits of Buying Now

If you are considering buying a newly constructed home, now is the perfect time. According to data from the Census Bureau and Department of Housing and Urban Development's 2011 American Housing Survey, the National Association of Home Builders (NAHB) found that buyers can purchase a higher-priced, newer home and achieve the same annual operating costs as an older, existing home.
NAHB's study first looked at how utility, maintenance, property tax, and insurance costs vary depending on the age of the structure. It found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241. Similarly, operating costs average nearly 5 percent of the home's value for pre-1960 structures, while they average less than 3 percent when the home was built later than 2008.
The study then compared the first-year, after-tax cost of owning a home by the year the house was built, taking into account the purchase price, mortgage payments, annual operating costs, and income tax savings. This data showed that a buyer can afford to pay 23 percent more for a new house than for one built before 1960 and still maintain the same amount of first-year annual costs.
While mortgage payments may be greater with the higher purchase price of a newly built home, the lower operating costs mean the home buyer will have annual costs that are about the same as if they'd bought a lesser-priced, older home with a smaller mortgage payment and higher operating expenses.
Many factors determine the choice between a new or existing home. While newly constructed houses often include open-space floor plans, abundant storage options and home entertainment centers, houses in established neighborhoods may feature mature landscaping and trees, handcrafted built-ins and distinctive exteriors. The decision is unique for each home buyer.

DFW Area Home Resales Set All-Time Record

Just the Facts

Area Home Resales Set All-Time Record

The sale of pre-owned homes in North Texas were up 23% in May from 2012 levels.  Real estate agents sold 9,197 pre-owned single family homes in May – the most ever in one month.  The number of new listings rose 8%.  But the total number of houses for sale in the metro area is still down 22% from May 2012.  “With sales remaining strong and inventory remaining very low, I think we will continue to see increasing prices this year,” said David Brown, president of the Metrostudy Inc. Dallas office.  The median price of pre-owned homes sold by Realtors in North Texas rose in May to a record $180,000.   This 11% increase over May 2012 brings the area’s median price of homes to about 16% higher than the peak in mid-2007, before the Great Recession.

-          Dallas Morning News, June 11, 2013

RE/MAX DFW Associates Up 55%

RE/MAX DFW Associates was up 55% in May, which broken down was a 37% increase in closed units and an 18% increase in average sold price.     According to NTREIS, the North Texas area was up a combined 34%, which was a 23% increase in homes closed and a 11% increase in home sale prices.

The Housing Boom is Nationwide

-          65% - percentage of sales in Miami close with all cash, no financing

-          50 offers  – the average number of offers per new listing in San Francisco

-          $100,000 cash – the amount over list in Boston for numerous home sales

It is unprecented in U.S. history.   The housing recovery continues unabated across the nation, and the pent-up demand could last for three years.   What is unique to this housing boom is that it is nationwide – all areas of the nation are seeing rapid home price increases and a dwindling available inventory.

-          New York Times, June 9, 2013

Housing Prices Nationwide Rise 12.1% in April

The housing boom is nationwide.  The monumental change represents the biggest year-over-year increase since February 2006 and the 14^thconsecutive monthly increase in prices nationally.  And on a month-to-month bases, home prices increased 3.2% in April over March.  The western states are averaging 20% or more annually in home price increases, with 24.6% increase in Nevada, 19.4% increase in California and 17.3% in Arizona.

-          RISMedia, June 7, 2013

Are We Headed For Another Bubble?

In Texas, absolutely not.   The home prices in Texas average about 20% less than nationwide due to our expanse of available land.  This housing recovery is sorely needed for Texas and other middle America states so that home prices can rise to appropriate levels.  However, East Coast and West Coast may be a different story.   West Coast has a history of rapidly escalating home prices, and then a free fall when the economy or housing market change.    California seems to be known for the “bubble.”

-          Inman News, May 2013 (excerpts)

DFW Average Sold Prices are Up

Just the Facts

		AVERAGE SOLD PRICE CHANGE
			MAY 2013 vs. MAY 2012
	CITY			% CHANGE		May-13		May-12
	ALLEN			7.10%		$272,120		$254,053
	CARROLLTON/FB			6.50%		$201,460		$189,043
	COLLEYVILLE			-2.50%		$486,743		$489,984
	COPPELL			9.60%		$345,917		$315,563
	FAR NORTH DALLAS			1.00%		$307,353		$304,958
	FLOWER MOU / LV			5.50%		$254,027		$240,764
	FRISCO			6.70%		$327,312		$306,663
	GRAPEVINE			-3.70%		$258,273		$268,143
	IRVING			3.50%		$232,701		$224,770
	KELLER			3.90%		$353,187		$340,076
	McKINNEY			13.60%		$248,823		$218,728
	PLANO			14.20%		$315,097		$275,998
	PROSPER			13.60%		$337,328		$296,962
	RICHARDSON			8.20%		$192,250		$177,758
	SOUTHLAKE			8.40%		$603,996		$556,993
	THE COLONY			26.30%		$176,098		$139,399
	TROPHY CLUB/WESTLAKE			2.80%		$433,150		$422,294

Buying beats Renting in 6% of Metro Areas

MAY 17, 2013

Zillow: Buying Beats Renting in 64% of Metros After 3 Years...

Buying a home is more affordable than renting in nearly two-thirds of metros after three years of paying for a mortgage, according Zillow.

For its calculation, Zillow considered costs associated with buying and renting, such as upfront payments, closing costs, insurance, utilities, and maintenance. Then, the online marketplace looked at historic and anticipated home value appreciation rates, rental prices, and rental appreciation rates to determine how many years would need to pass before buying becomes less expensive than renting.

According to Zillow, in 64 percent of U.S. metros, buying is more affordable than renting if homebuyers plan to stay in their home for at least three years.

“Locally high home value appreciation in many areas, combined with historically low mortgage rates and low home prices relative to recent peaks, has made buying a home a more advantageous financial decision than renting for many would-be buyers,” said Dr. Stan Humphries, Zillow’s chief economist.

In several large metros, it would only take around two years before a buyer reached what Zillow called the “breakeven horizon,” or the time it takes for buying to become more financially advantageous than renting.

Out of the 30 largest metro areas, Zillow found Miami and Detroit had the shortest breakeven timeline of just two years in the first quarter.

In Phoenix, the breakeven horizon was 2.1 years, while Riverside, California and Dallas followed closely behind at 2.2 years and 2.3 years, respectively.

In other large metros, buyers would have to hold onto their homes for a much longer period of time before buying is more affordable.

In New York, buyers would need to stay in their homes for 5.2 years before reaching the breakeven horizon. Other metros with longer timelines included Boston (4.1 years) and San Jose (3.7 years).

Zillow also provided breakeven horizons on the ZIP code and neighborhood levels within cities.

According to the report, in New York, the breakeven horizon could be as low as 2.5 years in the Parkchester neighborhood in the Bronx, but could be as high as 11.9 years in the Carnegie Hill section of Manhattan.

In several ZIP codes, the breakeven horizon was as low as 1 year, including areas within Dallas, Philadelphia, Detroit, Riverside, St. Louis, and Tampa. One the other extreme, the breakeven horizon for a Los Angeles ZIP code was 12.9 years.

To find the specific breakeven horizon in one’s city, Zillow has an interactive tool.

“The decision to buy or rent should always take into account a number of factors, one of which is how long a buyer or renter plans to stay in a property. Even in areas with relatively low breakeven horizons, buyers should resist the temptation to buy and sell properties based only on short-term goals. And renters in these areas should never feel compelled to stretch themselves to buy if it is currently beyond their means,” Humphries advised.

	AVERAGE LIST TO SALE RATIO - MAY 2013
		Plano is First City to go over 100% Ratio
	CITY		LIST TO SALE		LIST PRICE		SALES PRICE
ALLEN			98.20%		$276,986		$272,120
CARROLLTON/FB			97.90%		$205,886		$201,460
COLLEYVILLE			97.50%		$499,472		$486,743
COPPELL			98.30%		$351,840		$345,917
FAR NORTH DALLAS			96.80%		$317,647		$307,353
FLOWER/LVILLE			98.00%		$259,243		$254,027
FRISCO			97.30%		$336,449		$327,312
GRAPEVINE			98.30%		$262,787		$258,273
IRVING			97.50%		$238,633		$232,701
KELLER			97.50%		$362,125		$353,187
McKINNEY			98.10%		$253,755		$248,823
PLANO			104.50%		$301,300		$315,097
PROSPER			96.60%		$349,100		$337,328
RICHARDSON			98.80%		$194,860		$192,250
SOUTHLAKE			96.90%		$623,325		$603,996
THE COLONY			98.80%		$178,212		$176,098
TROPHY CLUB/WLAKE			92.70%		$467,365		$433,150
-          NTREIS Stats – May 2013 as of June 2, 2013