2013 Predictions

Just the Facts

Home Prices Could Jump 9.7% in 2013

J.P. Morgan Chase & Co. expects U.S. home prices to rise 3.4% in its base case estimate and up to 9.7% in its most bullish scenario of economic growth.  Standard & Poor’s has revised its estimate upward and now expects a 5% average rise in 2013.  The J.P. Morgan analysts boosted their base case estimate after a convincing rise in the “net demand” for housing in 2012 which surpassed two million homes.  Net demand is the pace of existing home sales minus the inventory of homes available for sale.   “Net demand has picked up a lot in 2012,” said John Sim, a strategist for J.P. Morgan.  “Once you get north of the 2 million territory, you are in positive growth.”  The bank expects net demand to rise to 2.7 million in 2013.

      -       Wall Street Journal, Dec 14, 2012

New Home Starts Surge with 50% Increase

The DFW area saw  new home construction increase by nearly 50% in the fourth quarter from one year ago.   Builders started 4,549 homes in the area – the largest fourth quarter start in five years.  Builders have had a hard time keeping up with the demand in 2012, and the strong surge is expected to accelerate in 2013.  The $200,000 to $500,000 price range is very strong, and more homes are badly needed in the market.   Less than 2,000 finished, vacant new homes were on the market at the close of 2012, the lowest inventory in 14 years.

-          Dallas Morning News, January 8, 2013

NTREIS HOME SALES AT 4 YEAR HIGH

North Texas pre-owned home market ended 2012 with the best sales total in four years.  The area saw a 16% gain in the number of single-family homes sold through the Realtors’ multiple listing service for North Texas.  And median home sale prices in 2012 rose 8% from the year before, according to numbers released Tuesday by the Real Estate Center at Texas A&M and NTREIS.

-          Dallas Morning News, December 9, 2013

Taylor Morrison Purchases Texas-Based Darling Homes

Taylor Morrison, a leading North American homebuilder, has purchased Texas homebuilder Darling Homes. The transaction closed on December 31.  Darling Homes, founded by brothers Bill, Steve and Bob Darling, has been building high quality family homes in the Dallas-Fort Worth Metroplex and Greater Houston Areas for more than 25 years. Darling Homes has received numerous industry awards.

“My brothers and I are delighted to be joining Taylor Morrison,” said Bill Darling. “Taylor Morrison has a customer-focused attitude and an internal culture that is a close fit with our own. It’s great to see that the Darling brand will continue in this way.”   Sheryl Palmer, CEO and President of Taylor Morrison said, “We have always been

impressed with the Darling brand and the team’s passion and commitment. It’s wonderful to think that we can now help to develop this complementary brand as part of Taylor Morrison.”

About Taylor Morrison

Headquartered in Scottsdale, Arizona, Taylor Morrison is a builder and developer of single-family detached and attached homes. Under the Taylor Morrison® brand, the Company operates in Arizona, California, Colorado, Florida and Texas. Under the Monarch brand, the Company operates in Ontario, Canada where the Company builds and develops single-family detached and attached homes in both Toronto and Ottawa.  Monarch also builds high-rise condominiums in Toronto. Taylor Morrison serves a wide array of homebuyers, including entry-level, move-up, luxury and active adult customers, through its innovative product mix. For more information, please visit www.taylormorrison.com.

-          Taylor Morrison & Darling Homes press release, January 2, 2013

Texas seeing steady price gaines

Just the Facts

Texas to Have 5% Home Price Gain in 2013

For the first time in seven years, all 50 states are expected to have price gains this year.  Some states, such as Texas, Florida, California and Arizona are expected to have the largest price gains, from 2.9% to 5.6% gain.  Texas is expected to see one of the healthiest price gains in the nation at or near 5%.

-          Scholastic Corporation, NAR, January 1, 2013

January DFW Foreclosures - Record Low

The DFW area has had a tapering drop off of foreclosures for two years, but nothing like the sharp decrease for January 2013.  Just under 2,400 area homes are threatened with forced sale by lenders on the second Tuesday next week.  That is a 42 percent decline from January 2012, according to data from Foreclosure Listing Service.  Monthly foreclosure filings have not been this low in North Texas since mid-2005, according to records.  The January number, which is a 70 percent decrease from two years ago, is actually the normal number of monthly foreclosure postings during the early 2000s before the recession.  Collin County had the largest decrease in foreclosure postings, down 44 percent from one year ago.

-          Dallas Morning News, December 31, 2012

Coppell & Grapevine – Only One Month Supply of Listings

The Dallas Morning News reports that Coppell and Grapevine have the lowest inventory of preowned homes for sale in North Texas, with only a one-month inventory and dropping.   Specialists explain that a six-month supply of inventory is a balanced market between buyers and sellers.  But a one-month inventory market puts the negotiating strength on the seller’s side with numerous homes selling for over list price.  It causes for a high frustration with buyers.   Coppell and Grapevine may see a healthy price increase in their market due to supply and demand.

-          Dallas Morning News, December 2012

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RE/MAX Vs. Industry 2013

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7 Don'ts During the Mortgage Process: How to keep your approval

7 DON'TS During the Mortgage Process:

 How to Keep Your Approval 

APPROVED!

By Sam B. Brock NMLS #884442, CCAR REALTOR®/Lender Committee

Congratulations! Your newest clients used your preferred lender, and were quickly approved for the home of their dreams. So quickly, in fact, that it is going to take a couple of weeks before the current owners move out, so we've got some down time. The last couple of weeks before closing can be the most pivotal in the process, so keep these thoughts in mind (and your clients' minds) leading up to signing day.

1. DON'T apply for any new credit.
Yes, homebuyers need to have furniture and appliances in their new home. But, they don't need it right this second on credit because they were offered 20% off at FurniturePalooza Warehouse. They also don't "need" to get in on the "Sign and Drive" promotion at the dealership to put another car in that new, larger garage. Credit will be re-verified at some point before closing, sometimes as late as the morning of the signing. New debt that comes up will, at best, delay your closing. At worst, it will result in denial of the loan application.

2. DON'T make unexplainable deposits into accounts used for qualifying.
All funds for qualifying and closing must be sourced and seasoned for (generally) at least the last 60 days. Large deposits that the borrower "just had lying around" are a definite red flag. While many programs allow gift funds, there are limitations on each program and required documentation. Have your clients consult their loan officer before depositing any non-payroll funds. Along these same lines, remind your clients that large cash withdrawals can be viewed the same way. Details regarding reserve requirements follow in item #5 below.

3. DON'T change jobs.
This includes position changes, industry changes, compensation model changes (i.e., salary to commission), and retirement. Employment is confirmed during underwriting and reconfirmed within 48 hours of closing. If your client is up for a promotion or is changing jobs within his/her company--even if it means a better income--recommend requesting a delay in the official title change with Human Resources, or have him/her consult his/her lender. Most employers want their employees to relish success and enjoy the benefits of their hard work, and will be more than accommodating.

4. DON'T consolidate debt or close credit accounts.
Your buyer, with a 661 that barely qualifies for his/her program, wants to change their way of doing things and clean-up some old accounts that they didn't know were still open. Have him/her take care of this after closing. www.MyFICO.com shows the formula used to calculate credit scores as 15% based on age of credit, including oldest, newest, and average age of credit accounts. For some homebuyers, closing a few accounts that they don't use or that they have transferred balances away from could change their score enough to disqualify them before closing. By closing these accounts--even with low limits or secured accounts--Mr. 661 became Mr. 652 the morning of closing, and was either disqualified or had to be restructured, including another ride through underwriting and an extension on your purchase agreement.

5. DON'T pay-off collections/charge-offs.
Just like the effects that closing accounts in good standing can have on credit, paying collection accounts or charge-offs that appear on the credit report can actually decrease a score upon verification. The best general advice is to leave these alone until after closing. If the underwriter is okay with them, your client should be as well, until after the loan has closed. Further, many programs carry "reserve requirements" (additional funds that have proven the borrower's ability to save). If the borrower dips into these funds to pay a collection--even though he/she still has plenty of cash to meet the down payment or closing requirements--it can result in the same delays and turmoil as other credit issues. Always have your buyer consult his/her loan officer before making any such payments.

6. DON'T "skip" or "push the date" on other current monthly payments.
There is a theory amongst the public, some REALTORS®, and some loan officers, that in order to have extra cash available at closing, you can push the date on some of your monthly obligations, or even skip payments, since it won't be reflected on the credit report (in theory) for at least 30 days. This is generally poor advice. Remember that the underwriter has viewed and scrutinized monthly checking and savings account statements, and from the credit report, knows the amounts and due dates of the client's other obligations. It is not unheard of for an underwriter to account for all other monthly obligations when calculating the minimum amount of funds required to be shown in the account at closing.

7. DON'T make loans to others/co-sign on student loans, car loans, credit cards, etc.
While everyone wants to see their children or other loved ones succeed and have opportunities to better themselves, there is a time and place for everything. Even if your buyer is 100% sure he/she won't ever have to make a payment for the loved one for whom he/she is co-signing, upon verification, that obligation will be included in the debt-to-income ratio, and can have the same detrimental effect on the loan approval. Again, have your client consult his/her lender or advise them to wait until after closing.

The best advice when asked by your client whether or not he/she can or cannot, should or should not, might or might not, or ought or ought not do anything with his/her funds, credit, or other assets and liabilities during the mortgage process is to have them consult their loan officer or lender representative. Because of privacy laws, we (members of the lending community) are not always able to share with you, the agent, all of the particulars about the borrower's situation. Credit scores, income, debt ratios, and asset account information are privileged information that the borrower can decide to share with you or not. Modifications to this information can make or break your deal, so always err on the side of caution by following the recommendations above and consulting the lender with any questions.

DFW #2 Moving Destinations

Just the Facts

Dallas-Fort Worth Ranks as No. 2 Moving Destinations

Dallas-Fort Worth has been named as the second most popular moving destination in the nation, according to an annual study by moving company Penske Truck rental.   The data is based on the moving firm’s online consumer truck reservations.  Last year, Dallas-Fort Worth ranked as the No. 4 moving destination.  Atlanta continued to rank at the top spot.   The third top moving area was Phoenix.

-          Dallas Business Journal, January 14, 2013

You Are A Listing King With 2 Listings

That is what I am telling agents these days.  Every new listing is valuable, it is almost money in the bank if it is in good condition and priced right.   Case in point is Flower Mound.  Today it has 178 active listings; three years ago 550 active listings; ten years ago 750 active listings.  Yet ten years ago it took 140 days on market.  Today it is 60 days, and in the mid-range market approaching 30 days.  What a market!  And it was announced today that the number of home sales in January are equal to our great market in 2004 – just so few listings, and so few days on market.

-          Mark Wolfe, January 22, 2013 (with inventory input from Jeff Brand)

As Prices Rise, Rental Home Investors Seek New Markets

Rapid price increases are forcing real estate investors to shift their focus, and money, to new markets as they scramble to buy more homes to rent.   The California, Arizona and Nevada markets have skyrocketing home prices, even though they have not fully recovered from the 60 percent plus drop in home values over the past several years.  But the price trend is moving investors to Texas, Georgia and Florida.   Investment firms command $10 billion war chest to buy homes to rent.  Blackstone Group owns 16,000 homes, and is buying 2,500 homes monthly.  Colony Capital expects to invest $150 million monthly in home purchases in 2013.  It bought 5,000 homes in 2012.  Waypoint Homes, another California investor, currently owns 3,300 homes, but expects to own 10,000 by year-end.

-          USA Today, January 19, 20013