January 2010

Today we round out our economic outlook for 2010 with expert perspectives from several different sectors of the local economy: a leading automotive company, a luxury realty firm, and custom home builders. All are encouraged by the positive signs in the economy and are looking forward to more improvement as the year progresses.

Carl Sewell, Owner, Sewell Automotive Companies: “We are seeing rising automobile sales in Dallas and Texas.  There is a shortage of large SUVs in Lexus, Cadillac, and the Yukon.  In fact, the larger the car, the larger the demand; the smaller the car, the smaller the demand.  People want to be safe and comfortable.  This is true throughout the country, but particularly Dallas and Texas.”   

Gregg Antonsen, Sr. Vice President Christie’s Great Estates:  “The highest-priced homes in the world and in the United States for 2009 were sold by affiliates of Christie’s Great Estates, of which Briggs Freeman is our only Dallas affiliate.  These sales – a West Indies beach estate for approximately $89 million, and a private residence for $43 million cash in Aspen, Colorado – affirm that important properties continue to command the attention of buyers around the globe.”

Javier Arreola, Founder Terrasse Properties, and Bob Cresswell, Cresswell Custom Builders, are both encouraged by seeing last year’s inventory dwindle.   

Today we continue our round-up of different perspectives on the state of the economy, with a view from Dallas Mayor Tom Leppert.

“I am talking with executives from a Fortune 200 company on the East Coast as well as a Southern California company that could bring about 400 jobs. And there are others we’re talking to.  In the next 18 months, we should see corporate relocations here.”

Across the city and country, the economy is offering opportunity and showing signs of recovery.  Robbie Briggs, CEO  of Briggs Freeman Real Estate, recently gathered insight from a variety of business notables, providing a round-up of different perspectives. Over the next few days, we’ll be sharing those perspectives with you, beginning with those of Briggs himself.    

Robbie Briggs:

Right now is possibly the best time in the last 25 years to buy a house. Based on historic trends, particularly during the last six years, we are primed for rates to go up dramatically.  With each percentage increase, the cost to a buyer is the equivalent of 10 percent of their purchase price. There is also a current selling window, for longer sales cycles are possibly on their way along with new spring market inventory. Sellers need to be realistic on pricing to take advantage of today’s opportunity.

Like a few other Obama policies, the Home Affordable Modification Program has been criticized for falling short of its goals. When it was passed last year, the so-called HAMP was intended to reduce monthly mortgage payments for cash-strapped homeowners so that they could afford to keep their homes.  But critics have charged that it is only delaying the inevitable, with many homeowners likely to be in default again within a couple of years.

But Treasury Assistant Secretary Michael Barr points out that the program has had “quite a strong stabilizing influence” on the housing market by reducing the number of foreclosures currently on the market and preventing more downward pressure on prices.  In addition to giving troubled homeowners a reprieve, HAMP also has created a backlog of cases as banks carefully screen borrowers to see if they qualify for a modification.

The result is fewer foreclosed homes on the market. Home foreclosure postings in Dallas County, excluding repeat filings, dropped 12 percent last year. Nationally, foreclosures are also down.  Proponents are hopeful that the housing market will be better able to handle foreclosures in a year or two when both the job market and the economy have recovered. And that would make HAMP a qualified success.

In yet another sign that the local housing market is strengthening in 2010, foreclosure postings are way down for the February 2^nd auction of homes in the area’s four largest counties. Postings plummeted 20 percent from January in Dallas, Collin, Denton and Tarrant counties, and were down 4 percent from one year ago in Dallas, according to a report released by Addison-based Foreclosure Listing Service.

 ”This decline is welcomed news,” George Roddy Sr., president of the real estate research firm said in a statement.  ”While this decline may be what we have been waiting to see, a change for just one month does not establish a new trend. We will just have to wait to see what happens next month.”

February postings in Dallas County fell 19 percent from the January auction, while Collin County posting fell 28 percent, and Denton County postings fell 25 percent. Those three counites were also down compared with a year ago, and all four saw lower filings than two years ago.

If you are getting ready to put your home on the market, it’s more important than ever to make a good first impression. While in some cases, that may involve hiring a professional home stager, it’s not always necessary. In fact, you can prepare your home to show better by following a few simple steps.  

Start by depersonalizing the space. Hide your children’s trophies and awards, take down the family pictures, and put away anything else that makes potential buyers feel like they are intruding on your personal space. Here are some other quick tips for getting your home ready to sell fast.

• Declutter every room.
• Deep clean everything, including the kitchen.
• Do away with animal odors.
• Put new grout in the bathrooms.
• Cut the lawn, trim the hedges and add pots of beautiful flowrs.

Click here for a complete list of  interior and exterior home staging tips.

Each day seems to bring fresh signs that the local economy is on the upswing. The Federal Reserve Bank of Dallas reported in its latest Beige Book that new and existing home sales increased over the past six weeks. “Homebuilders said that while overall starts remained at low levels, the momentum from the homebuyer tax credit was helping demand,” the report said. Prices continue to firm, and outlooks are “guarded but optimistic.”

Several other sectors in the North Texas economy also showed signs of improvement in the last six weeks.  High-tech manufacturing, retail and staffing services were among the sectors that reported an increase in demand during the period. There are even indications that credit markets are thawing. “Despite weak conditions, contacts at most financial services firms…said they have managed to end the year with flat or very modest growth in loan volumes.”

There are more signs that the local housing market is picking up steam. Home sales in the Park Cities and vicinity were up 21 percent in December from a year earlier, according to a new report released by the Real Estate Center at Texas A & M University and the North Texas Real Estate Information System. Transactions in the area were up 56 percent during the same time period.

In his 2010 outlook, the Real Estate Center’s research economist Dr. Jim Gaines says he expects housing to do “fairly well” in the first quarter of 2010. Activity for the remainder of the year will depend on how well the market can sustain itself without federal government support, he added. Gaines also expects the Texas home market to continue to fare relatively better than other markets provided that job losses abate and home prices stabilize.

The Texas economy continues to buck national trends thanks to the strength of the residential real estate market. Four of the nine cities that made the Gadberry Group’s new list of most notable high-growth areas in the nation are in the Lone Star State.  Two Dallas suburbs — Frisco and McKinney — also made the list of 25 finalists. Industry research indicates that the state’s comparatively stable housing market is likely a contributing factor in the strong rankings, says Larry Martin, principal of Little Rock-based Gadberry.

Mansfield came in at number seven as the number of households more than doubled in the last nine years. It added 15 percent of its total households last year alone. Also on the list is Wylie, which has had an impressive 163 percent increase in the number of households since 2000. According to the report, most of the new households are located in one of Wylie’s eight “Emerging Blocks.”

Other Texas cities that made the list are Atascocita and Katy, both located near Houston. Here’s the complete list of 9 from 2009:

• Braselton, Georgia (Atlanta suburb)
• Atascocita, Texas (Houston suburb)
• Spring Hill, Tennessee (Nashville suburb)
• Lincoln, California (Sacramento suburb)
• Katy, Texas (Houston suburb)
• Wake Forest, North Carolina (in the Raleigh-Durham triangle)
• Mansfield, Texas (Dallas suburb)
• Wylie, Texas (Dallas suburb)
• Buckeye, Arizona (Phoenix suburb)

The New Year ushered in good news for the local housing sector, as a new report showed that home construction in Dallas/Fort Worth rose almost 10 percent in the fourth quarter to its highest level in more than three years. There were 3,616 housing starts last quarter, up from 3,200 in the same period the year before, according to Residential Strategies Inc. In addition, builders sold more homes in the fourth quarter than in any other quarter of 2009.

The surge in the number of new home starts in the Metroplex is a reflection that existing inventories are on the decline. “Overall the supply of housing inventory is in excellent shape,” Residential Strategies’ Ted Wilson told the Dallas Morning News. There were fewer than 2,700 new vacant homes on the market at the end of last month, which translates to a 6.5 month supply, he added. A supply of about 6 months is considered market equilibrium, which is a sign that things are looking up in the local housing sector for 2010.