Register Real Estate Advisors

Below is a reprint of an Article by Ali Anari that was found in the July 2011 Tierra Grande Magazine – I think this is great information for consumers and real estate professionals!

During the past decade, Americans witnessed a home price bubble develop and then burst.  The aftermath showed how broadly these bubbles impact the U.S. economy.

To monitor real estate price movements leading to price bubbles, a Real Estate Center research program developed economic indicators that help detect bubbles at both the national and regional levels.

Detecting Bubbles

Real estate bubbles are rapid rises in real estate prices not related to or driven by economic fundamentals, followed by rapid price declines.  In residential real estate markets, property rents, family income and population are economic fundamentals for house prices.  That is, in the long run, home prices are driven mainly by these three economic indicators.  In the short run, the availability and costs of residential mortgage loans, changes in local job markets and imbalances between housing supply and demand can boost home prices, though these are not economic fundamentals.

Economists have developed several economic indicators for monitoring and forecasting real estate price movements by investigating the relationships between economic fundamentals and real estate prices.  Comparisons of long-term real estate price forecasts with their short-term price fluctuations can provide insights into the probable directions of prices.

The Real Estate Center has developed two major economic indicators for monitoring residential real estate prices:  housing costs as a percentage of total family income; and, sales-price-to-rent ratio.  A Center research study (see Center Publication 1944, “Consumer Spending Survey:  Texas Downturn had an Upside”) found that the larger the share of housing expenditures in consumers’ budgets in large metro areas, the more home prices declined from 2007 to 2009.  That study showed the importance of monitoring the percentage of family income spent on housing as a leading indicator for future home price movements.  This indicator offers insights into the likely growth rates of home prices in a region.

Recently released 2009 housing data from the U.S. Census Bureau allowed the Center to investigate whether changes in home prices in Texas metropolitan areas from 2007 to 2009 were related to share of housing costs in family incomes.  The research shows that home price appreciation was lower in Texas cities where housing costs represented a larger portion of family income.

The sales-price-to-rent ratio also can predict real estate price bubbles.  This idea is borrowed from asset pricing literature and the stock market, where the ratio of stock prices to dividends, earnings or profits is used to determine whether stock prices are overvalued or undervalued.  Stock prices are the discounted values of expected future earnings–the larger the expected future earnings, the higher the stock prices.  If expectations prove unrealistic, stock prices generally fall.

Price-to-rent ratios in real estate markets resemble stock-price-to-earnings ratios in stock markets.  Large ratios of home prices to annual rents are indications of potential home price bubbles.  Estimating price-to-rent ratios for Texas metropolitan areas and comparing them with national averages, the Center asserted in two previous articles that the risk of a price bubble in the Texas residential markets was low (see Center publications 1731, “Bubble Talk” [July 2005] and 1854, “Bubble Watch 2008” [April 2008]).

Great Recession Housing Costs, Prices

The median value of owner-occupied housing units in the United States fell 4.7 percent from 2007-09, from $194,000 to $185,000 [see table].  Over the period, only two Texas metro areas, Tyler and Victoria, recorded home price declines.  The median value of owner-occupied housing units in Victoria and Tyler fell 3 percent and 1.5 percent, respectively, from 2007 to 2009.

Odessa had the largest percentage of home price appreciation (28.3 percent) followed by Abilene (13.7 percent), Beaumont-Port Arthur (13 percent), Midland (12.1 percent) and El Paso (11.1 percent).  Home price appreciation in the Odessa and Midland petroplexes likely was influenced by record high oil prices in 2008 when the price of West Texas intermediate crude oil reached an all-time high of $140.20 per barrel.

The state’s larger metropolitan areas also reported home price appreciation during the Great Recession.  Austin-Round Rock experienced the largest increase (6.7 percent) followed by San Antonio (5.5 percent), Dallas-Fort Worth-Arlington (3 percent), and Houston-Sugar Land-Baytown (3 percent).

Housing costs include property taxes, insurance expenses, maintenance costs and mortgage costs.  Housing costs as a percentage of total income in all Texas metro areas were lower than the national average of 25 percent, except in Brownsville-Harlingen (26.5 percent), Laredo (28.7 percent) and McAllen-Edinburg-Mission (25.7 percent).  The higher than national average percentages of housing costs in these three metro areas mainly reflect lower total family incomes rather than higher housing costs caused by higher home prices.

Odessa housing costs represented the lowest percentage of income (17.7 percent), followed by Midland (19.6 percent), Beaumont-Port Arthur (19.6 percent) and Longview (20.6 percent).

Among the larger metro areas, Dallas-Fort Worth-Arlington had housing costs representing the highest percentage of total family incomes (24.3 percent) followed by Austin-Round Rock (24 percent), Houston-Sugar Land-Baytown (23.3 percent) and San Antonio (22.6 percent), all lower than the national average of 25 percent.

Plotting home price appreciation in the Great Recession against the housing costs as a percentage of total income for Texas metropolitan areas in 2007 reveals a negative relationship between home price appreciation and share of housing costs.  The larger the share of housing costs, the smaller the home price appreciation.

Texas, U.S. Sales-Price-to-Rent Ratios

Sales-price-to-rent ratios for all the state’s metro areas in 2009 were smaller than the national average of 18.3.  Austin-Round Rock ha the largest price-to-rent ratio (17.4) followed by Dallas-Fort Worth-Arlington (14.7) and El Paso (14.6).  San Angelo has the smallest price-to-rent ratio (10.1) followed by Odessa (10.3) and Brownsville-Harlingen (10.9).

Comparisons of housing costs as percentages of family income and price-to-rent ratios for the state’s metropolitan areas with the corresponding national averages once again show that the risk of a major home price decline is low in the foreseeable future and that Texas has a healthy residential real estate market.

TEXAS (Texas General Land Office) – The Texas Veterans Land Board (VLB) has voted to increase its home and land loan limits.

Texas veterans can now borrow up to $417,000 to buy a home and up to $100,000 for the purchase of land. Both options are available as low-interest loans.

The VLB has also reduced the minimum acreage allowed in its land purchase program. Lots as small as one acre are now eligible.

Information on the loan program can be found at the Veterans Land Board website.

The city of Spring has grown over the last decade.  It has many restaurants, shopping areas, and offers entertainment.  One of the great summer spots is Splashtown located right off of I45 North.  The Hardy Toll Road gives Spring residents easy access to Houston’s downtown destinations and Bush International Airport.  Going north on I45, The Woodlands offers wonderful shopping and entertainment.  Even further north you can reach Lake Conroe for summer fun and many gold courses. The new ExxonMobil Campus is being built in Spring, Texas close to The Woodlands. This will bring a lot of demand for housing into the area over the next few years.

Old Town Spring is a quaint collection of turn-of-the-century buildings that are a favorite shopping spot and tourist destination. Over 150 restaurants, museums, art galleries, and shops occupy the vintage structures. If you live in Spring, you can enjoy the annual Crawfish Festival. The unique shopping opportunites in Old Town Spring draw people from all over Texas.

Spring’s housing inventory has many lovely median priced residents.  Benders Landing Estates is a beautiful acreage community located just minutes from the Hardy Toll Road.  Schools, restaurants, entertainment venues, and medical facilities are all close by when you live in Spring, Texas.  If you are interested in moving or relocating to the Spring, Woodlands, or Old Town Spring area, please give us a call at Register Real Estate Advisors.  We would love to help you with all of your real estate needs – 281.288.3500.

Video of Spring -

HOUSTON (TxDMV) – As if moving wasn’t already stressful enough, now consumers are being warned to watch out for illegal moving companies that may be out to take a person’s personal belongings on a permanent vacation.

As the summer moving season gears up, state and moving industry officials cautioned Texans to do their homework before hiring a moving company and encouraged the law enforcement community to take note of a new state law that imposes fines and jail time against unlicensed movers.

More than 60 percent of the moving complaints received at the Texas Department of Motor Vehicles (TxDMV) deal with unlicensed movers. To operate legally, a moving company must display a valid TxDMV (TxDMV licenses moving companies) or United States Department of Transportation (USDOT) license number on the truck.

Perhaps the best advice is the most basic: always know who you are dealing with before starting a move.

“[Consumers] need to stop for a minute and ask themselves ‘Who am I about to let into my home?’ because it might just be some guy living in a basement or with a criminal record who is going to show up with a rented moving truck to cart off everything you own,” said Linda Bauer Darr, president and CEO of Virginia-based American Moving & Storage Association.

And where should you never go to hire a mover? Free internet advertising sites, said John Trevino of the Houston Police Department’s Special Investigation Command.

Before hiring a moving company, Texans can find out whether the company is licensed by going to Moving Companies on the TxDMV website.

There are mortgage programs that are aimed specifically for foreign nationals moving to the United States.  If you are a foreign national moving to the United States to live in the Houston area, contact RREA’s in house lender to get qualified for a loan specialized to your needs.  Properties that are eligible for foreign national loans are both single family homes and condominiums.  These loans do require at least 25% down payment.  Call RREA today at 281.288.3500 to talk with our in house lender about qualifying and to our Realtors who can help you purchase a home.  Realtors work differently in Texas than in other parts of the world, so talk with a Realtor before you purchase a new or resale home in the states.

A Reserve Study is an in-depth assessment of a property’s physical components that may be required by Fannie Mae or HUD for residents to get a mortgage.  Many times these are condominiums, or properties that have multiple owners.  They are performed by licensed engineers, finance and legal experts that can analyze the budget.  The inspection includes the roof, mechanical systems, recreational assets, and the financial status of the property.  Recently they are becoming more popular and are sometimes required on real estate purchases.  Inspectors go on location to do a reserve study and they outline antiquated replacements and repairs to common areas of a property.  They also recommend annual reserve funds that will cover long-term capital expenses.  They are beneficial because they can help maintain a property’s value and the owner’s investment by ensuring that adequate funds are reserved to cover anticipated costs of keeping common areas safe and maintained.   Reserve Studies help board members and community association managers anticipate expenses for the future.  One should be completed when a building is built, and on a reoccurring basis as determined by the length of the study. The study will be relevant for about 6 weeks and it covers a 10-30 year period.

COLLEGE STATION (Real Estate Center) – Home sales in Texas cities were hot last month, rising in Austin, Dallas-Fort Worth, Houston and San Antonio.

According to the Multiple Listing Service (MLS) report by the Austin Board of Realtors, 1,852 single-family homes were sold in the Capital area during March, up 15 percent over the same period in 2011.

The Dallas-Fort Worth region reported a 13 percent increase in single-family home sales, with 6,126 properties sold in March, according to a report from the MetroTex Association of Realtors.

The Houston Chronicle reported 4,996 single-family homes sold in Houston in March, up 7.8 percent from the 4,634 homes sold during the same month last year.

San Antonio also showed improvements in March, according to the San Antonio Board of Realtors, with 1,637 homes sold in the area, up 4 percent month-over-month.

The median sales price rose to $200,000 in Austin, up 8 percent from March 2011. The median price in DFW jumped 11 percent to $155,000, with San Antonio reporting a 4 percent increase to $155,600. The median sales price in Houston set a monthly record in March at $161,750.

As a Buyer’s Agent, I believe it is my responsibility to tour Active Homes on the Real Estate Market. Today’s excursion from Spring heading just a few minutes north on Interstate 45, zipping through The Woodlands to Conroe exit Highway 105-West took me to the gated community of Blue Heron Bay on the South Side of Lake Conroe. Are you familiar with this quiet community that is tucked away by the mature cedar trees? There is an area within the community designated for preservation of local vegetation and wildlife. I totally was in my glory as we strolled through the homes and into private gardens. Kudos to my good friend and Listing Agent, Tonya Smith, for setting up two of her listings in Blue Heron Bay for several of us to preview. Let me share with you some tips that I found while on tour today that I felt were especially worth mentioning.

Remember, in a previous blog, I mentioned how important curb curb appeal is to the buyer pulling up in front of your home? Check out these pictures, and tell me if you are ready to put the car in park and tour this welcoming home.

This was just one of the properties we previewed today. Notice the terraced landscaping beds that line the front of the home with beautiful shrubs and annual flowers. Beautifully maintained and very attractive! Then to the side of the driveway your eye catches additional color. I simply wanted to stay and watch for butterflies and hummingbirds. This home owner seems to know what to do to draw attention with painting the outside color in order to hail the Buyers to stop and spend time lingering inside the property. Once inside the Buyer will admire hand scraped wood floors, 2 living areas and bedrooms that each have private baths. My favorite, an outside living area with tiled floors and screened walls enabling visual and audible enjoyment of the wildlife surrounding this dreamy home site.

Another property previewed in Blue Heron Bay was situated at the water’s edge. Grab binoculars before calling for a showing because you will want to watch the wildlife in the preserve that is visible from the patio. As you stand in awe, imagine that could be your permanent home!

Staying inside I got separated from the group today because I was admiring the Master Suite. From staging the bedroom complete with a breakfast tray; To faux painted pillars at the garden tub;

To the hand painted artistic creation of the water view outside the Master Bedroom;

To the remarkable organization in the Master Closet (complete with a rolling ladder); plentiful shoe space and hangers for seasonal purses. This area is for indulging the “Total Woman” and King of the Household in their Master Suite. It was organized to a T and truly a “moment to take my breath away!”

If you are interested in researching more about Blue Heron Bay then try the following website:

http://www.blueheronbay.org/index.html

If you want to live in a gated Lake Conroe community and would like to visit Blue Heron Bay, remember, I am standing by to be your Realtor and I’m ready to discuss your home dreams and qualification to your successful home purchase. Let’s make a showing appointment. Feel to call my cell phone during normal business hours, or email me 24 hours anytime!

COLLEGE STATION (AgriLife Today) – Agricultural losses in Texas from the 2011 drought totaled $7.62 billion, setting a record for the costliest drought in history, according to economists from Texas AgriLife Extension Service.

Record-high temperatures, coupled with record-low precipitation and high winds, devastated production. Water supplies dwindled, thwarting production of hay and other crops, as well as inciting large sales of livestock.

Texas’ biggest category loss was livestock ($3.23 billion), followed by cotton ($2.2 billion), lost hay production ($750 million) and corn ($736 million).

The deficit from the 2011 drought is higher than the $5.2 billion in losses previously reported.

AgriLife Extension economists have recorded losses from droughts six times since 2000. The previous record was set in 2006, with $4.1 billion in losses.

This is a great list for getting your home ready to market.  Before you sell, spring clean!  It will make all of your marketing and advertising photos look better, too.  Buyers love a clean and clutter free home with curb appeal! 

• Remove and donate unwanted items, reorganize and clean closets, attic, basement and garage
• Power wash exterior walls, porch floors, deck, patio, driveway and sidewalks
• Clean outdoor furniture and outdoor light fixtures
• Clean out gutters or have new ones installed
• Clean out refrigerator and freezer, making sure to vacuum the grill and coil
• Remove lint from the hose attached to back of clothes dryer
• Vacuum baseboards, walls and ceilings, wipe down walls
• Steam clean carpets and area rugs and upholstery
• Reseal natural stone surfaces (travertine, etc)
• Reseal and repair grout in bathtubs and showers
• Clean window treatments, dust and clean blinds and shutters
• Remove items from all shelves, dust and clean
• Oil hinges

If you need a recommendation for anyone to help you with this list, call me for a referral.  And when you are ready to sell your home, give me a call!