The American Recovery and Reinvestment Act of 2009, H.R. 1 – How does it affect you, the home buyer?

February 12, 2009

The Economic Stimulus Bill (The American Recovery and Reinvestment Act of 2009, H.R. 1.) has been reconciled by the House and Senate. The details of the legislation have not been finalized but we expect the legislation to include a number of important housing provisions, including the remedies for the housing crisis that NAR prescribed at the annual meeting in Orlando, Florida.

  • Homebuyer Tax Credit – a $7500 tax credit that will be available for qualified purchase of a principal residence by a first time homebuyer between January 1, 2009 and September 1, 2009.  The credit does not require repayment. Individuals who purchase in 2009 using financing assistance from state and local mortgage bonds will be permitted to use the credit, as well.
  • FHA, Fannie and Freddie Loan Limits – Revised loan limits for FHA, Freddie Mac, and Fannie Mae.  Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the HUD Secretary.
  • Foreclosure Mitigation & Neighborhood Stabilization – Funding for states and local communities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized.

These elements of the American Recovery and Reinvestment Act of 2009 are the pillars of the NAR Housing Stimulus Plan presented to the 111th Congress.  Additionally we continue to work closely with the Department of Treasury and Secretary Timothy Geithner to implement a mortgage buy-down program. NAR also recommended that the Treasury Department expand the Term Asset-Backed Loan Facility (TALF) to include commercial mortgage-backed securities as eligible collateral.  The Treasury has approved this recommendation and this will encourage investment in the commercial real estate market.

The Economic Stimulus Bill (The American Recovery and Reinvestment Act of 2009, H.R. 1)
Additional Housing and Other Provisions of Interest to NAR

  • Rural Housing Service – Increased funding for the Rural Housing Service direct and guaranteed loan programs.
  • Low Income Housing Grants – Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations.
  • Tax Exempt Housing Bonds – Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT).  In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds.
  • Energy Efficient Housing – Grants for energy retrofits for federally assisted housing (section 8), funding for Energy Efficiency & Conservation Block Grants to states, and Increases in the residential tax credit through 2010 for certain energy efficient upgrades.
  • Transportation –   Spending for upgrades and repairs of road, bridges and transit facilities.  
  • Broadband Deployment – Grants to make broadband available in unserved communities

As the leading advocate for homeowners and the real estate industry, the National Association of REALTORS will continue to address the issues facing Americans who are trying to purchase a new home, protect their current home or preserve investment opportunities in residential and commercial properties.

NAR recognizes the efforts of the members of Congress and the Senate who understand that without a housing recovery, an overall economic recovery is impossible.

 


Buying Real Estate in Houston? Yes, Virginia… its a great idea!

February 11, 2009

5-10 years from now when the financial crisis has ended and housing prices are up once more, we will look in the rear view mirror and realize that we missed the golden age for buying the dream home or being the “first time home buyer”. 

Smart people say, that moment of knowing we have hit rock bottom is only indicated by the time when everyone is the most pessimistic. That moment is certainly getting closer. 

“Smart buyers are buying now.” Why?

1.       We are in the midst of the best interest rates we have seen since we are told, the 1950’s! 4.5% is an amazing rate to lock in for 30 yrs! Jumbo loans at 7%!

2.       Sellers are watching the national news and know they are not in the driver’s seat right now so they are willing to negotiate. Even though we are not in a depressed or declining market, the sellers watch national news stories that say otherwise. Buyers can take advantage of the negative mindset of the seller right now about his property not moving fast enough.

Facts:
National employment 3rd qtr 2008, down 500,000 vs. Houston employment at 60,000 new jobs. 

Stable pricing is between 6-7 months of inventory according to A&M Research Center and Metrostudy. Same period facts of 3rd qtr. 2008, 6.5 months of new home supply in the market according to MLS and MetroStudy. 

State Resale Supply Statistics

State/City Months Supply
South Florida 28 Months
Chicago 15 Months
Atlanta and Phoenix 13 Months
Charlotte and San Diego 10 Months
Santa Fe, Albuquerque 9 months
Colorado Springs and Raleigh Durham 8 months
San Antonio 7.5 months
Dallas Forth Worth and Houston 6.5 months
Austin 5.5 months
Sacramento 5 months


I hit the largest cities and within these stats we have Raleigh and Charlotte in top 10 Recession Proof cities in the Nation and so is Houston, DFW, Austin, San Antonio but our inventory of homes is smaller.

Texas Markets 2008 through 3rd qtr. overall appreciation metrostudy
Austin: 5%
Houston: 4.4%
San Antonio: 4%
Forth Worth: 3.1%
Dallas: 2.1%

Where are you doing business?

10 year average home appreciation for Houston: 5.31%. Houston does not have the huge appreciation but it is not a depreciating market.

Multi-Market Closings for New Homes by Annual Closings

City Annual Closings
Colorado Springs less than 3,000
Santa Fe 4,000
Tampa 7,000
Denver 9,000
*Salt Lake City 11,000
*(#1 Recession proof city in the US according to Forbes Mag. 2008)
Austin 11,000
San Francisco 12,000
Raleigh/Durham 13,000
San Antonio 13,000
Las Vegas 14,000
Chicago 15,000
Charlotte 16,000
Orlando 24,000
Atlanta 25,000
Phoenix 29,000
DFW 29,000
**Houston 35,000
**Most Flourishing Market in the Nation and State with Annual New Home Closings


Texas has had and continues to have an overall escalating market.  
From 1st qtr. 2000 – Homes in Houston, San Antonio, Austin and DFW were basically selling at $200,000.

Today DFW is around $270,000; Houston is close to $300,000; While San Antonio and Austin sell at close to $310,000. Slow and Steady… 

Why Buy?

  • Affordability – Texas and specifically Houston is among the most affordable in the US
  • More choices in Houston than most other cities – single family, condo, high rises, lofts
  • The Meltdown is in Other Markets – not Texas “We have a Stable Local Market”
  • Good time to trade up – you may sacrifice on selling end but capitalize on the buying end
  • Interest Rates are affordable “right now”…we don’t know about summer or fall 09
  • Homeowners are very realistic right now about home pricing – we could say homes are “on Sale” right now!
  • Home prices in Houston and Texas are stable.
  • Houston’s economy is strong

While others in cities that have enjoyed great appreciating markets are concerned they will not be able to build equity as rapidly as they did in real estate years past, in Texas, we have never seen the high appreciating markets, we only have seen in the past 10 years, slow and steady…If you plan to stick around in your home, you will see an appreciation of your property. NAR statistics show the average first time home buyer plans to stay in their home for 10 yrs. now as compared to last year’s survey of 7 yrs. Maybe people have become more realistic about how long it takes to earn equity or maybe they have more confidence in real estate assets they can see and feel than other market assets. 

As much as we discuss appreciation, truth be known: People buy for Life style…not investment. 

You couldn’t be in a better State or better City for selling real estate. The facts are crystal clear:

  • You will have the best year ever if you believe in psychology of real estate.
  • If you tell yourself it is a bad time – it will be.
  • If you tell yourself it is a great time – it will be.
  • But the facts say, “it has been and will be a great time for real estate”.


The Most Flourishing Market in the Nation and State with Annual New Home Closings is Houston. 
Facts from MetroStudy 11/08 

Investing in real estate assets right now is the best placement of your money; it is a better hedge than gold.
Dr. Dotzour, TX A&M Research Center 1/12/09 

You couldn’t be in a better State or better City for selling real estate than Houston Texas. 
TX A&M Research Center Data 1/12/09 

More than 2 million jobs were lost between Nov 2007 – Nov 2008 in the Nation; representing 1.2 % of its labor force. The Texas economy gained 222,900 jobs during the same time period; an increase in labor force of 2.1%. 
Real Estate Center RECON 1/13/09

Houston has the strongest job market in the US. 
Metrostud, Jan. 12, 2009

Texas has the strongest job market by State in the US exceeding the nearest competition by 1000%. 
MetroStudy, Jan. 2009. 

Houston’s inventory of homes is 5-6 months on average. This is the lowest average days on market in the US. 
TX A&M Research Center Data 1/13/09 

“We are half way through our recession in Texas. It started out last Jan. 2008.” 
Dr. Dotzour, TX A&M Research Center 1/13/09 
Dr. Gilliland, A&M Research Center Jan. 12, 2009 

Texas is the #2 Destination State for Retirees. 
Dr. Gaines, TX A&M Research Center Data 1/12/09 

Houston has the most affordable median home price of any MSA. 
TX A&M Research Center Data 1/12/09.
 

“The Texas Land Sales Market is short of Phenomenal.


Houston Real Estate Market – Single-Family – January 2009

February 11, 2009

Houston residential real estate now has the lowest inventory of single-family homes on the market since January 2004. In comparison to January 2008, Houston has seen a 20% drop in overall number of homes on the market and a 26% drop in new listings taken. New listings taken in January were the lowest ever taken since January 2002. This is good news amid a nationwide overabundance of homes on the market and an economic stimulus plan targeted at mitigating the rising tide of inventory. Houston never experienced a bubble and its’ economy is one of the strongest in the nation;

You couldn’t be in a better City for selling real estate than Houston Texas. TX A&M Research Center Data 1/12/09
More than 2 million jobs were lost between Nov 2007 – Nov 2008 in the Nation; representing 1.2 % of its labor force. The Texas economy gained 222,900 jobs during the same time period; an increase in labor force of 2.1%. Real Estate Center RECON 1/13/09
Houston has the strongest job market in the US. Metrostudy, Jan. 12, 2009
Texas has the strongest job market by State in the US exceeding the nearest competition by 1000%. MetroStudy, Jan. 2009.
Houston’s inventory of homes is 5-6 months on average. This is the lowest average days on market in the US. TX A&M Research Center Data 1/13/09
“We are half way through our recession in Texas. It started out last Jan. 2008.” Dr. Dotzour, TX A&M Research Center 1/13/2009
Houston has the most affordable median home price of any MSA.
TX A&M Research Center Data 1/12/09

Despite the good news amidst the bleak national economic scene, Houston got off to a slow start in January.

There were 2,827 single-family home sales, a figure 23% below January 2008.
Dollar volume for the month was $466,234,494, a 33% decline over last year.
Contracts initiated during January 2009 experienced 2,774 units or a 23% decline over last year.
The median sales price of sold homes in January 2008 was $127,850, representing an 8% decline over January 2008.
The average sales price was $164,922, or 13% lower than found in January 2008.
Home prices in Houston are not depreciating, there is simply a different demand in home prices classes.

Last year, million dollar home sales in January were up by 58% over the previous year and anything over $600,000 experienced double-digit increases. This year, those same home price classes have experienced double-digit declines as high as 61% for $600,000-$699,999 and homes over $1 million experienced a 57% decline over January 2008. This change in price class demand directly affects the average sales price overall. This year price classes under $60,000 are in positive territory whereas all others experienced a decline over January 2008.

What home price classes experienced the highest demand by number of sales in January 2008?

RANK
PRICE CLASS
# OF SALES 01/09
1$200,000-$249,999/220
2 $120,000-$129,999/182
3 $100,000-$109,999/163
4 $250,000-$299,999/156
5 $90,000-$99,999/153
6 $80,000-$89,999/148
7 $70,000-$79,999/145
8 $300,000-$399,999/143
9 $130,000-$139,999/134
10 $60,000-$69,999/128
11 $140,000-$149,999/124

It is interesting to note all price classes in the table above that are over $80,000 were in double digit decline last year. In short, Houston has experienced an aberration in sales by price class over the last few years. We see buyer demand returning to atypical price classes seen during normal Houston markets.
While normal is not as much fun as exuberance, any Houstonian gladly accepts our market as it is because it is currently the best that it gets.

Opportunities are ripe for Houston real estate. Houston does not need an economic stimulus package to stop home price depreciation or to absorb excess inventory, but Houston will benefit from national stimulus programs designed to do so. The biggest boost residential real estate could receive would be a boost in confidence and certainty about the future economy


Going Green – National Green Standard Approved

February 6, 2009

The National Green Building Standard, known as ICC-700, was approved (Jan. 29, 2009) as an American National Standard. The new Standard provides guidance for safe and sustainable building practices for residential construction, including both new and renovated single-family to high-rise residential buildings. This is the first and only green standard that is consistent and coordinated with the Code Council’s family of I-Codes and standards.

Code Council Board President Adolf Zubia said, “this is an enormous step forward in bringing focus to green practices for the built environment. ICC-700 provides a benchmark for green building in the residential market, serving as a new and needed starting point for comprehensive approaches to green residential construction. This is the result of many months of hard work by our members and our partners around the country.”

Code Council CEO Richard P. Weiland said, “the development of high performance ‘greener’ housing can have a tangible and positive impact on our environment and communities. This new tool for state and local governments fills an important gap to provide a measurable framework for efforts to produce green and sustainable housing. In concert with energy codes such as the International Energy Conservation Code, and rating systems such as the LEED Green Building Rating System, Energy Star, the CHPS Criteria, Green Globes or similar programs, application of ICC-700 can contribute to greater energy, water and resource efficiency along with reduced long-term costs to consumers and to our planet.”

The International Code Council and National Association of Home Builders developed the Standard with broad input from several thousand stakeholders, ranging from code officials and other building professionals to the entire spectrum of the green building community. This new standard provides a practical route to green, sustainable and high-performance construction, especially in communities with little if any green/sustainable buildings or guidelines to build green. The standard also promotes homeowner education for the maintenance and operation of green residential buildings in order to ensure long-term benefits.

The standard’s rating system allows builders, designers and communities to choose the levels of high-performance green buildings that best suit their needs. Key provisions include:

  • Land conservation
  • Rainwater collection
  • Construction of smaller homes to conserve resources
  • Energy performance starting at 15% above the baseline requirements of the 2006 International Energy Conservation Code
  • The use of low VOC (Volatile Organic Compound) materials and detached garages or carports to improve indoor environmental quality
  • Homeowner education on proper maintenance and operation to maintain its green status throughout its life cycle

ICC-700 is available along with related ICC publications through the Code Councilwebsite.

Training on ICC-700 already is available, including a special session March 23-26 at Codes Forum in New Orleans. Additional training is also available on related topics such as current green building practices and their relationship to the International Codes, overview of the LEED green building rating systems, and developing green building ordinances to help governmental departments and agencies tasked with establishing sustainable building programs.

The Code Council is finalizing its Green Building Technologies Certification program for building officials, inspectors, planners, zoning personnel, mayors, city council members, developers and other interested parties. The exams will be available in March. These certifications will demonstrate the ability to understand the application of green building technology and assess adherence with green building programs.

In addition, the International Code Council Board has approved the creation of a Sustainable Building Technology Committee to support the Council’s many ongoing efforts in green, sustainable and safe construction.

A Code Council subsidiary, ICC-Evaluation Service, has developed the Sustainable Attributes Verification and Evaluation (SAVE) program to provide independent confirmation that evaluated building products are sustainable and may qualify for points under ICC-700 as well as major green rating systems such as LEED or Green Globes. A SAVE evaluation involves both inspection of the manufacturer’s production process and reviews of independent product testing, where required. Manufacturers that successfully complete the evaluation process receive a Verification of Attributes Report in one or more of nine key categories. Design professionals will be able to use the reports as evidence that products or systems they select qualify for points under those programs.

Another Code Council subsidiary, the International Accreditation Service (IAS), offers accreditation to testing laboratories, inspection agencies and product certifiers in several fields related to energy and sustainability to support manufacturers and regulators involved in green building development and approval. IAS also accredits curriculum developers and training agencies focused on green initiatives.

The International Code Council, a membership association dedicated to building safety and fire prevention, develops the codes used to construct residential and commercial buildings, including homes and schools. Most U.S. cities, counties and states choose the International Codes, building safety codes developed by the International Code Council.

Press Release – January 30, 2009 from http://www.ICCsafe.org