The Houston Real Estate Market Opens 2009 With Weakened Performance as the US recession drags on

FORECLOSURES DRIVE HOME PRICES DOWN, RENTAL DEMAND IS RISING.

HOUSTON — (Feb 17, 2009) — Property sales throughout the greater Houston area stayed in negative territory during the first month of 2009, reflecting the lingering effects the nation’s recession is having on consumer confidence. Overall January property sales fell 26.4 percent compared to January 2008, and sales of single-family homes declined by 22.7 percent, according to new monthly data compiled by the Houston Association of REALTORS® (HAR).

The average price of a single-family home in Houston dropped 12.8 percent last month to $164,922 compared to January 2008. At $127,850, the January single-family home median price – the figure at which half of the homes sold for more and half sold for less – fell 8.5 percent year-over-year. January marked the fourth consecutive month of price declines.

Much of the pricing drop can be attributed to an increase in foreclosure sales, which typically sell below market prices. In January 2009, foreclosures made up 34.0 percent of all single-family home sales in the Houston area compared to 25.0 percent one year earlier. The median price for foreclosure sales reported in the MLS tumbled 23.0 percent from $104,000 to $80,500 on a year-over-year basis. The median price of traditional, non-foreclosure single-family homes dropped just 1.0 percent from $157,000 to $155,500.

Sales of all property types in Houston for January totaled 3,240, off 26.4 percent compared to January 2008. Total dollar volume for properties sold during the month was $530 million versus $817 million one year earlier, a 35.1 percent decline.

January brought a continued escalation in demand for rental properties, with leases of single-family homes up 4.8 percent and townhouses/condominiums up 24.6 percent on a year-over-year basis. This suggests that consumers who otherwise might purchase a home are instead opting to lease in order to enjoy the feel of homeownership without the financial obligations associated with a mortgage.

“ Passage of the economic stimulus package will by no means trigger a home buying frenzy, but eliminating the repayment provision in the first-time home buyer tax credit will help bring buyers to the market and further reduce housing inventory,” said Vicki Fullerton, HAR chair and broker of record at RE/MAX of The Woodlands & Spring. “Restoring consumer confidence is vital to healing our economy, and Congress and the president have just taken an historic step toward initiating that process.”

January Monthly Market Comparison
The month of January brought Houston’s overall housing market negative results when all listing categories are compared to January of 2008. Total property sales and total dollar volume fell, as did average and median single-family home sales prices.

However, the number of available properties, or active listings, at the end of January fell 12.9 percent from January 2008 to 44,178. That is 430 more active listings than December 2008 and considered an indication that inventory levels remain balanced.

Month-end pending sales – those listings expected to close within the next 30 days – totaled 3,216, which was 24.7 percent lower than last year and suggests another month of declining sales for February. The month’s inventory of single-family homes for January came in at 5.7 months, down 4.1 percent from one year earlier and unchanged from December, which marked the lowest level of 2008. The national month’s inventory of single-family homes is approximately 10 months, according to the National Association of REALTORS® (NAR).

Single-Family Homes Update

At $164,922, the average sales price for single-family homes dropped 12.8 percent from January 2008, when it was $189,143. The median price of single-family homes in January was $127,850, off 8.5 percent from one year earlier. That compares to the national single-family median price of $174,700 reported by NAR. These data continue to demonstrate the higher value and lower cost of living that prevail in the Houston market.

Additionally, January sales of single-family homes in Houston came in at 2,827, down 22.7 percent from January 2008 and accounting for the 17th consecutive monthly drop. Year-over-year sales of single-family homes priced at $80,000 and below rose 11.2 percent in January, fueled largely by foreclosure-related transactions.

HAR also reports existing home statistics for the single-family home segment of the real estate market. In January 2009, existing single-family home sales totaled 2,367, a 19.6 percent decrease from January 2008. At $147,646, the average sales price for existing homes in the Houston area fell 14.5 percent compared to last year. The median sales price of $117,000 for the month was also down 8.6 percent from one year earlier.

Townhouse/Condo Update

The number of townhouses and condominiums sold in January fell compared to one year earlier. In the greater Houston area, 203 units were sold last month versus 348 properties in January 2008, translating to a 41.7 percent decrease in year-over-year sales.

The average price of a townhouse/condominium dipped to $153,773, down 3.2 percent from one year earlier. The median price dropped 2.1 percent to $125,000 from January 2008 to January 2009.

Lease Property Update

Demand for single-family and townhouse/condominium rentals increased again in January. Single-family home rentals rose 4.8 percent in January compared to a year earlier, while year-over-year townhouse/condominium rentals were up 17.0 percent.

Houston Real Estate Milestones in January

Sales of single-family homes priced at or below $80,000 increased 11.2 percent, driven largely by foreclosure activity;

Single-family home rentals rose 4.8 percent;

Townhouse/condominium rentals increased 17.0 percent;

Month’s inventory of single-family homes remained unchanged from December 2008, holding at the lowest level since March 2007 (5.7 months) and nearly half the national average of approximately 10 months;

Active listings fell 12.9 percent, representing a balanced supply of housing inventory.

Interest Rate Buy-Down is Major Element of NAR Housing Stimulus Plan

By Bob Hunt, National Association of Realtors

At their recent meeting in Orlando, Florida, directors of the National Association of Realtors® (NAR) gave formal approval to NAR’s Housing Stimulus Plan. The plan, to be submitted to Congress in its lame-duck session, is designed to end the free-fall of values in the housing market. It aims to do this by providing sufficient incentives to get potential buyers “off the fence.” The plan has four points.

(1) Make the current $7,500 first-time homebuyer tax credit available to all homebuyers and, also, eliminate its repayment provisions.

(2) Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. Currently, those limits have been raised to $729,750, but those are due to be reduced to $625,000 in 2009.

(3) Use funds from the $700 billion rescue plan (a.k.a. “the bailout”) to institute a temporary (probably two-year) federal mortgage interest buy-down program to lower rates to 4.5% or lower for a thirty-year fixed rate mortgage. This would apply to homebuyers purchasing new or existing homes up to $1 million in price.

(4) Permanently ban banks from engaging in real estate brokerage and management.

The support for this plan did not come without some controversy and the offering of alternative programs. Most of this centered around the third point, the interest rate buy-down proposal. There were those who urged that the target rate be more like 3% rather than the “4.5%, or lower”. It was argued that this lower number reflected what would actually be needed to stimulate buyer activity in a meaningful way. Moreover, it was pointed out that it would be easier to start with a lower number and compromise upward, if necessary.

Others argued that a government-backed interest rate buy-down program should extend to all residential mortgage borrowing (e.g. refinances) and not just be applicable to purchase mortgage originations. Advocates of this point argued that, although the proposed NAR plan would certainly stimulate home buying, it did nothing to help those who were currently having serious difficulty making their present mortgage payments. They felt that any stimulus program also needed to help prevent foreclosures.

As proposed, NAR estimates that the stimulus plan would cost approximately $100 billion per year, “a small price to pay” said Dale Stinton, CEO of the organization, “to stop the hemorrhaging.” However, if the interest buy-down provision were extended to refinancing existing troubled mortgages, that cost could reach numbers in the trillions of dollars.

Charles McMillan, newly-inducted 2009 President of NAR, has already met with senior U.S. Treasury officials to discuss the four-point plan. According to an NAR news release, the plan was received positively. However, Treasury representatives said “their authority under the Emergency Economic Stabilization Act (EESA) to use rescue funds for that type of market intervention is unclear.”

The news release went on, “To move its proposal forward, NAR committed itself to communicating the value of the buydown to members of Congress and asking lawmakers to clarify – through legislation or other appropriate means – Treasury’s authority for the intervention on interest rates.” The effort has already begun. On November 13, NAR issued a “call to action” to its million-plus members asking them to contact their federal representatives in support of the plan. By now, thousands have responded.

NAR members who are unclear about how to contact their legislators and/or what to say to them should contact their local association of Realtors® for assistance. Non-Realtor® citizens should weigh in on this as well. The depressed housing market is a central element of our current financial debacle. Things aren’t going to be fixed until the housing market stabilizes. NAR’s four-point program gives some promise of accomplishing that.

ITS THE FORECLOSURES – STUPID!

There is one reason for the financial crisis – Foreclosures.

There is only one solution – Restructure mortgages to make them affordable.

Who would benefit – Everyone

The above sounds very basic but we are providing One Trillion dollars to bailout major financial institutions and insurers without addressing the underlying cause of the crisis which are the millions of homeowners at-risk of foreclosure. They want to say it is too complicated and throw out terms like CDO, Leverage swaps, and others to justify giving President Bush a blank check. While we have been there, the Congress is getting ready to repeat the disastrous past.

We are now committing hundreds of billions of tax payer dollars to bailout the very institutions who created the crisis. At a minimum lets use some of these funds to get the investors to do what is necessary in making these mortgages affordable. The previous bailouts of Bear Stearns, Fannie Mae, Freddie Mac and AIG have not opened up the credit markets. Despite the huge commitments of taxpayer funds they have accomplished little. In fact, Fannie and Freddie continue to refuse restructuring on affordable terms – having their owners the American people foreclosing on themselves.

It is about time that we stop rewarding the companies, their management and investors who use the Idiot excuse. They continue to say that despite making millions of dollars a year, they could not have predicted the current circumstances and could not have thought of more effective mortgage lending. Either their actions were a resulting of unbridled greed or tremendous stupidity. Either way, they should not be bailed out.

Congress must not be allowed to commit the largest amount to taxpayer funds in rewarding these scoundrels or idiots – choose your description. A trillion dollar bailout is unconscionable. We are rewarding the companies whose only motivation was greed. For our tax dollars to meet the intended purposes we will purchase the most problematic loan portfolios from the most irresponsible lenders. We will also pay the highest price since that is required to provide them with the capital needed to survive. This is truly the moral hazard bearing its ugly head.

The solution is right in front of us. Congress and the administration must immediately put a moratorium on foreclosures for homeowners who are owner occupants. Then through regulation, legislation and/or economic incentives have homeowner’s mortgages restructured to make them affordable for the remaining term of the loan. 

Contact your politician and make your views known. TELL THEM IT’S THE FORECLOSURES STUPID. NO BAILOUT OF THE PREDATORS. MAKE THE MORTGAGES AFFORDABLE

Lease-To-Buy May Be Good Option

Many people who are struggling to get mortgages are finding comfort in a growing trend: lease-options. This is a contract that allows renters to lease the property and, at the end of their lease, they have the option to buy the home.

Hopeful buyers with poor credit are finding the rent-to-own option creates an opportunity to repair their credit while positioning them for homeownership. It’s a win-win situation. Sellers find that properties that once sat vacant now offer cash flow.

The concept, while not new, is gaining momentum. There are a number of reasons buyers are finding this option appealing and it’s not just because of bad credit. Some buyers are not sure if they’re ready to own a home and take on all the responsibilities and extra costs that go with homeownership; the lease-purchase contract gives the buyers a chance to give homeownership a test drive.

Individual sellers in the housing resale market are considering this method to help get their homes sold and so, too, are developers who have found they’re loaded up on properties they can’t sell.

“In Boston, as is true with so of much the country, the condominium market is a little bit soft right now,” says Eric Gedstad, Corporate Communications Manager, MassHousing in Boston.

So, some developers are trying the rent-to-own program in hope of getting condos sold. “There is one development where the renters sign an agreement that says ‘If they would like to purchase the unit that they are renting any time within the next year, they can do so for a fixed price and they would have first dibs on that,” says Gedstad.

Understanding the lease-option is very important. There are various differences in the way this type of contract can be drafted, so it is critical to hire experts to help negotiate the process to make sure you understand the terms and are protected. Here is some basic information about leasing with the option to buy a property.

Typically, in return for the landlord/seller extending the offer to buy the property after a period of time (usually one to three years) at a predetermined price, the tenant/buyer has to pay an upfront option (fee). That fee is generally non-refundable. A portion of the monthly rent may be applied toward the down payment to purchase the home.

Advantages for the buyer/tenant:

 
• Under this type of lease-option contract, for the period stated, you are the only one who has the option to buy the property. 
• Typically a portion of your rent goes toward building equity and, when you purchase the home, is applied toward the down payment. 
• You have a contract to buy the home when the lease is up. 
• Usually you can buy the home at any time during the contract. 
• You can see if homeownership is right for you by testing it out. 
• In an appreciating market, you may get a good deal if the home goes up in value and you have already locked in a specific sale price for the home that is less than how much it appreciates. However, the reverse is true too. You could end up paying more for the home later on if it depreciates and a set price was locked in for a higher amount than what the home is worth when your lease-option is up. 
• You have a chance to clean up your credit and build equity.

Advantages for the seller/landlord:

 
• Immediate cash flow from the tenant and the opportunity to sell your property later on. 
• If the tenant/buyer doesn’t buy your property, you keep the upfront fee (option money). 
• You may have a larger pool to market your home to because you are marketing to traditional buyers and also renters and investors. 
• You will likely get higher-quality tenants who take better care of the home since the tenants may want to buy it in the future. 
• Since you own the home, you retain tax-shelter benefits while you have tenants in the home. 
• You may get some peace of mind knowing that you have tenants in your home who are working toward buying the home.

Things to consider when utilizing a lease-option:

 
• Do a home inspection and document necessary repairs. Take photos to document the condition of the home. 
• Make sure all payments are kept up such as mortgage, taxes, and insurance for the property. 
• Verify if there are any liens against the property. 
• Spell out the terms if the tenant/buyer does not exercise the option to buy the home at the end of the lease. 
• Specify everything in writing; option contracts must have all the specific information that a sales contract would have in order to be enforceable. 
• Prepare a draft of an undated and unsigned purchase agreement.

It’s always a good idea, when purchasing real estate, to contact experts to assist you through the process to ensure that you understand the contract and ultimately complete a successful transaction.

THE TITUS WOMAN MINISTRY LAUNCHES NEW, UPDATED WEBSITE

The Titus Woman Ministry is a 501 (c)3 faith-based nonprofit organization dedicated to serve the community through the holistic development of women in need.

One of our primary goals is to construct and operate a homeless shelter for women and their children in the Waller area, with the intent of equipping the women to enter (or re-enter) mainstream society and become self-sustaining and providers for their children. This proposed shelter will be constructed in Waller County, Texas and will house families from all the surrounding communities.

We have opened a resale shop, name Grace & Mercy, on March 1, 2008. Funds obtained from sales of merchandise at the Grace & Mercy resale shop will help fund this project, we are asking for the support of your church and the community to make the vision a reality. Come out and buy our resale merchandise.

Any donations to this worthy cause will be appreciated.

The shop is called Grace & Mercy for it was God’s grace that gave us the vision and His mercy will allow us to carry it through. Can we count on you?

The resale shop wiill carry furniture, clothing (for the family), household goods, and much, much more. It is located at 71 Scroggins Lane Waller, Texas (off FM 1488 In the Held Store Mini Warehouses). The grand opening was March 1, 2008.

For further information and/or donations, contact Rosemary Butler @ 936-931-1726; 281-682-4177 or Carol O’Brien @) 281-302-S333 or Fern Poyser at 936.931.3344. Pass the word and support this God given vision. We thank you in advance for what you will do.

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