Fast And Loose Housing Market Is History

October 13th, 2008

The trillion-dollar question everyone keeps asking about the economy is: When will the housing market come back?

The answer should be apparent: It won’t.

Oh, home sales will slowly rebound and prices will at some point stop falling.

But the fast and loose housing market that made the industry billions and fueled the world financial market crash has gone the way of nickel pop and $1 gas.

The U.S. housing market that arrived in the early 2000s and caused the collapse is history. It won’t be making a quick return.

Along with the current financial turmoil, there’s going to be a fundamental shift about how people look at residential real estate.

Assumptions that home prices will always keep rising and that housing is the best investment on the planet will no longer be sacrosanct.

Both lenders and borrowers are getting a painful software update on how to compute the risks and rewards of homeownership.

For some folks, especially those in hard-hit markets such as Florida and Las Vegas, the change in perspective could be permanent. Even in Dallas, homebuyers are looking over their shoulders before signing a contract.

My old granny lived through the Great Depression. To the day she died, she didn’t trust the financial industry because of the people she knew who lost their savings when the banks failed.

Will some people feel the same way about home values?

Perhaps. Or at the very least, they’ll have real reason to worry if real estate values in their neighborhood start growing at leaps and bounds ahead of wages and overall inflation.

And if they question the wisdom of leveraging a house beyond all reason to pay for trips to the mall or vacations in Aruba, the economy will be better for it.

As for the real estate industry, it will have to make do with less.

Between 25 percent and 30 percent of recent peak housing demand is gone for good and won’t be coming back. Those were the purchases made by investors financed with the cash leveraged out of other properties and the sales to buyers who never should have qualified for homeownership.

The buyers left in the housing market will have to make true down payments and show real repayment ability before they can borrow.

That means fewer home sales, fewer home starts and less appreciation.

And, believe it or not, that’s a good thing. It makes a house a roof over your head instead of a get-rich-quick scheme.

Oak Lawn

A big slice of Dallas’ Oak Lawn neighborhood is on the sale block.

Colliers International has just gotten the listing to sell more than 21 acres of apartments along Hudnall Street between Cedar Springs Road and Lemmon Avenue.

The four-block tract is now occupied by past-the-sell-by-date apartments that can be knocked down for new construction. Developers are doing just that across Lemmon Avenue.

Collier’s Joe Garrett, David Glasscock and Dustin Schilling are marketing the property for a California owner.

Credits: Dallas News

Builders Use Old-Style Details In New Home Construction

October 12th, 2008

In spring 2006, 13 employees from Southern Land Company’s architecture department in Franklin, Tenn., flew to Dallas and canvassed neighborhoods including Swiss Avenue, Munger Place and the Park Cities, armed with notebooks and cameras.

Their mission: Find the most charming, most enduring architectural styles and re-create them at Tucker Hill, an 800-acre master-planned community in McKinney. Called the “new old house movement” by Building Systems magazine, new-home construction that borrows the architectural grace and attention to detail of earlier eras is luring prospective homeowners away from McMansion styles to houses that look like the ones their grandparents grew up in.

Heirloom homebuilders are focusing on the turn-of-the-20th-century charm that buyers of new homes are responding to – front porches, period hardware, windows with divided panes – and pairing them with modern amenities like open floor plans and walk-in closets that consumers don’t want to live without.

The change comes because homebuyers are bored with run-of-the-mill design, says Rob Sell of Fort Worth’s Village Homes. They don’t want block after block of the same house in their neighborhoods, and they don’t like excessive details tacked onto architecture without authentic historical context. Today’s buyers know design, and they expect their homes to look the part. Mr. Sell says buyers are more knowledgeable about home styles than ever before.

“There are better books on architecture, and people are starting to appreciate and ask for historical-style architecture,” Mr. Sell says.

And builders, hoping to appeal to well-educated, discriminating buyers, are complying. Historically inspired communities are popping up in states including Massachusetts and Washington, as well as Texas.

Mr. Sell is developer of Idlewild, an 18-home subdivision west of downtown Fort Worth focused on classical architecture. He studied the work of his favorite English architect, Edwin Lutyens, known for incorporating modern touches into classical architectural styles, before undertaking the Italian Renaissance style of the Southern Living 2008 Idea Home. He kept early-20th-century details such as the groin vault ceiling in the dining room but added 21st-century touches like a media room and an open kitchen. That house, along with two others and a vacant lot in the neighborhood, has sold. Two other spec houses are on the market.

“Restraint is a precious commodity,” says Mr. Sell. “The pendulum is swinging back the other way, and good, historically inspired design really does matter.”

In McKinney, Danny Lane, vice president of single-family architecture for Southern Land Company, says tract builders tend to overlook precious details. For example, instead of shutters being placed on house exteriors as trim, they should be attached with hinges, should match the size of the windows and should have hold-back hardware fixed at the bottom.

Period details add to construction costs, but they are key to avoiding the homogenized look of McMansions, which combine architectural styles willy-nilly, he says, and somehow end up all looking the same. Builders who do their homework on these finer points of historical homes sometimes find that potential buyers mistake their new build for a restored historic structure.

“They’ll ask, ‘Are the floors original to the house?’ And we laugh and say, well yeah, but the house is only three weeks old,” says builder J.W. Brasher.

Mr. Brasher and partner Clark Mitchell own Swiss Avenue Homes, builders of historically inspired new construction. In 2004, they won Preservation Dallas’ award for best new construction in a historic context and fooled even the judges, who thought they had entered the wrong category. They thought the home in Old East Dallas was a remodel, not a new build.

Some say the push to turn back the clock on home design is about recapturing the neighborhoods of our youth, those close-knit communities of yesteryear. But more than that, builders say buyers equate historic architecture with safety and value. In times of economic uncertainty, historic homebuilders are banking that traditional styles will ease the minds of reticent buyers.

According to the North Texas Real Estate Information System and Texas A&M University’s Real Estate Center, 2008 single-family home sales prices are down 2 to 3 percent, quite the opposite from Swiss Avenue Homes’ selling prices, which have gone up 52 percent since it put its first house on the market in 2001. Of the five homes Mr. Brasher and Mr. Mitchell have built, 10 weeks is the longest one has remained on the market. Two were bought before they put a for sale sign out front.

Meanwhile at Tucker Hill, the starting price is $350,000, significantly higher than what the Collin County tax office reports as the average McKinney home price at $211,729. There, seven of its homes are sold and 15 more are on the market. The community is expected to eventually hold 2,100 homes, both spec and custom builds.

Why do historically accurate new homes seem to buck the downward price spiral? Jim Cheney, VP of communications for Southern Land Company, believes that solid value comes from solid home design. At Tucker Hill, he says, they avoid trendy features like turrets, those small exterior towers so popular on new homes.

“We stay away from themes and gimmicks,” he says, “and we feel that makes our product more premium.”

Builders of this genre also say the exterior details go beyond architecture – they contribute to building a better neighborhood.

Unlike many postwar houses, there are no true back yards in Tucker Hill. Southern Land, like conservationists around the country, believes that smaller yards tend to mean more community involvement. Instead of large yards there are parks, green spaces and even a traditional town square where residents can gather and children can play.

And although Swiss Avenue Homes builds infill housing in old neighborhoods, not in master-planned new subdivisions, its front porches are designed to get homeowners outside and chatting with neighbors. Both promote a walkable, bike-friendly lifestyle that mirrors the neighborhoods created at the turn of the 20th century, before streets were inundated with automobiles.

“The old Norman Rockwell picture of life is appealing to people again,” says Mr. Brasher, who builds in Peak’s Suburban Addition Historic District, with a business plan to expand into adjacent historic districts as land becomes available for new construction. “We’re all so busy and rushed, there’s so much technology in our office jobs, when we get home we just want to step back in time, where everything’s a little less hectic and more on a human scale.”

“People really do sit out on their front porches at night and know everyone by name,” adds Mr. Mitchell.

“People have a natural skepticism about new developments that strive to capture traditional designs,” says Mr. Cheney. “They dismiss it as if master-planned communities are somehow shallow and fake in nature. What they are missing is the fact that the beloved old neighborhoods in Dallas, like the Park Cities, were at one time new as well.”

Mr. Sell says homebuyers just want to feel they own a home worthy of preservation in the future.

“Everybody’s building ‘Old World,’ but really it’s the same old North Dallas special with new shutters,” Mr. Sell says. “Impostors trying to look the part just don’t.”

Credits: Dallas News

KENNEDY: Texas, Taxes And Schools

October 11th, 2008

Four weeks before Election Day in a campaign that is not going his party’s direction for now, you would think that Arlington Republican Bill Zedler would avoid picking a fight.

He just picked one — aiming at, of all people, public school leaders, including those in his districts of Arlington, Crowley, Kennedale and Mansfield.

Zedler is among conservatives behind a new “Pledge With Texans.” It’s published by the Texas Conservative Coalition as sort of a state Contract with America, a to-do list for the next Texas Legislature.

Pledge No. 1: “Cut property taxes until they are eliminated” — and one tax in particular.

“Elimination of school district property taxes must be the long-term goal,” the pledge reads.

Ouch.

We don’t have an income tax in Texas. Basically, we have two ways to pay for children’s education: property taxes and sales taxes.

“Certainly, we could look at that as an option,” he said Thursday, saying lawmakers could “eliminate property tax and replace it with a sales tax.”

It’s the only option. Unless he’s got a few billion stashed in a piggybank somewhere.

How much would the Texas Legislature have to raise the sales tax to pay for Texas schools?

“It would have to be an astronomically high sales tax,” said Steve Brown, Arlington associate superintendent of finance.

The Arlington school district alone — one of the state’s most thrifty — needs $200 million a year in property taxes to teach kids.

By the time the state of Texas replaced that money, it would take an extra quarter-cent in sales tax statewide to cover the bill. And that’s just for Arlington.

When Weatherford Republican state Rep. Phil King suggested a school sales tax last year, Texas Monthly said the idea was a “scheme .?.?. to hurt the schools.” The idea is a political gesture designed to shift control to Austin and stir up opposition to tax increases, the magazine’s Paul Burka wrote.

Crowley Superintendent Greg Gibson just got turned down by his own voters for a tax increase.

Imagine if every school in the state had to ask Austin for money to raise teacher salaries or pay higher electric bills.

“It’s pretty frustrating to me to hear about proposals like this when the state is funding schools so poorly,” Gibson said. “It’s all rhetoric. The money’s not there.”

Zedler, a three-term lawmaker, is the vice chairman of the Texas House Education Committee.

He has always returned calls. This was no exception.

“If you can reduce the property tax, then Texans will have more money to spend,” he said. “That’ll be good for the economy. And it’ll also generate more sales tax.”

The Conservative Coalition is hosting town halls to promote the Pledge With Texans.

Zedler will host a meeting at 7 p.m. Oct. 22 at Moore Elementary in Arlington.

“If you want to see what keeps people out of homes, a lot of it is the property tax,” he said. He wants school districts to “do more with less,” he said.

King, the originator, said he might agree to exempt low-income Texans from the sales tax. (A sales tax is often criticized because it’s like an income or property tax in reverse: The poorest Texans pay the highest percentage of their income.)

Zedler’s opponent, Burleson Democrat Chris Turner, said a school sales tax would be “a dangerous path.” It wouldn’t produce enough money in the event of a sales recession, he said.

“It’s a horrible idea,” he said.

Right or wrong, this is a horrible time to be talking about taxes.

Credits: Star Telegram

Tonti Building ‘Green’ Apartment Complex In Frisco

October 10th, 2008

Frisco will have the first apartment complex in the Dallas-Fort Worth area that meets the Green Built North Texas’ new criteria for green buildings, the organization said Wednesday.

The property meeting the organization’s green-built standards is Dallas-based Tonti Properties’ La Valencia at Sherwood apartment complex in Frisco, due to be fully completed in March 2009.

Green Built North Texas is a program that encourages green building under the umbrella of the Home Builders Association of Greater Dallas.

The group said the Tonti project incorporates several key elements of green living and energy preservation, including solar deflecting-thermal resilient windows, high performance heating and air-conditioning systems, R-13 interior walls insulation, R-22 for the exterior walls and R-44 in the attic.

The added insulation is expected to keep utility bills down. Green Built North Texas says in order to create the first green-built apartment complex, the program had to develop a protocol for practicing the art of conservation inside multifamily developments like La Valencia.

“Tonti Properties is constantly looking to improve the living experience of our residents and building green was the next logical step. We understand that saving money and helping the environment is important to our residents,” said Rick Perdue, vice president of acquisitions and development for Tonti Properties.

At the moment, approximately 30 percent of La Valencia’s apartments are leased, with some residents already living in the completed segments.

La Valencia’s monthly rents fall in the $830-to-$1,575 price range.

Credits: Biz Journals