Homebuyer Tax Credit

          

The homebuyer tax credit for both first-time buyers and repeat home buyers will be ending as of April 30, 2010, and the chances of it continuing are pretty slim at this time. To qualify for either credit, one of these two stipulations must be met:

A tax credit of up to $8,000 is available for first-time home buyers purchasing on or after January 1, 2009 and on or before April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

A tax credit of up to $6,500 is available for repeat home buyers who have owned a home for five consecutive years out of the prior eight years. The repeat home buyer tax credit applies to houses sold after November 6, 2009 and on or before April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

Other key components  can found here.

Special rules that apply to members of the military, the foreign service and the intelligence community can be found here.

If you planning to take advantage of this credit, as so many Austin buyers have done, you must hurry! The rules apply even if you are looking to purchase a foreclosure, as well as new construction and resale homes.

The new homebuilders continue to discount heavily to lure these buyers, and resale home prices continue to struggle, so best get on the “new-homebuyer-bandwagon” and take advantage of a still struggling Austin home market! The other incentive is the low interest rates home buyers are still being offered, but these may be climbing as we enter the summer months.

For more information on this credit, Austin metro home prices, neighborhoods, and school districts, go to www.showcaseofhomes.com. For an Austin Relocation Guide, contact Phil Hutson @ phil@showcaseofhomes.com, or call toll free (888) 410-5858.

An Open Letter To John McCain

                                                                                                                                                                                                                                                                                                            11/3/2008

Dear Senator McCain,                                                       

 

I am writing you this open letter on the eve of the 2008 Presidential election, and the dawn of what I believe will be a turning point in, not only America, but also the world that we live in, and there are a few things I have to get off my chest.

 

I want you to know that, in my opinion, you are one of the most honorable men in America, and I respect you very much. I respect you because, in spite of what others may think about you, you say what you think, do what you say, and don’t really care if it is for or against “party lines.” I haven’t always agreed with you on a number of occasions, being the staunch Republican that I am, but I will be the first to admit that I have not always been right on every occasion, and I believe that more “non-party line” voting from both the Republicans and Democrats is probably what this country needs right now to get our political system back on track. Too many of you Senators and Congressmen are too busy worrying about what your allies on the same side of the aisle are going to think and say about you, and if you are going to be “blackballed” the next time you ask them to do you a favor, and/or worried about getting re-elected, than what is good for the country. And last but not least, I respect and thank you for your service to your country, and in that respect alone, I view you as an American hero.

 

I want you to know, John, that what I have to say next might hurt your feelings, and I apologize up front for that, but I, too, say what I think, and if it hurts your feelings, so be it. For you see, you and the RNC have hurt my feelings, and a whole lot of my Republican friends’ feelings, and you have allowed arguably the most under-qualified, over-rated, diplomatically inept man to become President of the United States of America, at least in my lifetime.

 

I want you to know that I voted for you, even though I knew it was for a lost cause. Barack Obama will not win this election, you will lose it – there is a huge difference.

 

Some will say that you lost because Obama “bought” the election with his vast resources of money – money that is untraceable back to its source – and part of that will be true. Where did those millions and millions of dollars come from? In the very best of economic times in this country no candidate has EVER raised this kind of campaign money, and these are not the best of times in the country right now. So maybe if you had not agreed to limit campaign sources/funds you could have had a fighting chance and won? Probably not, but it wouldn’t have hurt – read on.

 

Some will say you lost because you are one of the worst debaters I have ever seen, and part of that will be true. Mr. Obama’s charisma in front of a crowd or camera, and his ability to charm one with his verbal eloquence is a sight to behold and an admirable quality, especially when it comes to politics, and something you are sorely lacking. You insisted on having several debates, and in spite of what a few Republican commentators say, you lost every one of them in the publics’mind. I know you felt compelled, but wrong decision.

 

 

 

Some will say you lost this election because you chose Sarah Palin as your running mate, and adding my personal opinion to this theory, believe that was one of the most insane, ridiculous, stupidest, and asinine decisions of your entire campaign. If you honestly believed you would win the “women-who-voted-for-Hillary” vote by choosing a female for a Vice Presidential running mate, you were mistaken beyond belief. Although you picked up a small percentage of the female vote in this irrational thought, the country knew that Sarah Palin was and is no Hillary Clinton, and no amount of makeup could hide the fact. Sarah Palin is a very, very smart woman, and a very beautiful one at that, but enormously unqualified for the position intended. If the position had been a popularity contest, as in one voting for a head cheerleader, she would have garnered you a lot of votes, but her inexperience shown every time she opened her mouth, and the American public isn’t stupid, John. You really blew your chance of playing the “no experience” card on Mr. Obama when you chose Sarah as your running mate. You lost another small chance – so he gains another small victory. You may live for another 50 years in spite of your heart condition, but a lot of people weren’t willing to hedge their bet. See where I’m going with this, John?

 

 

Some will say that, because Mr. Obama is black, or at least black enough, that you never had a chance because of his heritage – that the black vote alone was enough to bury your chances, and there is some rational to that theory – to what extent remains to be seen. The African -American (I hate that expression) populace of this country believe they have been downtrodden for decades, and that because he is “of their color”, that in itself gives them hope – hope that he can and will change the hatred and racism that still exists here in America, but I have my doubts. The vast majority would have voted Democrat like they always have, but he did pick up a few extra votes because of his roots. To be honest, you never really had a chance on this issue – you would lose the black vote regardless – you just lost more of them because he got more of them to vote!

 

A very popular theory, and probably the one with the most credibility, is you lost because of the “economy”. If the economic policies implemented under the Democrats/Bill Clinton regime, and continued by the Republicans because it was helping the rich get richer (and NOT just Republicans), and poor, unqualified people get houses, and the other nations of the world thrive on our stupidity, had continued, we would not be having this discussion – you might have just squeaked out a victory. But this one “world-shattering event” was maybe enough to derail your Presidential victory. You and your advisors never really came up with a satisfactory economic answer to Mr. Obama’s “Change We Need” from the past Bush economic policies, and although the “change we need “ is not, in my opinion, to an Obama Presidency, you lost the opportunity to propose your own “change for the better” hypothesis. See what I mean? He didn’t win the opportunity – you simply lost it? Am I making any sense yet?

 

There would be some argue that the war in Iraq was the main reason you lost, and it certainly didn’t help – we haven’t learned a lot since you got out of the Hanoi Hilton when it comes to winning a war for a foreign country. And however admirable I, and most of your Republican constituents believe this is the righteous thing to do, we as a nation cannot continue forever to be the “Police Force of the World”, and the sooner the “world” wakes up to this fact that there will always be “bad” people(s) that need a good spanking, someone else needs to help swing the paddle. The “good-cop-bad-cop” procedure sometimes works with murderers and thieves, because some of them actually have a conscience, but not with terrorists – they don’t have one, and they don’t care.

 

 

Another interesting theory on your loss, John, is the “liberal media bias” that some say exists – existence to the extent of deciding an election, and approaching that theory from a very biased position I would have to partially agree. Only partially agree because it is a well-known fact that this is Not a theory, but a fact, and it certainly did not GAIN you any votes – another unfair advantage in Mr. Obama’s favor – so certainly another small contributing factor in your loss. I firmly believe that even if you had hammered Barack’s association with the “Reverend” and “Ayers” and “Rezco”, and had really beat him to death on his supposed “Muslim roots” and his birth certificate and his anti-Israeli stance and his wife’s comment about “the only time in my life I have been proud to be an American”, “the media” would still not allowed proper “air time” to be effective. I guess I am more disappointed in the American public over these matters than anything else, because in spite of the limited press time on these subjects, these are things that go to the “heart and soul” of a person and a nation, and Americans chose to ignore them. Obama called them negative attacks – I call them acts of a traitor, if true, and certainly concerns that should have been given equal discussion and investigation, but alas. America deserves better than that. Voters deserve the truth from the press, not vague cheers of “hope” and “change” while willfully ignoring or airbrushing Obama’s record.

 

Barack Hussein Obama had no business even being in the running for President of the United States. Under any other circumstances this man would not only NOT have been vying for this position, but rather have been under investigation for conspiracy, potential money laundering, lying, and associating with terrorists. Under any other circumstances there is no way America would have supported the most radical and least qualified candidate for President in at least a century –IF- you, or any other Republican candidate, had given them more than what we got. I’m not saying it was all your fault, because there is a lot of fault in the management of this 2008 campaign, but quite simply, you and all your advisors blew it…… Why did you put so many of your marbles in the basket of a plumber from Ohio than in your own qualifications of a major-party candidate for President, Senator McCain? Barack Obama certainly didn’t have anything to write home about when it came to credentials for President. Why, why, why – or rather why not, why not, why not? I don’t know any more, and it’s too late to care.

 

There’s a cliché in football that says, “ the best offense is a good defense”, and having played the game, I know this to be true. But if you don’t have a good defense, which you and our beloved Republican party apparently don’t, then you better be able to score a lot of points, and in that regard, you have failed. Not only did you lose this election, John, so did America. I pray that I am wrong. But for the first time in my life I am taking a second look at the predictions of Nostradamus, and wondering if his “2012 timetable” might not be more than just fiction?! I hope God truly does bless America, because I think we are going to need all the help we can get!

 

 

 

Phil Hutson – a staunch Republican from Austin, Texas, and still proud to be an American!  

Lakeway at Lake Travis – Scenic Beauty in the Hill Country

• 

The Location: 20 miles west of Austin.

The Numbers:

• Established: 1963
• Population: 8,002 from the 2000 census
• Average age: 41 years
• Current Median Home Price: $273,100
• Who lives there: Families (non-single residences) represent 79.9% of the population, giving Lakeway a higher than average concentration of families. There is a healthy mixture of working Austin families, retirees and second home weekenders.

Snapshot:
Lakeway is a planned development consisting of approximately 5,500 acres of Texas Hill Country that stretches across meadows, hills and limestone cliffs to the shores of Lake Travis approximately 20 miles west of the Texas Capital – Austin. It is one of the most respected recreation oriented, planned communities in America. Lakeway blends extraordinary scenic beauty with controlled growth and quality recreational resources. The land rises and falls in a panorama of the Texas Hill Country, secluded valleys and wooded acres – from the average Lake Travis level of 681 feet mean sea level to a maximum land elevation of 1,174 feet.

Eat, Shop & Play:
The City of Lakeway, boasts a wide variety of shops and eateries. A visit to the Oasis, the “sunset Capital of Texas” Located 450 feet above Lake Travis, is a must!

     

The Academy of Golf in the Hills is the most advanced golf instruction center in the country. Its three holes, a par 3, 4 and 5, provide a range of challenges and learning opportunities with multiple pin placements, fairway bunkers, uneven lie mounds and varying cuts of rough. The Hills of Lakeway golf course is one of three golf facilities in Lakeway.

 
The Hills course hosts the Kinko’s Classic Golf Tournament.

Located adjacent to the Lakeway Resort and Conference Center is the Lakeway Marina, the largest full-service marina on Lake Travis. There are more than 350 covered boat slips, as well as a parts department and fuel service. Daily boat rental (skiing, fishing, pontoon, pedal and runabouts) are available.

 The Hill Country Galleria Mall is expected to become the new shopping mecca of southwest Austin. The project which includes many high-end retailers offers a shopping experience much like that of “The Domain” in North Austin, with its village type atmosphere.

Outside of the retail shops, the Galleria will also feature a 1.3-million-square-foot lifestyle center, which includes a 30,000-square-foot City Hall, as well as an amphitheater and multifamily housing.

For additional information contact Phil Hutson @ (888) 410-5858, or email phil@showcaseofhomes.com.

Pflugerville, Texas: Commercial Growth Should Ease Homeowner Tax Rate

For years, Pflugerville has had one of the highest property tax rates in the Austin area, but with five consecutive years of decreasing rates, Mayor Jeff Coleman said those days might soon come to an end.

“I firmly believe that in the next four to seven years, this city is going to have to make a dramatic decrease in the tax rate,” he said. “By then, Stone Hill [Town Center] will be full, Verde [commercial development] will be full. It’s just going to take some time.”

City officials anticipate that commercial growth in Pflugerville will continue to push the property tax rate down, as it has done in other cities experiencing similar growth. But Coleman said it will take time for retailers to generate the substantial sales tax revenue needed to change the city’s funding mix.

Growing pains, property values

On Sept. 23, the city council approved the 2009 fiscal year budget, including a half-cent decrease in the property tax rate. Homeowners will pay more next year in property taxes despite decreased rate.

The current city tax rate of $0.614 per $100 of property valuation will be lower than last year’s rate of $0.619, but rising property values mean homeowners are likely to pay more at tax time. The value of an average home in Pflugerville is $169,791, and with the new rate a homeowner will pay $1,042.52 next year in city property tax – an increase of $25.20.

“In the 2000 [U.S.] Census, we had 16,000 people. Today, we have over 41,800,” Coleman said. “In less than eight years we have grown drastically.”

Rooftop market

Although the new rate is lower than last year’s, it will still remain significantly higher than nearby cities such as Round Rock and Austin, with respective rates of $0.3652 and $0.4012 per $100. Coleman attributes this to those cities’ more established commercial sectors and the amount of sales tax revenue they generate.

Pflugerville relies more on property taxes than neighboring Round Rock, which depends on sales tax revenue from Dell, Inc. for a large percentage of its general fund revenue. For 2009, only 14 percent of Pflugerville’s general fund revenue will come from sales tax, and nearly half will come from property taxes.

City Manager David Buesing said cities like Pflugerville traditionally have higher tax rates to compensate for the lack of retail.

“We’ve got a rooftop market here and when that’s mainly what you have, you have higher taxes,” he said.

Coleman said even with higher property tax rates than nearby cities, Pflugerville homes are among the best values in the region.

“We feel like we have the most reasonably priced housing market in the northern Austin market,” Coleman said. “You can buy more house [for the price] in Pflugerville than virtually any place in Central Texas.”

Mixed messages

As the commercial sector develops in Pflugerville, the council wants to make the city a place where residents can also work.

“What we’re really focusing on now is recruiting businesses that are going to bring employment bases into Pflugerville,” Coleman said.

But as the city moves forward, Coleman said the council will do all it can to preserve Pflugerville’s rural charm.

“Our goal is to maintain as much of that small-town, community feel as possible while implementing those aspects of a larger suburb, which are retail growth and commercial tax base growth.”

The dilemma facing the council, Coleman said, is finding a compromise that satisfies citizens wanting lower taxes but not willing to see nearby green fields transformed into retail space.

“The city council receives a very mixed message depending on the project,” Coleman said. “On one hand they say drop our tax rate and on the other hand they say don’t change to do that, and we can’t accomplish both things. We try to find a balance.”

 Source: Community Impact Newspaper

For additional information contact Phil Hutson @ www.showcaseofhomes.com.

Round Rock, Texas; New Schools Are Top Priority

An article by staff writer Lauri Zachry in the Round Rock Leader, the local newspaper serving Williamson County, caught my attention recently. Since I live in Round Rock, my kids attend school there, and about 40% of my home sales are in the area, I am very much attuned to what’s going on in the community. But that being said, I was still amazed at the growth that this area continues to see, and hence ANOTHER bond proposal for MORE new schools!

The most recent bond election voters approved for the district was in November 2006. Voters approved four propositions totaling more than $267 million. Projects funded by the 2006 bond include the opening of three new elementary schools and one new middle school this fall. The district’s fifth high school, Cedar Ridge High School, will open for the 2010-11 school year.

In spite of the last bond package passed only two years ago, and in spite of the Nov. 4 general election being dominated by the presidential race, Round Rock ISD wants to remind voters that a two-proposition bond package for $293.9 million will be there to vote on. Most of the first bond proposition is devoted to new facilities and schools. The first bond proposition totals approximately $156.6 million.

The district wants to construct three new elementary schools in the Stone Oak, Paloma Lake and Parmer Lane corridor areas. The Paloma Lakes subdivision is in the northeast quadrant of the district near U.S. Highway 79 while the Parmer Lane corridor is near the RRISD Athletic Complex.  These two schools would accommodate up to 900 students. The Stone Oak elementary location will be a smaller school (for 700 students) located north of FM 1431 near the Stone Oak subdivision to help relieve overcrowding at Cactus Ranch Elementary.

RRISD will have four public hearings throughout October to provide input on construction for the new facilities, upgrades, technology and land and bus purchases. These public hearings will also give residents a chance to ask questions regarding the election. The dates and times for the public hearings are as follows:

· Oct. 14 – Westwood High School, 12400 Mellow Meadow Drive, Austin, and Round Rock High School, 300 Lake Creek Drive 

· Oct. 21 – McNeil High School, 5720 McNeil Drive, Austin

· Oct. 28 – Stony Point High School, 1801 Bowman Road
The pro-bond Political Action Committee, Classrooms 4 Kids, also wants voters to be informed before making their decision regarding the school bonds, said Classrooms 4 Kids co-chair Raymond Hartfield.
“We want to get the awareness up of this bond election,” Hartfield said. “Yes, you’ll be voting for president, state representative and for county commissioners but we don’t want people to forget about this important election too. Since people will be voting for school bonds, we want them to make an informed decision.”

The second considered bond proposition is totaled approximately at $137.4 million for school additions and renovations, curriculum, more buses and technology infrastructure. The RRISD Citizen’s Bond Study Committee presented bond package recommendations to the school board and the community June 5.

The citizens study committee presented its tentative list of new construction, upgrades and technology infrastructure projects May 19 during a public hearing in the lecture hall at Round Rock High School. The original list the group started with totaled almost $440 million, but the committee reduced the list to $350 million, even though the district bond finance committee suggested further reducing the list to $300 million, said Catherine Hanna, 2008 Citizens Bond Study Committee co-chair and Classrooms for Kids co-chair. “We had some hard decisions to make,” Hanna said. “We really don’t have any fluff on this list.”

During earlier bond study committee meetings, the district considered creating a 500- to 700-seat auditorium in the eastern portion of the district, smaller, 600-seat auditoriums at Round Rock and Stony Point high schools and an alternative high school. The citizen’s bond study committee was unable to justify displacing other needed priorities for the two auditoriums, said Dwayne Kostiha, citizens bond study committee co-chair, in June. The board had until Aug. 26 to call the bond election to be placed on the Nov. 4 general election ballot. Early voting for the November bond election begins Oct. 20.

For information about Round Rock, contact Phil Hutson for a free relocation guide, or call (888) 410-5858.

Austin New Home Builders Continue REALTOR/Buyer Incentives

I don’t suppose it comes as any surprise to anyone that, as a buyer looking to purchase a new home, or a REALTOR searching for his buyer looking to buy a new home, that most New Home Builders are discounting heavily in order to move inventory. As I’ve noted in several blogs, the Austin metro area continues to outpace most other areas in home sales, but it is beginning to show signs of slowing. The foreclosure rate for the area is increasing, and a lot of people that had been looking to buy a new home will instead go for the much lesser price of a foreclosure. Even the smell of new paint and carpet will not overcome a 20-30% decrease in the market value of a foreclosed home price tag!

The Builders, anticipating this months ago, began offering incentives to both buyers and Realtors as enticements, and to help slow this attrition. As expected, the incentives were much less in the “hot” months from March-July, but starting about 6 weeks ago they really started “upping the ante”! Below are just a few of examples from several “production” Builders’ ads:

DR Horton Homes - ”5% commission on 30 day closing”; “up to $20,000 in buyer incentives (homes from $180,000-$210,000); “up to $50,000 in incentives (homes from $275,000-$325,000); “{6% commission/buyer closing costs paid”                                               

KB Homes – “$0 down USDA loans still available”; “buyer discounts on ALL ready-for-move-in homes!”; “5% commission”

Standard Pacific Homes – “6% commission on closeout homes”; 5% commission on all specs”; 4% commission on New construction”; $10,000 buyer incentives

David Weekley Homes- “Up to $40,000 in FREE options”; “FREE trip w/airfare and accommodations to Cabo San Lucas”

Drees Custom Homes – “$5000 Realtor bonus on any home sold”; $30,000-$60,000 discounts”

Perry Homes – “$5,000-$25,000 Realtor bonus on all inventory homes”

Mercedes Homes – “Up to $30,000 paid towards closing costs”

Highland Homes – “Up to $30,000 in discounts”

There are approximately 40 “production” Builders in the Austin area, with most offering some type of promotion/discount/incentive. These are just a few examples. For a more complete list, go to Builder Discounts at www.showcaseofhomes.com.     

                                                                                                  

Where’s the Bottom, and When’s the Rebound?

                                                          

 Have we seen the bottom of the housing market? In my opinion, NO. And although the Texas economy, specifically the Austin metro area, is still fairly vibrant, we are continuing to see declines in both number of homes sold, and price/sf. The “mortgage crisis” that has taken center stage the last few months will be corrected, and fewer homes will be sold because part of the correction will be a RETURN to legitimate methods by lenders to qualify potential home buyers! So where’s the bottom, and when’s the rebound?

Although every area of the country has “reasons why” their home market is down, I believe the answer(s) are somewhat generic as far as “bottoming out” and “rebounding”. I’ll cover these first, and then briefly mention my thoughts on a Texas specific “rebound” at the end. 

What Has to Happen?  

Two major events have to occur before the housing market will begin to bottom out. First, home prices have to stop falling, and second, investor confidence in the traditional U.S. residential mortgage must be restored. What must happen for home prices to stop falling?

The answer is a painful process. Prices fall when there are more houses for sale than there are buyers who want to buy (or can afford to buy). The abrupt “nuclear event” that occurred in July 2007 (see “Wall Street Implosion Causes Nuclear Explosion”) shut off a substantial amount of demand for new homes almost overnight. The large group of low income home buyers that was active in the market in June 2007 was gone completely the next month. Meanwhile, new homes were still piling into the market. The excess supply has continued to grow as foreclosed homes are put on the market. This overwhelming imbalance of supply and demand caused prices to fall.

Prices will stop falling when the excess supply is eliminated from each local market. This can happen in only one way. First, new construction must be reduced to virtually nothing. This actually began in the Austin area last summer, as New Home Builders began renegotiating their “take-down” schedules on lots from developers,and started various “Buyer incentive/discount” programs. The relentless population growth in most of America will ultimately absorb the excess inventory. The inventory of unsold homes will decline until selections get too limited to meet the needs of picky home buyers. At this point the market will begin to shift from a buyer’s market to a seller’s market. Prices will stabilize, and the market will begin to heal itself.

 How Long to Heal?

The pace of this turnaround will vary from city to city. If home builders cut back dramatically on new supply, the recovery will occur faster. Communities with fewer foreclosures will work through the excess supply more quickly. Communities like Austin, Texas, with strong job and population growth will create demand that will absorb the excess units faster. Conversely, communities with slow job growth could take years to bounce back from the excess supply. Political action could change the timeline as well. If the Federal government were to offer tax credits for people to buy homes, the excess inventory could be soaked up even faster. This would cause the housing market to bottom and turn around much faster.

Another stimulus that would speed the recovery is gently rising mortgage rates. Typically, when mortgage rates are falling, homebuyers postpone buying. But when they see that mortgage rates have stopped declining and may rise, they hop off the fence and buy. As the economy begins to rebound in 2009, look for mortgage rates to take an upward turn. As long as rates do not increase dramatically enough to impact affordability, this should stimulate housing demand.

What About Texas?

The long-term outlook for the Texas housing market is clearly strong. In the 1970s and 1990s, house prices in Texas rose in nine out of ten years. And even in the 1980s – the most challenging decade for Texas in the past 38 years – house prices increased eight out of ten years.

Job growth in Texas has doubled the national average for most of the past ten years. Demographic experts estimate another 13 million people will live in Texas by 2030. Many Texas cities still have tight inventories of homes for sale with prices continuing to appreciate. The state’s metropolitan areas have strengths and weaknesses in their local markets. Attractive properties located in older neighborhoods close to downtown, like Hyde Park and Tarrytown in Central Austin, are still performing well and will continue to do so. The challenges in big city housing markets will be in select sections of the suburban perimeter. In the short term, these markets will struggle because too many new homes have been built. Even in the hot home markets around Austin, like Round Rock, where home sales have been very good, sales have dropped off substantially since the first of the year.

But even in these areas, supply is being quickly withdrawn as new home starts plummet. It may take a few years for these areas to return to a balanced supply. For now, builders are accepting substantial concessions to make a sale. If you plan to buy a house to live in for a number of years, this would be a great time to buy. If you think you may not live in a house for two years before you move again, you might be better off to rent.

For a comparative market analysis of the Austin, Texas, metro area, contact Phil Hutson @ (888) 410-5858 or phil@showcaseofhomes.com

 

 

Wall Street Implosion Rivals Nuclear Explosion

(Picture depicts U.S. House of Representatives vote on 8/29/2008 re: “Wall Street Bailout”)

The Fallout Has Just Begun

How in the world did we get here to begin with?

Over a year has gone by since the real estate mortgage markets experienced the first day of “nuclear winter.” For three or four years prior to July 2007, the credit markets for real estate lending were on fire. The thinking among the “smart money” on Wall Street was that under modern central bank policies, risk was a thing of the past. The economy would still move up and down, but in much gentler waves, and when things got rough, the Fed could fix it.

 

Remember the Y2K crisis? The Fed fixed it. Remember the stock market difficulties after 9/11? The Fed fixed them. Remember the 1998 Russian ruble crisis and the ensuing credit market turmoil it caused? The Fed fixed it. Even when the stock market crashed in October 1987, the Fed fixed it.

These examples prove the Fed will not tolerate more than minimal corrections in the U.S. economy. Investors have now succumbed to the notion of “The Greenspan Put.” This catchy little phrase essentially means there is no longer any risk in the markets that the Fed cannot fix by lowering interest rates. When global investors perceive no risk, investment capital flows everywhere. Investment prices go up and yields go down. Cap rates on real estate hit record lows. In this kind of environment, how do investors find higher yield? The answer is that they take on more risk. They make home loans to people who cannot afford to pay them back. Then they sell those loans to investors who do not know what they are buying. Who cares? The profits roll in, and that’s all that matters!

 

This new “no risk” era has had a remarkable impact on the housing market. Prices started rising and suddenly homes were no longer just places to live – they became investments as well. As prices continued to escalate, investors figured if one house was a good investment,why not buy more? TV shows began to reflect the popularity of investing inhomes. Investors could tune in to “Flip This House,” then switch channels and watch “Flip That House.”

 In post-World War II U.S. history, there have been three barriers to buying a first home: a down payment, a job and good credit. But early in this decade, the desperate search for yield prompted investors to buy riskier mortgages. Lenders had a new way of doing business. No job? No credit? No cash? No problem! They began making 100 percent loans without documenting borrower financials. Traditional risk management and mortgage underwriting standards that had served well for decades were swept aside. This new type of mortgage lender went by the name of Wall Street. Mr. Street did not need Fannie Mae and Freddie Mac underwriting guidelines because he did not sell his loans to Fannie and Freddie. He sold them to all kinds of investors all over the world. These loans were supposed to be virtually riskfree, rated AAA by the most reputable ratings agencies.

In 2006, prices stopped going up. Then they started to decline. Some people stopped paying their mortgages. Suddenly, investors decided not to buy more U.S. residential mortgages from Mr. Street. At this writing, those investors still are not interested in buying new mortgages. So guess who is left to make the loans? The traditional lenders who made them back in the good old days. Even an old friend – FHA – quickly evolved into the subprime lender of the 21st century.

And Then The Music Stopped

America finally woke up September 29, 2008, when, after weeks of debate and discussion about “our troubled lending institutions – especially MORTGAGE lenders – our beloved political leaders stepped to the plate and said “we are NOT going to allow the FED to fix it this time“, and the picture above “tells the rest of the story.”

 

Housing Wheel of Good Fortune

“Fix-It” Fed

Austin New Homes – New Inspection Law for Builders

Starting Sept. 1, Texas state law requires inspections for residential construction in unincorporated areas or in areas not subject to municipal inspections. There are three required inspections: foundation, framing and mechanical systems, and final sign-off. These requirements apply to new construction or qualified remodeling projects that begin on or after Sept. 1. 

“Residential builders and certain remodelers are required to register with the Texas Residential Construction Commission. Property Code Section 401.003 defines a builder/remodeler as any person who, for a fixed price, commission, fee, wage, or other compensation, sells, constructs, or supervises or manages the construction of, or contracts for the construction of or the supervision or management of the construction of: a new home; a material improvement that either increases or decreases the home’s total square footage of living space and also modifies the home’s foundation, perimeter walls or roof; or an interior remodeling/renovation project that exceeds $10,000″ (see the entire “County Inspection Form and Instructions” here).

The commission can take disciplinary action against a builder or remodeler who fails to comply with the inspection requirements. It is the builder and remodeler’s responsibility to secure the three required inspections for qualified residential construction projects in unincorporated areas or areas not subject to municipal inspections.

This is a huge step in the right direction by the TRCC (Texas Residential Construction Commission) to insure the quality and integrity of the new home builders construction for workmanship and defects. I have always strongly recommended to ALL my home buyers to monitor their new home construction, but most do not have the time/expertise to know what to look for. On EVERY new or custom home I sell, I monitor this construction and send my home buyers copies of my inspections – very few REALTORS do this, but it is extremely important that a REALTOR follow-up with the Builder Superintendents and report back to his client after these inspections are done! There have been many times where inspections were either not done or insuffiently done, and the homeowner suffered the consequences.

Keep in mind these new inspection rules are different from existing building codes already in effect for Tecas Builders – codes dictate how a builder must build a home. The building and performance standards spell out how a home must perform after it is built. The performance standards offer all Texans the promise that their newly purchased home will remain structurally sound for years to come.

The TRCC has started a voluntary program called “Texas Star Builders.” This program, detailed in the Star Builder brochure, acknowledges a registered builder/remodeler’s exemplary experience and business practices. A builder or remodeler that qualifies for the program must meet certain criteria regarding experience, educational levels, training, financial stability and insurance. They must also show a commitment to building to meet the commission’s warranties and building performance standards. These requirements vary based on the volume of home projects the builder registers with the commission each year.

In order to qualify, a builder or remodeler must also provide documentation that indicates an excellent financial history and overall positive association with a financial institution, as well as information about their experience, training, education, building practices and participation in the building community.

How will a homeowner or a builder get more information on warranties and performance standards?
The commission-adopted limited warranties and building and performance standards – effective June 1, 2005 – apply to all home construction projects. The warranties and performance standards in effect at the time of construction are the ones that will govern a dispute between the homeowner and builder. Current standards are available on the commission Web site. If a homeowner or builder has a question about the warranties and building and performance standards applicable to a particular construction project built at some time in the past, they should contact the commission for guidance on how to identify the applicable standards.

Austin Custom Home Builders – Russell Eppright Homes

Although the Austin real estate market is experiencing the same slow-down as most of the markets across the U.S., it is still very viable, especially in the “luxury home” price ranges. Austin continues to outpace most of the nation in home construction, and the Custom Home Builders have taken advantage of this growth! In the last several years, the number of Custom homes in the $1,000,000 range have averaged from 60-80 consistently in the Austin MLS, and beautiful golf/lake communities such as Barton Creek, Lake Travis, Spanish Oaks, Rough Hollow, Steiner Ranch, and Flintrock Falls are but a few of the magnificent communities that have been developed to accommodate this growth.

 If you’ve ever built a Custom home, you know the process can be very tedious and time consuming. So if a move to Austin, Texas, is in your future, and a beautiful luxury home is your desire, give me a call. My services (below) as an exclusive “Buyer’s Broker” will be invaluable to you in this process!

• Inventory of available or soon-to-be-completed homes; access to all “appointment only” homes
• Synopsis of selected Builder, community history (appreciation/depreciation), school analysis 
• Builder sites/lots available for construction -or- we’ll find you a lot to build on
• Market/cost analysis including site procurement (lot cost), price/sf, sold comparables, etc.
• Architectural/structural/feature recommendations based on over 24 years experience selling custom homes
• Construction walk-through inspections through completion, and final inspection w/builder
• Mortgage companies/interest rates (when applicable), and title and closing documentation review
• Total “fiduciary” responsibility representation to you, the buyer (“buyer agency”) – no “seller-agency” that you  would  expect from the Builder or his/her representative

 

 There are over 150 Custom Builders in the Austin metro area. A partial list of these Builders can be found on my web site www.showcaseofhomes.com under the icon Austin Custom Home Builders, and a current list of available Custom Home inventory under the icon Austin Luxury Homes. In my continuing quest to spotlight these Custom Home Builders in the Austin Metro area, I will be featuring some of them on my blog sites over the next several weeks. Each is unique in their own way, and each has a story to tell. This is but one of those Builders, and what they have to offer – in their own words:

Russell Eppright Custom Homes sets the standard for excellence in the custom home industry. The hallmark of our company is customer satisfaction. We promote and maintain a genuine customer service attitude toward our clients and among our employees. Our standards for integrity, quality and professionalism are the industry benchmark for Austin and translate into the maximization of our product value and customer satisfaction. Since each home is totally custom, the process begins and ends with the customer. Russell continually emphasizes, “We recognize the customer as the most valuable player on the team. We include the customer in each phase of the home building process. Our state-of-the-art, Internet-based programs link our clients directly to our construction managers in the field, home office and subcontractors. Together, we find innovative ways to meet their demands and exceed their expectations. This is the spirit of a true custom home builder.” The company’s quality team of dedicated professionals consistently achieves our primary goal – to make your home building experience as enjoyable as possible, while at the same time, offering value and maximization of your investment without compromising quality. “When we build a home, we employ an innovative approach to doing business, and teamwork is the basis of our philosophy. From the moment you purchase your lot, to your move-in date and beyond, you are supported by (and become a member of) our experienced and talented team.”