In May, home sales get early start on looming post-tax credit slump

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

The housing market may be on the verge of taking another tumble that could weaken the broader economic recovery.

Sales of previously occupied homes dipped in May, even though buyers could receive government tax credits.  And nearly a third of sales in May were from foreclosures or other distressed properties. That means home prices could soon be heading down after stabilizing over the past year.

Last month’s sales fell 2.2 percent from the previous month to a seasonally adjusted annual rate of 5.66 million, the National Association of Realtors said Tuesday. Analysts who had expected sales to rise expressed concern that the real estate market could tumble once the benefit of the federal tax incentives is gone entirely, starting next month.

The report is “a worrisome sign for what will occur in July and thereafter when the effect of the tax credit is behind us,” said Joshua Shapiro, chief U.S. economist at MFR Inc., an economic consulting firm in New York.

Existing-home sales — which account for 90 percent of the housing market — have climbed 25 percent from the lowest level of the recession, an annual rate of 4.5 million sales in
January 2009. But they’re still down 22 percent from the peak rate of 7.25 million in September 2005.

The report counts home sales once a deal closes. So federal tax credits of up to $8,000 for first-time buyers and up to $6,500 for existing homeowners helped prop up sales in May. The deadline to get a signed sales contract and qualify was April 30. Buyers must close their purchases by June 30.

The tax credits were expected to lift sales in May and June. Lawrence Yun, the Realtors chief economist, said delays in the mortgage-lending process put about 180,000 potential buyers in limbo. They are unlikely to qualify by the June 30 deadline. The trade group is pushing Congress to extend the deadline for closing a sale until Sept. 30.

Real estate agents are reporting a decline in foot traffic, meaning sales could worsen in the coming months.

A series of recent industry reports have signaled that the residential real estate market is slowing. Housing starts last month dropped by the most since March 2009, and building permits, a sign of future construction, fell to a one-year low, according to the Commerce Department. The number of mortgage applications filed to purchase houses dropped this month to the lowest level since 1997, according to data from the Mortgage Bankers Association.

Another troubling sign is the number of foreclosures and so-called short sales, which occur when lenders allow borrowers to sell a home for less than they owe on their mortgage.

Existing-home sales have climbed 25 percent from the recession’s low in January 2009 but are still down 22 percent from their peak in September 2005.

Together, foreclosures and short sales made up 31 percent of sales in May. And those numbers ,could rise because the government’s efforts to help troubled homeowners keep their homes have had only modest success.

The inventory of unsold homes on the market dropped 3.4 percent to 3.9 million. That’s an 8.3-month supply at the current sales pace, compared with a healthy level of about six months.

First-time buyers made up 46 percent of sales. The median sales price in May was $179,600, up 2.7 percent from the same month last year.

Although the rise in home prices is encouraging, analysts don’t see that lasting. They say the glut of unsold homes on the market and the anticipated rise in foreclosure sales will drive prices down over the next few months.

Round Rock, Austin saw big gains in population in 2009 according to Census

Texas cities saw some of the fastest population gains among U.S. cities last year, according to data released Tuesday by the Census Bureau, a statistic that experts chalk up to a stable economy amid a national recession.

Four of the top 10 cities with the greatest percentage increase in population were in Texas: Frisco, McKinney, Round Rock and Lewisville.

Round Rock was No. 8 on the list, with a 3.4 percent increase.

The population growth was tabulated from July 1, 2008, to July 1, 2009.

Frisco, a wealthy suburb of Dallas, saw a 6,2 percent population spike, making it the fastest growing city in the U.S. McKinney was No. 3, and Lewisville was No. 10.

By raw numbers, Austin was ninth on the list of cities with populations of more than 100,000 that saw the largest numerical increases last year, with a rise of 19,183 residents, according to.the Census Bureau.

Four other Texas cities made that top 10 list: San Antonio at No. 3, Fort Worth at No. 5, Dallas at No. 7 and Houston at No. 8.

The Census Bureau reported that New York City had the nation’s largest increase in overall. population numbers, going from 8.34 million to
8.39 million.

Steve Murdock, a former director of the Census Bureau and now a professor at Rice University, said Texas’ growth was probably because of the state’s ability to dodge the worst of the economic crisis, as well as its growing immigrant population.

“Diversity and growth go together, and Texas has one of the most diverse populations in the “country,” Murdock said.

Daniel Hamermesh, a University of Texas professor who specializes in demographic changes, called the population spike a “good thing for Texas,” echoing Murdock’s sentiments that the state’s growth is due to its relatively stable economy while the rest of the U.S. slowly emerges from the worst economic slump since the Great Depression of 1930s.

“People want to move here,” Hamermesh said. “The economy is doing better than anybody else’s, and there is a long-term trend to move toward the South and Southwest.”

The state is also scheduled to receive more representation in Congress because of the population increase, probably gaining three or four seats during the redistricting process in 2011.
“Steady growth will make Texas cities the big winners when the 2010 census comes out next year,” said William Frey, a demographer at the Brookings Institution.

City’s new tree rules put to test. Homeowner says oak tree near house is danger to foundation.

The huge live oak in Carla Peebles’ backyard offers shade and beauty.  Its locations – about four feet from her Northwest Austin townhouse- is not so ideal.

Peebles and her mother have lived in the 30 year-old home since 1995, and over the past few years a large crack has formed in a concrete patio at the trees’s base and crept up two concretes steps to the the back door.  Peebles wants to cut down the tree, fearing it will damage the home’s concrete slab foundation.  But becuase the tree’s trunk is more than 24 inches in diametere, she must get the City of Austin’s permission.

So far, the city has said no and asked Peebles to explore other options, such as replacing part of the pation with wooden decking that’s less restrictive for tree roots.  The case is one of the first tests of tougher new rules designed to protect especially large trees the city calls heritage trees.

“What if we spend a bunch of money redoing the patio and a year down the road, the tree is cracking the foundation?”  said Peebles, 32, who works part-time and is a part-time student.  ”I like that Austin so protective of the trees and that this is such a verdant city. But my mother has a fixed income, and this (home) is our most important asset.  We don’t have unlimited money to dedicate to this problem.”

The city has for nearly three decades required property owners to get a permit before  felling trees with trunks that are at least 19 inches wide.

In February, the City Council kept those rules in place but decided that landowner’s whoe want to cut down Austin’s oldest, grandest trees-those with trunks at least 24 inches wide and one of 20 native or highly adapted species- must get a variance.

That’s a higher bar because a property owner must show that the tree is dead, badly diseased or “an imminent hazard to life or property” that can’t be mitigated.  Peebles’ oak , which has a trunk about 26 inches wide, seems to be in good health, and an arborist and engineer she hired have not shown that the tree poses an imminent threat to life or property, said city arborist, Michael Embesi, who has also inspected the tree.

Rules began in the 1980′s

The city first enacted tree rules in the 1980′s to prevent developers and landowners from clear-cutting lots or felling decades-old trees.  The thinking behind the rules, city leaders say is that even trees on private land affect the public good.  Aside from their intrinsic beauty, large trees cut energy use by offering shade, filter storm water and absorb carbon from the air.

Residential property owners ask to fell about 900 trees a year with trunks that are at least 19 inches wide, Embesi said.  The city allows about one fourth of them to be removed, mostly because they’re in bad health, he said.  The city does not have exact figures because it tracks the numbers of trunk  diameter inches saved, not the number of trees, he said.

Since the tougher rules took effect in February, 30 requests have been submited to cut down tres with trunks at least 24 inches wide.  The city has OK’d 20 of them, for health reasons, he said.

Property owners given permission to cut down especially large trees must plant new ones, pay $75 per diameter inch into a city tree-planting fun or show the city that they’ve paid for more intensive care for existing trees on their land, such as hiring and arborist to prune the trees or aerate their soil.  The width of the trunks on new trees must equal three times the diameter of the felled tree- twelve 6-inches- diameter trees planted to replace a 24 inch tree, for example.

Residents who illegally cut down a tree can be charged with a Class C misdemeanor and fined up to $2,000. Because the fine is low, city officials rarely impose it and instead focus on getting landowners to plant more trees. In a high-profile case earlier this year, the owner of a South Austin scrapyard felled 100 trees without a city permit, saying he wanted to clear an area where thieves and transients were living.  About 20 of the trees were at least 19 inches in diameter, and the city is still assessing that incident and possible penalties, Embesi said.

Embesi decides on most tree-removal requests, though a city land-use board has the final say on trees at least 30 inches wide that are on the list of 20 species.  Owners of trees at least 24 inches wide can appeal a denial to the city land use board.  The tree rules don’t make exceptions for residents with financial hardships.

Different takes on tree

In Peebles’ case an arborist at Good Morning Tree Company,which cares for and removes trees, wrote a one-page assessment saying that the tree is showing signs of strain. Its health will keep declining because it is growing so close to the home, the arbosrist worte. The tree is a hazard and “will continue to cause damage to the home’s structure and foundation if nit is not removed,” the arborist said.  The company told Peebles it would cost $1,500 to cut down the tree.

An engineering firm Peebles also hired to assess the oak said it was not possible to determine the patio’s shifting and cracking are due solely to the tree’s location.  But it wrote that engineers typically recommend removing a tree growing so close to a home.

“Trees next to foundations can apply intense pressures on those foundations… Tree roots can grow under the foundation , causing uneven foundation settlements, resulting in cracks in the structure, and doors and windows to stick,”  the one-page report said.  The trees should be trimmed or removed “so that it cannot continue to damage the home’s foundation.  The roots clearly grow beneath the footprint of the home, which is always detrimental.”

Embesi said those reports have not shown that the oak is an immediate threat to the home, even if it has cracked the patio.”  ”They say that in the future, the tree may cause damage.  They are inconclusive that the tree is causing structural integrity problems.  The justification is not there,” he said.

Sid Mourning, owner of Good Morning Tree Company, said Peebles’ tree and the case of a large post oak in West Austin show that the new tree preservation rules go too far.

The West Austin oak has a trunk about 27 inches wide and is growing straight up the side of a single family home.  The owner bought the home a few months ago assuming she could cut down the tree, which prior owners had accommodated by cutting holes int he foundation and in an eave, Mourning said.  Engineers also recommended removing that tree but said it was not possible to tell if the tree alone was causing the home to shift and creating cracks in walls and ceilings.  Embasi has also inspected the post oak and read the engineering report and said there’s not enough proof that the structural integrity of the house is at risk.

In both cases, Mourning said, “It ‘s simple to see that the tree roots have done damage and are going to do more. It’s obvious, obvious stuff.”

“The city wants to protect beautiful old trees.  We all do.  But these home owners are being told that these trees are more important than their house, their lives, everything they’ve got,”  Mourning said.  ”The basic question is, are trees more valuable than the person that owns the house and their assets?”

Austin-American Statesman Tuesday April 27, 2010

Annual Rise in Home Price Index

Home prices in February posted their first annual increase since the end of 2006, lifted by temporary tax credits for homebuyers.

The Standard & Poor’s/ Case- Shiller home price index eked out a gain of 0.6 percent, but that was half the increase analysts had expected.  On a more cautionary note, 11 of the 20 cities tracked by the index showed declines from February last year.

Be wary of moving and mortgage scams

Even though the real estate market in Austin is doing relatively well, the condition of the national housing market has caused scam activity to spike across the country. These schemes are designed to make the perpetrators rich and leave others holding the bag.

It can happen to you

Sly, smart and opportunistic, scam artists frequently prey on people who find themselves in desperate situations. Although eyeryone’s potentially vulnerable, common targets include the recently unemployed, citizens with disabilities, those on a fixed income or People who just aren’t well-schooled in financial matters.

These are not necessarily small operations planned in dark rooms. Some schemes are multi-layered, complex cons that involve legitimate-sounding companies and official documents.

On the move

Two common scams are aimed at people moving from one home to another. The first involves an artificially low estimate from the moving company. Then, on moving, day, the company revises the estimate to a much higher price. At that point, you have little choice. Everything is packed and ready with a timetable to meet.

The second involves a moving company’s refusal to unload consumers’ property unless they agree to pay the bill, which inexplicably grew while their possessions were on the truck.

You should know four things about avoiding moving scams:

  • Get a written estimate from a reputable, insured moving company.
  • By law, a moving company must deliver your property for no more than 10 percent above a nonbinding estimate.
  • You are not required to pay more than the amount quoted on a binding estimate.
  • Movers must bill you for any additional charges within 30 days.

Foreclosures

You may hear from someone claiming to be a foreclosure specialist or mortgage consultant. Be careful. Some are knowledgeable and smooth scam artists. They offer to save your credit or pay your mortgage for you, then attempt to transfer your home’s title to them or someone else. Once that happens, you may find yourself as a renter in a home you formerly owned only to discover that the “rescuer” is not making payments. When the loan default inevitably arrives, you are evicted and have lost all equity. In certain circumstances, you may even end up with the foreclosure on your credit history.

Here’s a tip — do not sign over the title to your home unless you’re dealing directly with your mortgage company and don’t send payments to anyone but the mortgage company without the company’s explicit approval. In fact, the first thing you should do is contact your lender if you are behind on your mortgage payments.

Free help is available if you are behind on payments. Check hud.gov, makinghomeaffordable.gov and ask your Realtor about resources to assist you.

Don’t be a victim

Mortgage fraud, equity stripping, equity flipping, bait-and-switch schemes — the list continues. Remember, if it seems too good be true, it probably is.

If you think you have fallen prey to fraud, contact the FTC and the Texas attorney General.

Home sales in Central Texas rise in January

Central Texas home sales rose 5 percent in January from a year ago, the Austin Board of Realtors reported Thursday.

January’s median sales price rose 1 percent to $179,250.

Real estate agents sold 884 previously owned homes in January, compared with 840 the same month last year. There were 1,417 sales pending, a 7 percent increase from a year earlier.

John Horton, chairman of the Board of Realtors, said January 2009 marked the low point of the current cycle.

“With steady improvement throughout 2009 that, continued in January 2010, we can see that we’re one year into the recovery in Austin,” Horton said. “What’ most important about this is that it’s the kind of recovery we want: one that is steady, stable and consistent.”

Throughout 2009, the volume of single-family home sales in Austin improved steadily, Horton said. In the first half of 2009, the gap in year-over-year sales narrowed consistently, reaching levels similar to those in 2008 during the summer peak, with the exception of a dip in August, Horton said.

By fall, sales began outperforming 2008. They surged in October and November, spurred by the original deadline for the first-time home-buyer tax credit. In December, sales returned to a modest increase, rising 5 percent from December 2008, a growth rate that held last month.

“We’re already seeing positive signs in sales volume and price appreciation,” Horton said.  “Those factors, combined with the population growth and additional jobs economists expect for our area in 2010, bode well for the long-term value of Austin real estate.”

Foreclosures increase despite recent signs of improvment

Austin-area residential foreclosures have jumped, dimming prospects for a drop after months of year-over-year increases.

Last month, the wave of foreclosures ap peared to be subsiding, as postings for the February auction were up just 2 percent from a year earlier. It was the smallest increase in months.

But 1,038 properties have been posted for the March 2 auction, up 26 percent from March 2009, according to Foreclosure Listing Service Inc. The Addison company collects foreclosure information for 25 counties in Texas, including Travis, Williamson, Hays and Bastrop.

For the first three months of the year, the 3,958 postings are 36 percent higher than for the same quarter of 2009, although down 2 percent from the year’s final quarter.

Early signs of a recovery in Austin’s economy could help ease foreclosures. Austin’s job losses have been slight compared with other large Texas cities, and job growth in the region — which several economists have forecast his year — could help people keep their homes.

Local foreclosure postings
The local breakdown for the March 2 auction:

Travis County: 667 postings, up 23 percent from March 2009

Williamson: 403 postings, up 23 percent

Hays: 151 postings, up 51 percent

Bastrop: 78 postings, up 30 percent

Austin City Council Approves Heritage Tree Ordinance

The Austin City Council unanimously approved the staff recommendation of the heritage tree ordinance on all three readings on Thursday, February 4, 2010, making it more difficult to remove certain trees 24″ or greater in diameter. Trees larger than 24″ but smaller than 30″ will require an administrative variance prior to removal, and trees larger than 30″ will require a land-use commission public hearing before a variance is granted.

RECA came out in opposition to the public hearing component of the ordinance. Despite RECA’s testimony and strong showing at City Hall, Council kept the public hearing process in the ordinance. Council Members amended the ordinance with the following changes:

  • Include a tree list in the ordinance that will be subject to future modifications by rule, if necessary. RECA advocated for the inclusion of a tree list in the ordinance.
  • Grant flexibility in the heritage tree variance language by allowing for exceptions if the removal of that tree will result in “a design that will allow for the maximum provision of ecological service, historic, and cultural value from the tree.” RECA advocated for more flexible removal criteria.
  • Require monthly reporting from the City Arborist to the Urban Forestry Board on tree removals between 24″ and 30″ instead of public hearings for those trees. RECA advocated against public hearings for those trees.
  • Allow for multi-stem measurements. However, a public hearing would only be required for trees with at least one stem greater than 30″. RECA opposed multi-stem measurements, but this amendment will not increase the number of public hearings.
  • Remove certain exemptions for electric utilities. RECA was neutral on this aspect of the ordinance.

The final point of contention was the standard of removal for protected trees. City staff and RECA encouraged Council to keep that standard as denying “a reasonable use” of one’s property to allow for removal. Tree advocates asked for the denial of “all reasonable uses” before a tree could be removed. Council agreed with the RECA position.

It is also important to note that Council moved forward with the staff recommended version of the ordinance as opposed to Planning Commission’s version. Tree advocates testified in favor of the Planning Commission’s version, which would have been more onerous towards property owners.

The heritage tree ordinance will now be subject to a rules process to determine mitigation rates for heritage trees, potential stiffer penalties for illegal removal of trees, and how to interpret the following removal criteria: ”a design that will allow for the maximum provision of ecological service, historic, and cultural value from the tree.” RECA will be engaged in this rules process.

RECA has been involved in this issue for several years now, and special thanks goes out to Jeff Howard, Peter Cesaro, Paul Linehan, Aan Coleman, Keith Donahoe, and Jim Schissler for all of their hard work in advocating on behalf of RECA during this process. Without them, this ordinance would have been worse. Special thanks also to Board Members and the entire LDC class for showing up at City Hall to support the RECA members who testified at Thursday’s public hearing.

Austin one of America’s Safest City

In a recent study by Forbes.com, Texas cities were ranked among the safest in America. After examining the 40 largest metropolitan statistical areas across four major categories, including violent crime rates, workplace death rates, traffic death rates and the risk for natural disaster, the list of safest cities was determined. Austin-Round Rock and Dallas-Fort Worth-Arlington tied for the 15th spot on the list.

Central Texas: A Great Place to Live

Recent reports from a variety of news outlets indicate that the Central Texas region is among the top performers when compared to other U.S. cities. From San Marcos being deemed the best place to raise children to Austin-Round Rock and other Texas cities ranking among the safest in the U.S., here is what others are saying about Central Texas:

Austin Ranks No. 1 in Milken Institute’s Best Performing Cities

In the 2009 Milken Institute/Greenstreet Real Estate Partners Best-Performing Cities Index, the Austin-Round Rock area ranked number one. Cities were ranked based on their ability to create and sustain job growth. The index also looks at economic growth, wages and salaries. Numerous other Texas cities joined Austin on the list—including three more in the top five. See how the Texas cities fared below:
1. Austin-Round Rock
2. Killeen-Temple-Fort Hood
4. McAllen-Edinburg-Mission
5. Houston-Sugar Land-Baytown
11. San Antonio
12. Fort Worth-Arlington
13. Dallas-Plano-Irving
14. El Paso
16. Corpus Christi

On a side note, Corpus Christi was one of the year’s biggest improvers. The city ranked 88 overall in the 2008 index and 16 in 2009.

Click Here to view other cities made the list.

Austin recognized as a top city for young adults