October 2008

The Housing “Mess” – Blame Gas Prices?

I’ll start off by saying, It’s Monday, I watched the news all weekend and read up on a bunch of articles…So this post may be a little “cynical”…. That’s the mood I’m in right now.

First, I’m not an economist, but I like to think I’m an observant person. Although I don’t have all the answers, I have plenty of question. You know, plenty of questions that I NEVER hear anyone on the news ask.

One question I have is… “Is the price of gas a partial cause of the housing mess”? One thing that I find interesting is that so many lenders gave loans to folks that could barelty afford (or not at all) their mortgage. You have a situation where people are struggling to make their house payment and then all of sudden throw in a higher expense for not only gas, but the rise in price of EVERYTHING because of fuel prices, and *poof*! No big surprise that people don’t have money left to make their house payment.

Now don’t get me wrong, I’m not trying to blame the oil companies for people losing their homes, it’s really just a question…. I find it interesting that the higher gas goes the higher (it seems) the foreclosure rate goes up. Really, is the price of a gallon of gas “the straw that broke the camel’s back”? Could be. Or it could be just another “straw” thrown on top of the other “straws”:

• The gov’t pushing lenders to make sub-prime loans: I saw a special on television talking about ALL that money that Fannie Mae and Freddie Mac threw around on Capitol Hill. All that money given to members of Congress. It’s no surprise that some politicians said *wink” *wink*… “don’t worry, we’ll have your back”…oops, I mean the taxpayers will have your back *wink* *wink*.
• People KNOWINGLY buying a home they couldn’t afford: I sold a foreclosure a couple of months ago. The house was only 9 months old (did the previous owners make any payments at all?) Anyway, the neighbor said that she wasn’t surprised that the original owners lost the house. According to her, there were a several adults living there and it took the income of ALL those adults to even qualify for the loan! The neighbor pointed out that the day they moved into their brand spankin’ new house, they also had all their new furniture delivered too….from a Rent-to-Own place. And there’s the problem….”hey we can’t afford to actually buy a few pieces of furniture, but the bank gave this HUGE loan to buy a house”!
• Investors (really not “investors” but rather “traders) gobbling up Mortgage Backed Securities (MBS): It got to be a big game of “hot-potato”.
• Too many other “straws” to list really.

The question begs to be asked…. “Was the rise in fuel prices a contributing factor to the increase in foreclsoure rate”?

Of course, it’s an election year, so you have democrats blaming republicans, republicans blaming democrats, lenders blaming buyers, buyers blaming lenders and the government. I even heard one politician blame home builders!! She said that if home builders didn’t build all those homes then the supply wouldn’t have kept up with the demand the home prices would’ve been out of reach for those that couldn’t afford it (and thereby “saving” them from buying an over-priced house and going through foreclsoure)! It’s one vicious circle. Oh, and “smoke and mirrors too”.

I really do have a lot of questions (some not related to real estate). Maybe you can answer a few for me?

• When the price of a barrel of oil (a few years ago when it was starting to rise) was $70 and the price quickly shot up to $3.40 for a gallon of gas, then why were we paying $2.12 later when the price of oil was at $95 a barrel? Or why are we paying $2.99 over the past weekend with the price of a barrel at $73?
• Why do I see bumber stickers saying “Save the planet”, “It pays to be green”, “Please leave the planet better than you found it” attached to… Chevy Suburbans, Hummers, Escalades, etc…?
• If you’re driving at the speed of light then turn on your headlights… what happens?
• On your birthday, are you a whole year older or just another day older?

There seems to be plenty of talk about the current economic situation we’re all in. The problem is who do you blame? I tend to blame: Me, you, him, her, us, them, and everyone. Do you think it’s possible that this problem is “full-circle”? After all, we do have the power of the “vote” – Supposedly.

I’m Gary and I appprove this message.

The Waco Hippodrome

I can’t believe that I’ve lived in Waco for 13 years and never seen a live show at the Waco Hippodrome – until last night. I’d never even stepped inside the Waco Hippodrome before. No reason really, just never had a chance to go inside.

I’m not much of a “theater” type person. Not to knock the performing arts; it’s just never been my cup of tea. Maybe I need to broaden my interests or something. Anyway, last night was the opening night for “Suessical”. Now, being a newer dad, I HAD to take the little one to her first live show. Which she really seemed to enjoy, until you know, the restlessness set in – not hers but MINE! Just kiddin’. I guess you can only expect a 17-month-old to sit still for so long. On a side note, the folks at the Hippodrome were very nice and accomodating. The show itself, was impressive. I was pleasantly surprised.

Sitting in my seat waiting for the show to start, I decided to get on my wife’s iPhone and surf the net looking for trivia about the Waco Hippodrome since we were there and I didn’t know much about it. Actually, I found some interesting facts (obtained from Cinematreasure.org):

• Built in 1913 as a vaudville showhouse by a group of Waco businessmen organized by Thomas P. Finnegan
• Grand opening was February 7, 1914
• Shows featured on opening night: Live seal act, magic show, and a five piece orchestra
• Used to be called “Hulsey’s Hipp”, after the manager, H.P. Hulsey
• Tickets were 10 cents for adults and five cents for children. Box seats were a whopping 25 cents!
• As the vaudville era was coming to an end, it became a silent movie theater
• As a silent movie theater, operated under the name “Hippodrome” as an affiliate of Paramount.
• A fire occured in 1928 destroying a lot of the building front
• The renovation after the fire resulted in the style (in front) you see today
• Reopened in 1929 with a new name – The Waco Theater
• The theater closed in the 1970s
• Remained vacant and unused until 1980 when the Junior League of Waco decided to take on the task of restoring the 67 year old theater.
• On February 28, 1987 The Waco Hippodrome reopened and is now on the National Registry of Historic Places

Waco Hippodrome Now – Courtesy of (CC) Larry D. Moore

Waco Hippodrome Then – Courtesy of Jennifer Warren

The Waco Hippodrome is currently operated by the Waco Performing Arts Alliance. If you’d like to see a show or two at the Hippodrome, here’s a link to a list of upcoming events: Hippodrome upcoming shows.

The Waco Hippodrome:
724 Austin Ave.
Waco, TX 76701
(254) 752-9797

Also, if you’d like to rent the Hippodrome for a special occasion, call the number above for more information.

Waco Real Estate Sales

With the “melt-down” of the subprime mortgage industry across the nation, The Waco area has fared well when compared to other cities across America. What’s been happening in Miami, San Diego, D.C., New York, etc… hasn’t been happening in the Waco MSA (really, McLennan County).

Although foreclosures are in fact up for Waco, here are some numbers you may find interesting (Comparing September 2007 and September 2008):

• Number of sales – Up 16.7%
• Average Price – Down 2.7%
• Average Price: 2007 – $138,035
• Average Price: 2008 – $134,264
• Average Days on Market for 2007: 124
• Average Days on Market for 2008: 135
• Total Volume Sept 2007: $23,051,773
• Total Volume Sept 2008: $26,181,408
• New Listings taken Sept 2007: 218
• New Listings taken Sept 2008: 286

I should state that the data used for analysis was obtained from the MLS system we use for the Waco area. This data is single family housing only (including condos, patio homes, town houses, homes with a little acreage). My sales data DOES NOT include: Manufactured homes (mobile), Commercial properties, Farm and Ranch (homes with more than 25 acres), land, lots, and multiple family housing (duplexes, apartments). Also, this data does not include homes that have been sold “off MLS”, such as for sale by owners, homes not listed in the MLS, etc…

Usually I don’t like to just look at data for a month at a time, but I though these number looked a little interesting. Home sales are up, but yet the average price (home value) is down? If you look a little further, you’ll notice that new listings are up as well (about 31%). Not hard to figure out that although the buyers are still around, there’s more inventory on the market too (compared to last year), which increases the supply side of “supply and demand”. Of course, when you have more supply, prices tend to go down. Now, the fact the Waco area foreclosures are up (57% according to the Waco Trib), probably added to the increased inventory of homes on the market.

The news media has added to the “panic” of home values falling through the floor! I’m sure in some areas that is close to accurate, but “Texas ain’t Cali-forny”. According to various reports, one reason Texas stays a relative affordable place to live and buy a home, is because we have a lot of land still left to develop and the new home construction industry has kept up with buyer demand and has (at least not yet) “over-built” to drastic levels.

So you live in Waco and want to sell or you moving to the area and want to buy… What does this mean for you?

Well, if you’re selling, you’ll need to price your home aggressively. After all, there’s more competition now if you’re a home seller than there was a few years ago. The buyers are still there, but they have more choices.

If you’re buying? You should’ve more to choose from! But at the same time, realize this isn’t California or New York or Florida, and home values are “falling through the floor”. It pays to be realistic about Waco’s real estate market and price. With that being said, on average, homes in Waco have sold for about 96% of current asking price. With the increased number of homes on the market, you may be in a position to negotiate for more than the average 4% difference. Of course, if a home is prices aggressively and the price is already at a lower than normal price, be aware you may find yourself in a multiple offer situation. In that case, if you really want the home, you’ll need to put your best offer foward from the get go.

If you’d like more detailed statistics and analysis, be sure to sign up for our Waco Home Sales Report. This report will include FAR MORE data than you found in this post, including sales by school district, area, neighborhoods, days on market, etc… Best of all it’s free! We send at our report on a quarterly basis. If you’d like to be “plugged in” to the Waco real estate market, sign up now!

Good things are happening for Waco! The real estate market, for the most part, has held up well compared to the other areas on the country. People seem to be moving to area and more growth is on the horizon!

Homes with Acreage in Midway ISD

With the increasing popularity of “ranch style” communities and the success of Ranchcrest and Hunter’s Meadow in Lorena, the up and comming Rancho Lorena, Hills of Childress Creek in China Spring, etc… I thought you may be interested to know that I was just informed about a new subdivision that will be developed, probably within the next year. This new community wil be located in Midway Idepdendent School District.

I’m pretty excited about it! The plans, so far,  call for a ranch-style neighborhood with restrictions. The new community should encompass about 450 acres. Here are some quick facts:

• Lot sizes should be around 3 acres or so . Maybe 1.5 – 3 acres lots?
• Restrictions will be in place. Pipe fencing for instance, for the “ranchstyle” look.
• Horses will be allowed. Mainly horses, cats, dogs, and other small house pets. No “livestock” such as pigs, goats, fowl, etc…
• There may be a community center, pool and other neighborhood ammenities
• Nestled among a very popular and fast growing area of Waco
• Midway ISD
• Some lots will have river access

Of course some of those bullet points could change without notice. Ground has not been broken on the new area, but hopefully soon.

As a Realtor, I get a lot of inquiries from people who want homes with acreage in the Midway school district. Unfortunately, the pickin’ are well, rather slim. There are plenty of homes available with acreage in Robinson, China Spring, Lorena, Speegleville, etc… But with the popularity of Midway schools, it seems over the last several years, the lots have gotten smaller and the prices have gotten higher.

When this new subidivion gets underway, it should prove to be popular. The developer has been around the Waco area for awhile and has other successful developements that have become “in-demand” areas.

Of course, there are still many details left to be worked out. These details could change rather quickly, but here’s what I’ve heard so far. I don’t have a firm price on the lots yet, but best estimate so far, would be around $75K for a 3 acre lot… Of course that’s a VERY preliminary price. The restrictions haven’t been fully written, but minimum square footage for homes are probably going to be around 2,500.

What I do know so far is that the land has been bought and the plats have been drawn up.

If you’d like more information about this new neighborhood, give me a call and I can have the developer get in touch with you to answer any questions you may have. Gary: (254) 498-4276

If you’re looking for a “higher end” area with enough space between you and your neighbors, this may just fit the bill!