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RECON

Real Estate Center Online News

February 20, 2009

Copyright 2009. All rights reserved.

Material herein is published according to the fair-use doctrine of U.S. copyright laws related to non-profit, educational institutions. Items attributed to sources other than the Real Estate Center at Texas A&M University should not be reprinted without permission of the original source.

FIVE TEXAS CITIES NAMED HEALTHIEST HOUSING MARKETS

TEXAS (Builder) – Five Texas cities swept the top spots on Builder magazine’s list of “Healthiest Housing Markets for 2009.”

Houston ranked first, Austin second, Fort Worth third, San Antonio fourth and Dallas fifth.

Rounding out the top ten were Raleigh, N.C., Seattle, Indianapolis, Ind., Fayetteville, Ark., and Washington D.C.

To compile the list, Builder analyzed the top 75 housing markets in the country, ranking them based on population trends and job growth, perennial drivers of housing demand. They also looked at home prices and the number of building permits.

NEW LAW TO HELP HOUSING MARKET, CREATE GREEN JOBS

WASHINGTON (Texas Association of Realtors, National Association of Realtors, U.S. Environmental Protection Agency) – President Obama earlier this week signed the American Recovery and Reinvestment Act, which contains provisions intended to help the housing market and create jobs that benefit the environment.

Among the housing provisions:

• An $8,000 tax credit for first-time homebuyers who purchase a principal residence between Jan. 1, 2009, and Dec. 1, 2009. The credit does not require repayment.
• Reinstatement of last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans.
• $2 billion in additional funding for the Neighborhood Stabilization Program, which provides grants to states and localities to address problems that can be created when whole neighborhoods are decimated by foreclosures.

The law also includes $7.22 billion for projects and programs that will protect and promote both green jobs and a healthier environment. These environmental areas include:

• $4 billion to assist communities with water quality and wastewater infrastructure needs and $2 billion for drinking water infrastructure needs. A portion of the funding will be targeted toward green infrastructure, water and energy efficiency, and environmentally innovative projects.
• $100 million for competitive grants to evaluate and clean up former industrial and commercial sites.

OBAMA UNVEILS PLAN TO HELP HOMEOWNERS

WASHINGTON (Texas Association of Realtors) – The Homeowner Affordability and Stability Plan, introduced this week by President Obama, is intended to help seven million to nine million families avoid foreclosure by restructuring or refinancing their mortgages.

The plan includes three main elements:

• Government-sponsored enterprise refinancing for responsible homeowners suffering from
  falling home prices;
• Three-year $75 billion initiative to reduce monthly payments for three million to four million at-risk
  homeowners; and
• Support for low mortgage rates through strengthening confidence in Fannie Mae and Freddie Mac.

FULLER FINDS OFFICES

HOUSTON (globest.com) – Houston-based Fuller Realty Partners has purchased a 133,924-sf Class-B office building from Christus Health.

The vacant building at 2600 N. Loop West was built in 1976.

Colliers International represented the buyer. 

CONSTRUCTION'S PROJECTED SLOWDOWN

WASHINGTON (American Institute of Architects) – A fall in the economy will translate into a decline in nonresidential construction activity over the next two years, according to an American Institute of Architects (AIA) panel.

The AIA Consensus Nonresidential Construction Forecast Panel predicts nonresidential construction will experience an 11 percent overall decline in 2009 and an additional 5 percent fall in 2010.

The AIA panel expects office, retail and hotel development to decline between 25 and 35 percent.

Construction for manufacturing and related distribution facilities will see a 20 percent slowdown over the two-year period, according to the panel.

Institutional and healthcare facilities will see much less of a building freeze, with declines of 7 percent and less than 5 percent, respectively.

For a more extensive list of projected declines, see the AIA Consensus Construction Forecast.

HIGHEST HOME APPRECIATION IN TEXAS

SANTA ANA, CALIF. (First American CoreLogic) – Texas continues its trend of weathering the recession better than most other states. The state’s major metros top the nation in home price appreciation over the last year.

Austin–Round Rock leads the country’s largest core-based statistical areas (CBSA) in home price appreciation with a 3.7 percent increase in 2008, according to First American CoreLogic.

Houston–Sugar Land–Baytown experienced a price appreciation of 3.3 percent over the last year, putting it right behind Austin–Round Rock.

Dallas-Plano-Irving homes appreciated 1.92 percent and San Antonio’s homes 0.17 percent, putting them third and fourth in the nation.

Only one other major CBSA, Denver-Aurora, Colo., showed an increase in home price, according to CoreLogic.

Of the 958 smaller communities the study observed, College Station–Bryan experienced the sixth highest home price appreciation, with an increase of 6.78 percent.

Overall, Texas homes saw an appreciation of 1.83 percent in 2008, putting the Lone Star State sixth among all state rankings. 

NORTH TEXAS HOME STARTS SLOWING

DALLAS (Dallas Morning News) – Homebuilding will fall in North Texas this year, but not nearly as much as in other regions of the country.

A MetroStudy report predicts home starts in North Texas will decline as much as 20 percent in 2009, but U.S. homebuilding is expected to slide by 47 percent. 

"This decline would be in addition to the 33 percent drop [nationwide] from 2007 to 2008 and is steeper than many other housing economists have predicted," Brad Hunter, MetroStudy's chief economist, said in the new report.

Dallas–Fort Worth had about 20,000 housing starts in 2008, and MetroStudy expects another 16,000 to 18,000 more this year.

The decline in home starts followed a decline in demand. DFW had a 6.9-month supply of finished unsold new homes at the end of 2008. A balanced market is considered less than a three-month supply.

SENATE TO FOCUS ON FORECLOSURES

AUSTIN (Dallas Morning News) – With 96,000 home foreclosures statewide in 2008, officials are eager to hear the status of Texas’ housing market from real estate experts in the current Senate session at the capitol.

A similar number of foreclosures are expected this year, and at least one in three Texas homeowners will feel the effects of the large number of foreclosures across the state, a Senate committee heard Wednesday.

Texas has fared better than many states even though it saw a surge in subprime mortgages in recent years, said David Long, president of the Texas State Affordable Housing Corp.

More than a third of all home loans in Texas were subprime in 2005 and 2006, a number trailing only Mississippi, according to Long.

Long told the Senate Intergovernmental Relations Committee that by the end of 2010, about one out of every 35 houses in Texas will have been foreclosed upon.

Legislators are expected to consider several measures related to foreclosures in their current session.

BP SETTLING CLEAN AIR VIOLATIONS

TEXAS CITY (U.S. Environmental Protection Agency) – BP Products North America Inc. has agreed to pay nearly $180 million to settle clean air violations at its Texas City refinery, the U.S. Environmental Protection Agency (EPA) and the U.S. Justice Department announced yesterday.

The company will spend more than $161 million on pollution controls, enhanced maintenance and monitoring, and improved internal management practices at the refinery. It will also pay a $12 million civil penalty and spend $6 million on a supplemental project to reduce air pollution in Texas City.

“BP failed to fulfill its obligations under the law, putting air quality and public health at risk,” said Catherine R. McCabe, acting assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement will improve air quality for the people living in and around Texas City, many of whom come from minority and low-income backgrounds.”

The settlement requires that BP address violations of Clean Air Act requirements limiting emissions of stratospheric ozone-depleting hydrochlorofluorocarbons (HCFCs) from leaking cooling appliances. BP will eliminate approximately 51,000 pounds of HCFCs by retrofitting industrial and commercial cooling appliances at Texas City to use non-ozone-depleting refrigerants.

The company will spend an additional $6 million to reduce air pollution from diesel vehicle emissions in Texas City and the surrounding area.

FANNIE, FREDDIE INCREASING FEES

WASHINGTON (Washington Post) – Effective April 1, Fannie Mae and Freddie Mac will increase the "delivery" fees they charge lenders based on FICO scores, down payment amounts and other loan characteristics.

Under the new guidelines, even applicants who assumed that their FICO credit scores would get them favorable rates will be charged more unless they can come up with down payments of 30 percent or more.

For example, a buyer with a 699 FICO score who brings a down payment of about 25 percent to the table will be hit with a 1.5 percent delivery fee at closing under the new guidelines. A buyer with a FICO score between 700 and 720 will pay an extra three-quarters of a point. Someone with a 739 FICO — once considered a platinum guarantee of the best rates available — will get dinged with a quarter-point add-on.

Condominium buyers who cannot come up with a 25 percent down payment will be hit with a three-quarter point add-on penalty, no matter how high their credit score.

TWO TEXAS PORTS RECEIVE $4 MILLION GRANTS

BEAUMONT (Beaumont Enterprise) – Two Texas ports should be able to expand and improve cargo operations using $8 million in economic recovery grants distributed Wednesday by the U.S. Economic Development Administration.

The ports of Beaumont and Orange will each receive $4 million. Port leaders said the grants will help create jobs in Southeast Texas, as well as increase size and business at both ports.

The Port of Beaumont will use the funds to improve rail access on its Orange County property, and the Port of Orange will use the funds to develop new cargo transportation infrastructure at its facilities on the Sabine River, according to a news release from the Port of Beaumont.

Beaumont’s rail improvement is about a $5.5 million to $6 million project, said Chris Fisher, executive director of the Port of Beaumont. The Port of Beaumont will have to put up between $1.5 million and $2 million of its own funds for the project.

But Fisher said the investment potentially could create several hundred jobs as well as increase the size of the Port of Beaumont by 50 percent or more.

JANUARY HOUSING CONSTRUCTION FALLS

WASHINGTON (U.S. Census Bureau) – Nationally, home permits and starts dropped last month, according to new residential construction statistics released by the U.S. Census Bureau and the Department of Housing and Urban Development.

Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 521,000. This is 4.8 percent below the revised December rate of 547,000 and is 50.5 percent below the revised January 2008 estimate of 1,052,000.

Single-family permits in January hit 335,000, which was 8 percent below the December figure of 364,000. Permits for units in buildings with five units or more reached 166,000 in January.

Privately-owned housing starts in January were at a seasonally adjusted annual rate of 466,000. This is 16.8 percent below the revised December estimate of 560,000 and is 56.2 percent below the revised January 2008 rate of just over one million.

Single-family housing starts in January numbered 347,000, which was 12.2 percent below the December figure of 395,000. The January rate for units in buildings with five units or more was 114,000.

Privately-owned housing completions in January were at a seasonally adjusted annual rate of 776,000. This is 24.2 percent below the revised December estimate of just over one million and is 41.7 percent below the revised January 2008 rate of 1.3 million.

Single-family housing completions in January fell to 566,000, which was 17.5 percent below the December figure of 686,000. The January rate for units in buildings with five units or more was 203,000.

CENTER'S LAND EXPERT APPOINTED TO MITCHELL FELLOWSHIP

COLLEGE STATION (Mays Business School) – Dr. Charles Gilliland, research economist with the Texas Real Estate Center at Texas A&M University, has been appointed to the Helen and O.N. Mitchell Fellowship in Real Estate.

As a researcher with the center since 1977, Gilliland has dedicated 32 years to the study of the Texas real estate market, as well as to the teaching of related subjects at Texas A&M University’s Mays Business School.

He has authored numerous articles for publications such as The Appraisal Journal and Tierra Grande, the quarterly magazine published by the Center. He presents his research frequently to industry insiders, such as real estate investors and builders.

The Mitchell Fellowship supports a faculty member’s teaching, research and professional development. It is also meant to encourage cooperation with the Mitchell Master Builder Chair and the Mitchell Professorships in Construction Science, Land Development and Real Estate, both in the College of Architecture, as well as other faculty with a teaching focus on residential development, construction and design.

The Mitchell family, founders and owners of History Maker Homes, funded the fellowship.

@ THE CENTER

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