The Kerrville Real Estate Market Faring Much Like Wall Street
March 4th, 2009 categories: Assessing the Local Market
On Monday, the Dow Jones industrial average fell to 6,763 — the lowest close for the Dow since April, 1997. The 300-point drop Monday leaves the index more than 52 percent below its record high of 14,164.53 set in October 2007.
The Texas Hill Country real estate market, while still doing better than the national market, is experiencing a similar decline as that of Wall Street. Kerrville, Texas Real Estate Sales in January & February 2009 totaled just $7.67 million, equivalent to just 46.7% of last year’s sales.
It is commonly understood that in an unstable environment, “Big Ticket Items” get hit the worste. People delay purchases … especially big ones until they feel more certain about the future. Real Estate certainly is one of the “Big Ticket Items” that is suffering in the current economic environment.
What will it take to create a more certain future? I imagine just time. In our opinion, the real estate market, like the stock market, was due a “correction.” People get caught up in the frenzy and make unwise decisions … not based on fundamentals. The good side to a correction is people start making sensible decisions about how they spend their money. And, the ones that don’t OVERREACT can seize opportunities. When the market is down, deals can be found more easily!
The good news is that, historically, real estate has been one of the best places to invest money in uncertain times. Real estate is a “real” asset … meaning it is a tangible, real asset … It can’t be taken away … It’s not just on paper!
We believe that it is time for many who have lost money in the stock market to consider investing in real estate.
The Texas Hill Country is still one of the best places in the country to invest. Tourism and retail sales are still strong.
Our encouragement to you is: Live fully and yet wisely! And keep the long term perspective!
We’d love to help you find your Hill Country dream home! Give us a call at 830-995-2511.
RESPOND WITH YOUR MOOS & VIEWS HERE
| Discussion: No Comments »
REAL ESTATE SALES – ARE WE PAYING TOO CLOSE ATTENTION TO THE WAY SALES “BOB UP AND DOWN”? FREDERICKSBURG TEXAS JANUARY & FEBRUARY 2009 RESULTS
March 4th, 2009 categories: Assessing the Local Market
President Barack Obama said on Tuesday that paying too close attention to how Wall Street “bobs up and down” could lead to bad long-term policy. “What I’m looking at is not the day-to-day gyrations of the stock market, but the long-term ability of the United States … to regain its footing.”
The same may be true when looking at real estate sales in Fredericksburg, Texas which were WAY down in January and February … just 33% of the previous year’s figures*. Sounds horrible? Should you run from this market?
It would seem to be a paradox … but Fredericksburg actually is thriving this year!
Pass through the town any day of the week, especially on weekends and you’ll see a city that is booming. Tourists galore!
Doesn’t quite fit with the real estate numbers? Well, go figure!
What we are hearing from the retailers in Fredericksburg is that sales are up! More people! And they’re still spending!
What’s happening is that, instead of taking trips to Europe, the Carribean, and other exotic places, people in Texas are taking small trips within the state … and Fredericksburg, still characterized by its German heritage, is a huge draw to the local tourists. Close to Austin, within driving distance of Dallas and Houston, and “smack dab in the middle of the Texas Hill Country,” people are taking weekend and extended visits to the Fredericksburg area.
Our feeling is that many of those tourists will take note of this quaint Texas town and, once optimism returns, will resume real estate purchases there.
Given that outlook, right now would be a prime opportunity to get into this market. Buyers are getting better deals than they have been in a long time! Give us a call if this interests you. We’d love to help you find your Hill Country dream home or ranch.
Our encouragement to you: Live life fully and yet wisely! And keep a long term perspective!
~
~
*Also, keep in mind that a large portion of Fredericksburg real estate sales are large acreages and ranches. Just a few ranch sales can make up a large portion of the overall sales figures and a decrease in the number of ranch sales can make the picture look worse than it actually is.
RESPOND WITH YOUR MOOS & VIEWS HERE
| Discussion: No Comments »
OPPORTUNITIES KNOCKING IN THE FUTURE??? KERR COUNTY REAL ESTATE SALES DOWN IN NOVEMBER
December 4th, 2008 categories: Assessing the Local Market
Kerr County Area real estate sales were WAY down in November (just 45% of last year’s total). Residential Sales were just 57% of last year. Commercial and Farm and Ranch Sales were pretty much non-existent during the month of November. Lot sales were only one-third of last year.
With numbers like that, one would expect that prices would be going down in the Kerr County market. The average selling price during November was $187,328 as compared with $203,456 a year earlier. However, the Sold Price/List Price (e.g., the amount of actual negotiation occurring) for residential sales during the month of November was 93.21% … just slightly below last year’s percentage of 94.34%. Likely in the coming months prices will continue to fall!
With all the talk about a tight money market, it is interesting to note that of the 28 properties sold in the Kerr County Area, 9 were cash, 17 were with conventional financing and 2 with FHA financing. Likely more homes could be sold (those with loans less than $271,051) if Realtor’s would recommend using FHA financing. Credit requirements … as well as down payment requirements are not as stringent.
Understanding the current market dynamics is important for those selling as well as those buying. Call for a free consultation! 830-995-2511. We sell the Hill Country: Kerr, Kendall & Gillespie Counties.
RESPOND WITH YOUR MOOS & VIEWS HERE
| Discussion: No Comments »
CONSEQUENCES OF THE BAILOUT – REAL ESTATE OPPORTUNITIES
September 23rd, 2008 categories: Assessing the Local Market
Last week, in my article, Mortgage Crisis: Where Do You Draw The Line?, I quoted Former Fed Chairman, Alan Greenspan as he spoke about the current financial crisis and the effects of federal government intervention. He agreed that there were certain instances where government intervention was necessary in order to “maintain the smooth functioning of the economy”; however, warned that using federal funds to accomplish it would have negative effects (e.g., “our scarce savings” will be used up and cause “economic stagnation”).
Well … the Line was drawn last Friday by Treasury Secretary, Henry Paulson, with his Bailout Plan for the U.S. Financial System. Here is his statement released September 19, 2008 (hp-1149). I include it because, with all the commentary out there, it is important to make sure we have listened to ALL sides.
Statement by Secretary Henry M. Paulson, Jr. on Comprehensive Approach to Market Developments
Washington, DC– Last night, Federal Reserve Chairman Ben Bernanke, SEC Chairman Chris Cox and I had a lengthy and productive working session with Congressional leaders. We began a substantive discussion on the need for a comprehensive approach to relieving the stresses on our financial institutions and markets.
We have acted on a case-by-case basis in recent weeks, addressing problems at Fannie Mae and Freddie Mac, working with market participants to prepare for the failure of Lehman Brothers, and lending to AIG so it can sell some of its assets in an orderly manner. And this morning we’ve taken a number of powerful tactical steps to increase confidence in the system, including the establishment of a temporary guaranty program for the U.S. money market mutual fund industry.
Despite these steps, more is needed. We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system’s stresses.
The underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. These illiquid assets are choking off the flow of credit that is so vitally important to our economy. When the financial system works as it should, money and capital flow to and from households and businesses to pay for home loans, school loans and investments that create jobs. As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to have significant effects on our financial system and our economy.
As we all know, lax lending practices earlier this decade led to irresponsible lending and irresponsible borrowing. This simply put too many families into mortgages they could not afford. We are seeing the impact on homeowners and neighborhoods, with 5 million homeowners now delinquent or in foreclosure. What began as a sub-prime lending problem has spread to other, less-risky mortgages, and contributed to excess home inventories that have pushed down home prices for responsible homeowners.
A similar scenario is playing out among the lenders who made those mortgages, the securitizers who bought, repackaged and resold them, and the investors who bought them. These troubled loans are now parked, or frozen, on the balance sheets of banks and other financial institutions, preventing them from financing productive loans. The inability to determine their worth has fostered uncertainty about mortgage assets, and even about the financial condition of the institutions that own them. The normal buying and selling of nearly all types of mortgage assets has become challenged.
These illiquid assets are clogging up our financial system, and undermining the strength of our otherwise sound financial institutions. As a result, Americans’ personal savings are threatened, and the ability of consumers and businesses to borrow and finance spending, investment, and job creation has been disrupted.
To restore confidence in our markets and our financial institutions, so they can fuel continued growth and prosperity, we must address the underlying problem.
The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy. This troubled asset relief program must be properly designed and sufficiently large to have maximum impact, while including features that protect the taxpayer to the maximum extent possible. The ultimate taxpayer protection will be the stability this troubled asset relief program provides to our financial system, even as it will involve a significant investment of taxpayer dollars. I am convinced that this bold approach will cost American families far less than the alternative – a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.
I believe many Members of Congress share my conviction. I will spend the weekend working with members of Congress of both parties to examine approaches to alleviate the pressure of these bad loans on our system, so credit can flow once again to American consumers and companies. Our economic health requires that we work together for prompt, bipartisan action.
As we work with the Congress to pass this legislation over the next week, other immediate actions will provide relief.
First, to provide critical additional funding to our mortgage markets, the GSEs Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities (MBS). These two enterprises must carry out their mission to support the mortgage market.
Second, to increase the availability of capital for new home loans, Treasury will expand the MBS purchase program we announced earlier this month. This will complement the capital provided by the GSEs and will help facilitate mortgage availability and affordability.
These two steps will provide some initial support to mortgage assets, but they are not enough. Many of the illiquid assets clogging our system today do not meet the regulatory requirements to be eligible for purchase by the GSEs or by the Treasury program.
I look forward to working with Congress to pass necessary legislation to remove these troubled assets from our financial system. When we get through this difficult period, which we will, our next task must be to improve the financial regulatory structure so that these past excesses do not recur. This crisis demonstrates in vivid terms that our financial regulatory structure is sub-optimal, duplicative and outdated. I have put forward my ideas for a modernized financial oversight structure that matches our modern economy, and more closely links the regulatory structure to the reasons why we regulate. That is a critical debate for another day.
Right now, our focus is restoring the strength of our financial system so it can again finance economic growth. The financial security of all Americans – their retirement savings, their home values, their ability to borrow for college, and the opportunities for more and higher-paying jobs – depends on our ability to restore our financial institutions to a sound footing.
Obviously, from these comments, Treasury Secretary Paulsen believes that this is a situation where intervention is necessary to “maintain the smooth functioning of the economy.” He is on record as saying, “The risks of doing nothing are far greater than the risks of acting.”
Take a look, however, at the amount of our “scarce savings” that will be used for this purpose:
Although the risks of not acting may have been greater than acting, let us not be naive that there won’t also be a great cost with that choice. Greenspan called that cost: “economic stagnation.”
According to Wikipedia, “Economic stagnation is a prolonged period of slow economic growth … less than 2-3% per year is a sign of stagnation.” Sounds like a nice way to talk about recession. Actually, when asked (during that same interview referred to in last week’s article) about the chances of 
escaping a recession, Alan Greenspan referred to more than stagnation:
I think it (e.g., the chances of escaping a recession) is less than 50% … I can’t believe that we can have a once in a century type of financial crisis without a significant affect on the real economy globally. I think that indeed is what is in the process of occurring.
Nouriel Roubini of NYU’s Stern School takes it a lot farther. In his September 21, 2008 article entitled, The shadow banking system is unravelling, he says that “the real economic side of this financial crisis will be a severe US recession.” Keep in mind that Mr. Roubini is often referred to as “Dr. Doom” … He is, however, worthy of note as we are seeing the beginnings of what he has been prophesying for some time. The hope is that what he refers to as “the shadow banking system” can be corrected with a mild recession rather than a severe one.
What does all this mean for Real Estate? Here are some observations about the Bailout Plan, Recessionary Markets and Potential Opportunities:
1. The rescue of the financial system is good thing for Real Estate. The goal of the plan is to remove illiquid assets that are weighing down financial institutions. What that means is: Financial institutions (e.g., where buyers get their money to purchase homes) only have a limited amount of money that they can lend out (e.g., deposits on hand). Once they loan out that fixed amount of money, they try to regain their lending power by selling the loan in the secondary market which enables them to continue lending money out again and again. If the primary lenders can not sell the loan in the secondary market, the process stops and the next buyer is not able to get a loan. It is the secondary market that currently is in big trouble (e.g., the ones causing all of the stir: Fannie Mae, Freddie Mac, Insurance companies with large deposits, such as AIG, large securities companies, again with large customer deposits, such as Lehman, etc.). They own the majority of the loans that are being foreclosed on.
2. The mortgage market will continue to be tight even with a Bailout as it takes time to work these things out. In a tight market, only the best qualified buyers can get loans … so if you are a qualified buyer, count your blessings. There are things that you can do to increase your creditworthiness. Feel free to ask about them.
3. It will take a while for the large supply of real estate inventory (which includes empty, foreclosed homes) to be liquidated. This will continue to drive home prices down. We in the Hill Country are not excluded from this phenomenon although, thankfully, our market is doing better than the national average.
4. Days on market (the average amount of time a house stays on the market before it sells) and housing inventory will likely continue to increase for a while. Only the best quality, best priced homes will sell. Owners will need to make sure that their homes are priced well if they want to move them. Both buyers and sellers should know what inventory levels are before pricing their home or making an offer! Ask us to help you with this!
5. Even with a Bailout, foreclosures will continue despite the economic bailout. The only difference is that the government will be involved! It will be interesting to see if Government involvement will speed up the liquidity of these homes. Certainly, the number of short sales (e.g., the sale of a home prior to foreclosure at less than the loan payoff with Lender approval) will continue to increase. If you or someone you know has suffered a financial hardship and has little or no equity, give us a call and we can discuss this option. This option can be good for both sellers and buyers.
6. The need for Owner Financed Homes will continue to increase. While many owners don’t typically think of this as a great option, it can be a great investment opportunity. Normally, a larger down payment is required and the buyer pays a higher interest rate. It’s still a Win/Win for many buyers and sellers. If you are interested in finding out more about this option or would like to be made aware when of these come available, let us know.
7. Larger Demand for Rentals. With fewer able to get a mortgage, more rentals will need to be available. It’s a great opportunity for Landlords. If you are interested in building an inventory of rental homes, let’s talk strategy.
8. Need for Private Lenders. With less mortgage money available, the need for private individuals or private partnership lenders will be in greater demand. Again, if you would like to find more about this option, let’s discuss the opportunities.
9. Ultimately, prices will recover. See my article entitled, The 2nd Half of 2008 & Beyond: Speculations About Inflation and Housing Prices (www.MoovingThoughts.com).
The Bailout Plan (likely to be passed is some fashion) certainly will bring with it BOTH consequences and opportunities! With things changing daily, we’re here to help you stay informed: Buyer, Seller, Renter, or Investor. Please feel free to comment below on our website or give us a call and let us know how we can further help you!
RESPOND WITH YOUR MOOS & VIEWS HERE
| Discussion: No Comments »
HOW TO SAVE MONEY ON YOUR PROPERTY TAXES
September 18th, 2008 categories: Real Estate Resourcing
Do you want to lower your property taxes and your overall housing budget?
Well, if that’s your goal, you might want to consider relocating to an area where property tax rates are lowest. Here’s a chart of the current (2007) tax rates in various locations within Kerr, Kendall and Gillespie Counties along with an estimation of what taxes would run for a $150,000 Home (no exemptions):
(Compiled from data provided by Kerr, Kendall and Gillespie Appraisal Districts)
Here are a few things to take note of:
The cheapest places to live (in terms of property taxes) in these three counties in the Hill Country is Outside the City Limits, in Kerr County, in the Divide ISD. If that isn’t where you want to be, check out the following list (moving from the lowest property taxes to the highest):
Top 10 Best Places to Live in Kerr, Gillespie and Kendall Counties
(If You Want To Save on Property Taxes)
- Kerr County in the Divide ISD
- Gillespie County in the Doss ISD
- Gillespie County in Harper ISD
- Kerr County in Medina ISD
- Kerr County in Harper ISD
- Kerr County in Hunt ISD
- Kerr County in Center Point ISD
- Kendall County in Comfort ISD
- Kerr County in Kerrville ISD
- Kerr County in Ingram ISD
All of these are outside any city limits.
If being far out of town is not what you are looking for, you’d be smart to look for a home close to town but just outside the city limits. Your savings on a $150,000 home would be as follows: $825 per year just outside of the Kerrville city limits, $663 per year just outside the Boerne city limits, and $362 per year just outside of the Fredericksburg city limits.
If being “In Town” is important to you (e.g, my definition of being “in town” is that it at least have ONE grocery store), Comfort has the cheapest property taxes, followed by Fredericksburg, Kerrville and Boerne, in that order.
Obviously, property taxes is just one element in the housing budget and may or may not be a determining factor in your choice of a home. Please let us know what is important to YOU and we’d love to help you find your “Hill Country Home.” Ask for Julie or Buddy, 830-995-2511.
RESPOND WITH YOUR MOOS & VIEWS HERE
| Discussion: No Comments »
