Expecting To Make Money On The Sale
CBS DFW reports from Texas. “Despite a nationwide decline of new homes sales, North Texas is once again serving as an exception to the trend. Tony Caballero, of Net Worth Realty, says people are outbidding one another to get into these houses. Caballero said, ‘Most people are paying 18 to 20 percent above market value just because there is no supply out there, and they want to buy a house and they can afford it.’”
“He went on to say if there is a new home market problem in DFW, it is that there aren’t enough of them. Caballero added, ‘The labor can’t keep up with the demand. I mean they just can’t build them fast enough.’”
The Dallas Business Journal. “Land investment firm Encore Land LLC, a division of Dallas-based Encore Enterprises Inc., plans to develop 3,100 home lots throughout North Texas in the next year. ‘We estimate that there are currently only 3,000 finished vacant homes available in the DFW market,’ said Encore Enterprises Chairman Bharat Sangani.”
From WFAA.com. “The remodeling business in North Texas is going ‘through the roof’ says Sandy Tabacinic, owner of Homecorp. ‘It’s absolutely insane. It is the highest amount of projects I have had in years,’ she said. ‘In the nine years I have been doing this, never this much.’”
“Mindy Albert said her family shopped around for another house and found properties priced at ‘upwards of $500,000 for a comparable house to what we have now.’ And what she (and many North Texas homeowners) have now is a home that’s worth more. That’s allowing many people to afford a home equity loan to improve their living space. ‘It seems like everyone around us is renovating, also,’ she said. ‘It’s definitely the buzz of the neighborhood and a lot of it is going on.’”
The Austin Business Journal. “The short term prognosis for new housing in Austin is all systems go. The long term situation could be greatly tempered, however, by escalating material costs, labor shortages and fewer attractive land options. Last fall the Austin Business Journal reported that the median annual income of $56,076 in Austin only typically qualifies for a loan of $195,756. Yet Solimine said the average target price of a Standard Pacific Home in the Austin market currently is $460,000.”
“‘We haven’t hit the pricing tipping point yet. People are still moving here and buying homes,’ said April Solimine, VP of sales and marketing for Standard Pacific Homes in Austin. ‘I don’t necessarily see it slowing down but how deep can you go at that price point?’”
The Midland Reporter Telegram. “Midlander Chelsea Dey and her roommate last month closed on a three-bedroom house, allowing them to finally achieve the American dream of owning a home. But that same dream for many other millennials is increasingly inching out of reach as home values around the Tall City continue to climb. Dey, 26, works for a local nonprofit organization. Troubled by how expensive homes have become in recent years, she said she never would have been able to afford a house if her parents hadn’t loaned her the money for a down payment. ‘Working in a nonprofit, I would say it’s pretty close to impossible to save up a down payment,’ Dey said.”
“The median price of a Midland home grew more than 23 percent year-over-year in June, pushing the value up to $283,100, according to the most recent data from the Real Estate Center at Texas A&M University. A national real estate data firm released statistics indicating that Midlanders who’ve already purchased a house are also struggling to cope with the rising cost. The percentage of loans that were more than 90 days delinquent in May increased year-over-year for the first time in nearly four years, according to CoreLogic.”
“The U.S. Department of Housing and Urban Development announced in December the new loan limits for 2014. The limit was unchanged for Midland, staying at a $271,050 maximum. Midland’s FHA loan limit is now less than the most recent median home price, meaning borrowers are more likely to turn to the less-forgiving underwriting standards of conventional or jumbo loans that typically require stronger credit scores and higher down payments.”
“Brian Sales, Permian Basin Board of Realtors president, said the community is likely growing faster than governmental agencies, such as HUD, can keep up with — meaning Midland’s loan limits may not be as high as they should be. ‘We’re probably approaching a point where a review may be necessary,’ Sales said.”
From El Paso Inc.. “Shavana Turay, an Army captain who’s been at Fort Bliss for four years, recently got orders for Hawaii. But she and her husband, Foday, won’t bother trying to sell their home. Because they know they can’t. ‘We’re getting ready to move, but we know we won’t be able to sell it, so we’re going to rent it out,’ she said, referring to a three-bedroom house they bought just last year outside the city limits.”
“Their plan is to wait five years or so until no more new homes are being built in their subdivision, Americas Estate One, and, they hope, the market has improved. Her former neighbor had to do the same thing and was lucky to find a good renter quickly. That, says real estate agent Patrick Tuttle, is typical of what is happening to Fort Bliss soldiers these days and to the El Paso housing market as well. ‘It’s tough,’ Tuttle said. ‘As of July 2, we had an 8½-month supply of homes on the market.’”
“He explained that when the number of troops at Fort Bliss was growing a few years ago, many bought homes, expecting to be in El Paso long enough to make money on the sale when they left. For the most part, they were buying homes in the $150,000 to $175,000 range and builders were able to shave points off the closing costs, as were mortgage companies. ‘Then, in two or three years, when they get transferred out or leave the service, they’ll put it on the market,’ he said. ‘But they have zero appreciation on the value, and they’re competing against the same builder who sold them the house. They can’t compete.’”
“That’s because prospective buyers may have enough cash for a down payment, but not for the closing costs. The sellers can’t help them with that, but the builder can and happily will, so they buy from the builder, and the would-be sellers are left to try the rental market, Tuttle said. ‘We have a lot of soldiers’ homes that are on the market waiting to be rented, and there’s still construction going on Fort Bliss for soldier housing,’ he said. ‘So, we have a glut of resale of used homes, new homes and of rental homes in our market.’”
“‘But they have zero appreciation on the value, and they’re competing against the same builder who sold them the house. They can’t compete.’”
Again…. a depreciating used shack is worth far less than a new one. If you want to ‘compete’ in the construction biz, become a contractor.
Where did this notion come from that a house “appreciates”? Houses depreciate. They always have and always will.
With the massive excess empty and defaulted inventory in Texas, the coming oil patch bust is going to make the 80s bust seem like a walk in the park.
They aint makn anymore land buddy. If you want to build in CA you better have some deep pockets to pay everyone before you put up 1 2×4.
Sure thing J. Fraud.
u really are clueless arent you?
You’re sinking.
Yeah, I hate it. I never heard of the term “used house” before the Great American Housing Bubble started in 1998 or so.
So of COURSE there’s a shortage of new houses! There will ALWAYS be a shortage of those. A house is a big capital investment and we have lots and lots of those just laying around, empty, already built, often built long ago.
There’s always a shortage of brand new, expensive capital assets. Everyone wants one, but they cost so much money that you just buy one that’s already sitting around.
This modern American expectation of huge costs (and huge borrowing to afford those costs) is really pissing me off. That’s why I laugh at the increasing trends in foreclosures, bankruptcies and divorces. These socio-economic maladies are clear indicators of a people who are too dumb to understand basic economics… particularly the principle of sound budgeting.
“Study: 35% of Americans Face Debt Collectors”
http://www.cnbc.com/id/101874818
This is what happens when millions massively overpay for a depreciating asset like a house. Sadly, they double their losses by financing for 15 or 30 years.
If you paid in excess of $50/square foot for a house and you can find a way out from under it, do it. Do not delay.
when the money enters from a printing press does it really matter if it gets paid back? nothing gained nothing lost?
Underwater?
YOUR BS MAKES ME LMFAO SOMETIMES
Enraged already?
Everyone likes to say that DC is overpriced, but not when I hear about $238K for a house in Midland, TX. At least in DC, there are still old-school 20-year career jobs at the Fed and most contractors, making buying in DC viable in an old-school way. How long are those oil jobs in West Texas going to last?
‘Everyone likes to say that DC is overpriced, but not when I hear about $238K for a house in Midland, TX’
What does one have to do with the other? If I’m right, all of these markets are mania’s, not grounded in reality. And note the Midland prices ran right up to the FHA loan caps. Funny how that happens over and over again.
The other day I posted a quote from an Orange County CA broker, who had a record quarter only to see sales drop in half. He said, “something is going on.” He got it partly right. The “something going on” was the huge run up in prices in the first place. The bidding wars, the letters to the sellers. The delusional euphoria you can see in these articles above. Most people only detect a problem it when it stops. Then they freak out when it reverses.
Zillow says our North Orange County property appreciated over $13k from last month and is expected to increase over 9% in the next 12 months.
Realistic? Methinks not.
Are you saying that Midland is podunk?
It is worse than podunk. Between the drilling, the dust, the huge feedlots, there is an inescapable aroma the covers the entire area.
I drove through there a couple times, the speed limit to the west is 75 mph and of course it goes down to 60 once you get near Midland. Bamm, of course I got a ticket, I signed that sucker as fast as I could just to get the heck out of there.
Issuing speeding tickets at the edge of town is a primary source of revenue for towns all over the west. Spend much time driving around and after a while it becomes your default assumption, just to be safe.
Years ago a I was with a friend driving in North Texas. At a town called Childress, they had speed signs that went 55, 45, 35 in the space of a hundred yards. My friend didn’t slow down fast enough and he got a ticket. We drove through this little place and he got another ticket on the other edge of town.
Having lived in Torrey UT for 8 years (pop ~200), whose Main Street is also the main drag, with no stop signs or stoplights, I realized what it’s like to be walking along the shoulder by the general store, and some clueless tourist d-bag comes roaring past at 65 mph with his bus-sized motorhome and trailing ORVs, boats, whatever. The speed limit in the center of town was 35, which really was the only reasonable speed for a few blocks.
One time one of them wiped out into the canal along the one side, because they couldn’t stop when they had to. Served them right.
People are living their lives right along side what you think is your own dedicated superhighway. As a result, I slow down in towns as much for courtesy as to avoid the inevitable tickets. But justified or not, it is a key revenue source. How do I know? They’ll hardly ever ticket a local, even a regional local. I got off the hook more than once that way.
“Everyone likes to say that DC is overpriced, but not when I hear about $238K for a house in Midland, TX.”
One is not a benchmark by which to compare the other- they are both horribly overvalued- just separated by a little geography is all. Its not about jobs or rationality or sustainability or reality- we left that behind a couple of years ago. Same bubble, same mania, same euphoric disregard for common sense, sound judgement and responsible decision making. Same end result too. Its like gravity: everything is subjected to its force and everything knows how it effects us, but every so often a shit-load of lemmings just HAVE to run off a cliff. Because this time it will be different…
Last time I was in Midland you could buy a nice 3/2 for less than $100K. This won’t end well (again).
Seems like a typical short squeeze on a stock, lock up the shares and dump them when everyone panics.
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Most people are paying 18 to 20 percent above market value just because there is no supply out there, and they want to buy a house and they can afford it.’”
“Dey, 26, works for a local nonprofit organization.**Troubled by how expensive homes have become in recent years**, she said she never would have been able to afford a house **if her parents hadn’t loaned her the money for a down payment**. ‘Working in a nonprofit,…”
And Ms. Day, this line of reasoning that you display is exactly why your entire career path will be working for NON-PROFIT entities!
Anybody care to guess what her student loan debt looks like? Maybe she’s in grad school in order to defer those payments a few more years.
‘The Amarillo housing market could see 3,200 single-family home sales this year unless a lack of inventory chokes off activity, one residential broker said.’
“There’s a lot of sellers that are in a quandry,” Coldwell Banker First Equity broker Randy Jeffers said. “They’d like to put their home on the market, but they don’t see the home they’d like to buy on the market.”
‘Inventory pressure is “easing a bit,” Prudential Ada broker Greg Glenn said. “To me, it’s closer to average conditions than it was a year ago, but it’s still tight.”
‘Although the market appears relatively balanced between buyer and seller, sellers still have been pressured for concessions to close deals, cutting into their ultimate sales price, Glenn said.’
‘In recent years, common wisdom held that the Permian Basin’s best days were behind it, along with most of Texas oil. That was before the shale boom erupted. Fracking in Barnett in north Texas, the Eagle Ford in south Texas and the Wolfcamp and Spraberry shale formations in the Permian Basin led to an energy renaissance. Now more than half the rigs in the country are in Texas, and 563 of those — more than half the rigs in the state — are in the Permian, according to the Baker Hughes rig count. For places like Midland and Odessa, built on oil, dependent on oil and obsessed with the stuff, this was the boom they’d been praying for since the big bust in the 1980s.’
‘But there’s always a price. With prosperity comes inflation. Rental costs have soared along with the larger paychecks for some and the billions of dollars invested by oil companies. Odessa is the second-fastest-growing metro area in the country, and Midland is third, according to a U.S. Census Bureau population study.’
‘As Ed Hirs, an economics professor at the University of Houston, puts it: “You’d best be a heart surgeon or an oncologist if you want to live out there and you aren’t in the industry.” There are increases in pay, but in some situations they aren’t enough to close the cost-of-living gap created by inflation. People can work at fast-food joints making $16 an hour and still not be able to afford to live in the area.’
‘The story goes differently if you’re in the oil industry, says Hirs. “The world is their oyster right now,” he says.’
‘Oil company officials are publicly predicting that the expansion will last for decades, that there are enough untapped shale formations to keep economic activity thrumming for years. History says that won’t be the case because booms always bust and the wells needed to reach shale formations are incredibly expensive to drill, at about $7 million each. Oil has hovered around $100 a barrel for years, which makes drilling a shale well profitable, but if the price ever falls to $50 to $60 a barrel, oil companies will lose money and Odessa and Midland could go from boomtowns to ghost towns overnight.’
‘Painter thinks of that whenever he drives past the RV parks with hundreds of people packed into spaces of flat, arid land. If it all ended, some of those people would doubtless be able to leave, but just as many others would be trapped in West Texas and they’d have a nightmare on their hands, he says. Some observers say the boom will never end because it’s being driven by advances in drilling technology and not the price of oil.’
‘Malugani didn’t stay to find out. At the end of the school year, she packed up her things and drove to Boise, Idaho. People asked her what it was like living in Odessa, and she tried to explain the adrenaline in the air, the way everyone, even the kids, is focused on the slick black crude trapped in dense, brittle rock hundreds of feet below. “I tried to explain it to people, but they didn’t really understand. Until you’re in it, living it, experiencing it, you don’t understand.”
‘Think the oil boom is soon to bust? Experts say think again. “It’s not going to go away anytime soon,” said Jim Peach, professor of economy at New Mexico State University in Las Cruces.’
‘The news might be a welcome sign for supporters of this booming industry. However, the boom could continue to cause a strain on local residents who are on a fixed or lower income, even if more residential units or commercial businesses enter Carlsbad, Peach said. More hotels or RV parks may not be the ticket to lower the cost of living in the area.’
“Will that be enough?” Peach said about the potential of new housing and commercial sites. “I’m not sure. People should expect to see continued high prices.”
‘Peach said predicting the oil industry is risky business, because oil barrel prices drive the industry. Currently, the price for an oil barrel is around $100, which is good, Peach said.’
‘The housing market is a long-term investment, according to Peach, and the unpredictably of the oil industry might deter developers from putting that much investment into Carlsbad. He said Carlsbad has a diverse economy that includes potash, tourism and the Waste Isolation Pilot Plant, which would help if the oil industry slumps.’
‘He added that other residential units, like apartments and RV units, don’t require the same type of investment, which could be an indication on why more hotels and temporary housing units are headed into the city than housing units. Currently, four hotels are under construction in Carlsbad.’
‘Peach said he looked at recent hotel price in September when he plans to visit for Mayor Dale Janway’s Oil and Gas Summit. He found a room at $379 a night. “That’s like prices you would see in D.C. (Washington), New York, or L.A., not Carlsbad” Peach said.’
credit is the only thing keeping home prices afloat. If people had to pay cash prices would be slashed immediately.
Desperate sellers are already a’ slashin and a’ slicin’ and dicin’. Lolz