July YTD 2007 – Single-family home sales

Houston Overall Statistics July YTD 2007

• Single-family home sales are exactly the same number of sold units as found in July YTD 2006 sales with 42,152 MLS recorded sold units
• Dollar volume sold in MLS through July YTD 2007 is $8,669,472,677 which is a 3% increase in dollar volume sold over last year.
• Average sales price YTD is $205,672 or 3% greater than this time last year. The median sales price, where half the homes sold above and half the homes sold below is $152,000, and that is 2% higher than last year.
• Active listings are up by 15% with 34,493 single-family homes on the market.
• Contracts written, which represent July YTD buyer demand in Houston, are up 6% over this time last year with 31,253 homes that have gone under contract.
• Average sales price per square foot is $90, which is 3% greater than last year.
• Days on the Market, a statistic that is good if it is declining, has gone down by 4% since last year and the average time to sell a home in Houston is 76 days, down from last year’s 79 days.
• Contracts written [buyer demand] are still in a positive position in the first half of the year, and days on the market on the decline. The only metric that is causing a drag on the market is the double digit increase in homes on the market. This additional supply makes selling a home more competitive and will slow home price appreciation in areas that have experienced an increase similar to the overall Houston market.

The Top Ten Areas on the Houston Hotness Index in July 2007 are:

Katy, Area 36 Hotness Ratio – 24.6
Clear Lake, 7 Hotness Ratio – 19.7
Montgomery County, SW, 15 – 18.6
Fort Bend Central, 29 – 18.2
Far Northwest, 32 – 17.3
Hempstead West, 35 – 16.3
Montgomery County, SE, 40 – 15.1
Northeast, 1 – 14.7
Montgomery County, NE, 19 – 14
Far Northwest, 14 – 13.9

Many of you have called me this past week asking me about the problems in the Mortgage Industry. The media, as usual, has hyped this as a “doomsday” situation. They have stated buyers are unable to get mortgages and that is simply not true. There have been buyers with great credit not being able to get funding at the last minute because their mortgage company went bankrupt. What the news is not telling you is those same buyers simply switched to another mortgage company and closed within a few days at little or no additional cost.

During the past five years we have enjoyed very low interest rates. Anyone that had a mortgage was refinancing it, sometimes every year. The low interest rates encourage people to purchase homes. Lenders were making a lot of money. New mortgage companies formed, tons of people were getting into the mortgage industry to cash in.

Because of the competition, lenders were offering new exotic loan products. 100% financing, No Doc Loans, ARM’s, Buydowns with Arms. These are called non conforming loans(non government backed). Conforming loans are backed by the government. Once loans are made, they are packaged together and sold as mortgage backed securities to investors. By selling off mortgage backed securities, lenders can free up those funds to make more loans. Because of the numerous amount of foreclosures, investors are wanting high returns (high interest rates) before they are buying loans.

Mortgage companies made billions of dollars in loans 30, 60, 90 days ago at “X” interest rates when investors were buying loans at that rate. Mortgage companies are now trying to sell those loans and investors want a higher interest rate. Since mortgage companies cannot legally go back to the consumer and raise their interest rates they are stuck with the loan. Since they are stuck with the loans that ties up their funds so they cannot fund new loans with current buyers. Many lenders are having to take a loss or if they are a small company they are going bankrupt.

Many people including myself see this as a painful but good correction in the market. No one wins when a home is foreclosed on, the bank loses, the homeowner is devastated, the neighborhood loses value and overall economy is hurt. As I type this, home buyers with decent(not good or great) credit, good job history and very little down payment will have no problem getting a loan and closing. Call me today if you have questions or a referral.

November Election for Proposed League City Municipal Development District The City of League City will hold an election on Tuesday, November 6, 2007 to propose the creation of a Municipal Economic Development District and the adoption of a sales tax of ¼ cent to finance projects beneficial to the district. The proposed district will comprise all of the city limits and its extraterritorial jurisdiction.

In February 2007, City Council voted unanimously to support the creation of the district. The city often competes with other communities to recruit the types of businesses that citizens want located in League City. These businesses bring highly paid jobs and generate large sales tax. They often locate in communities that can offer land with utilities and roads already in place. In order to recruit these businesses, League City uses its general fund (funded by property tax payers), but this will change with the creation of the Municipal Economic Development District.

In Texas, voters in over 500 small and mid-size cities have already adopted the sales tax for economic development, including area cities like Galveston, Dickinson, Kemah, Pasadena, and Webster. The additional ¼ cent sales tax will generate approximately $1.1 million in revenue during its first year of collection. According to a study by CDS Market Research, by 2011 both League City resident households and non-resident households will pay approximately 38% of the sales tax and businesses will pay the remaining 24 percent. In 2011 this ¼ cent sales tax will cost the average League City resident household approximately 50 cents per week. Early voting will be held from October 22nd to November 2nd at the Galveston County Annex located at 174 Calder Road. November 6th Election Day locations will be at the Johnnie Arolfo Civic Center at 400 W. Walker Street and Ferguson Elementary School at 1910 Compass Rose.

Finally after almost two months of rain we are seeing sunshine and real estate activity. This previous month we have seen interest rates stable and record rains. There has been no real motivation for buyer to move on properties or to look. When rates are volatile buyers move in order to beat raising rates. When it rains everyday people don’t stop at open houses or drive neighborhoods unless that must move. The past two weeks we have seen a large amount of traffic at open houses and showings are improving. With people getting home from summer vacations activity will continue to increase.

Whats Hot – Waterfront property is still very hot with sellers getting contracts close to list price and selling with 2-3 months. Land is also very hot. Last year on average land appreciated by 21% according to The Real Estate Center at Texas A & M.

Whats Not – Condo’s & Townhomes – While this segment of the market isn’t bad it is softer than the housing market. With affordable housing and low interest rates condos must be priced right and in good condition to move. With that said waterfront condos/townhomes are moving very quickly.