Rates are down below 6% for just about all loan products (30 yr, 15 yr fixed, arm) FHA limits were increased and the end of school is approaching. Interest rates are directly affected by the bond markets. Many people think that when the fed reduces the short term lending rates it automatically means mortgage rates will drop and unfortunately that is not true. The bond market has been very volatile over the past few weeks. Hopefully we will see some stability which will help keep interest rates low.

In my opinion one of the biggest problems with our credit crunch and high foreclosure rate is bank reliance on FICO scores.  FICO scores do a good job of reporting an individuals past history of repayment of debt. The biggest problem is the scores do not forecast in my opinion the current position of the borrower. To read from Fair Isaac what goes into your FICO score click here. FICO scores miss two important things when considering giving someone a loan, assets and income.  Most people credit reports have misinformation that can help or hurt them. You could have two borrowers one with $200,000 in assets making $100,000 a year with a 560 fico score and one borrower with a 800 fico score that has  -0- assets and making $30,000 a year.

A year ago the buyer with a the 800 fico score was able to get a loan for $500,000 with no asset or income verification and in most cases with nothing down.  This happened frequently which is why we are so many foreclosures in the high price ranges. The rate of commercial foreclosures is at an all time low. Why? Because commercial banks looks the entire position of their customer. They look at each loan & property individually and not just a credit score. Commercial lenders always look at the market area of the property, not just when the economy is in a down turn. Looking at the individual property and borrower more carefully will help banks avoid foreclosure in the future.

Constellation Pointe League City

Constellation Pointe has had a rough start with slow sales.  The development sits on a prime piece of property shaped like a peninsula on the south shore of Clear Lake.  There are two major roads Constellation & Pegasus. Development along Constellation has been very brisk because the lots are large (close to an acre) and are true waterfront home sites. Lots sold from $150,000 to over $300,000.  Most of the homes built on Constellation are by prominent Bay Area builders with good reputations. As you travel down Constellation the road turns in to Pegasus. The majority of the lots on Pegasus were purchased by Stonebridge. For what ever reason Stonebridge had 10-12 spec homes on the market for sale last year (2007). I personally showed the homes to three different buyers who were concerned by the fact that there were so many homes available. Unlike Constellation on Pegasus none of the lots are true waterfront.  On the west side of Pegasus the home sites stop before the water. There is a pipeline easement that runs parallel to the road between the homes and the water. The easement is owned and maintained by the homeowners association.

Constellation Pointe Homes

On the east side of  the road the homes back to another road/parking lot. The developer has requested approval from League City for a private marina to be developed on that side of the road.  Owners on both sides of Pegasus can purchase a slip from the developer on the east side as shown above with a month maintenance fee to maintain the docks.  With an average sales price of $608,000 most buyers expect true waterfront with a slip outside their door, not on the other side of the street or down a walk way.  Stonebridge is no longer building in the subdivision. The development does have a lot of positives, the lots on Constellation are amazing and offer a size not found on Clear Lake. The views from the homes close to Clear Lake are amazing. In stark contrast to last summer there are only four homes for sale and the last spec home on Pegasus is under contract. This will help prices increase with less demand. While the slips have to be purchased they are floating docks and owners can put in lifts. Here is what is currently available on the Point.

3 Bedrooms 2 Baths – 2871 sq ft  List – $675,000

4 Bedrooms 3 Baths – 4091 sq ft List – $849,900

4 Bedrooms 3 Baths – 4750 sq ft List – $995,000

5 Bedrooms 4 Baths – 5430 sq ft List – $1,375,000

I wrote a post back in January about the completion of Endeavour. After taking a tour last week it was apparent that the property is being occupied but not yet complete. The 2nd level entrance is missing the cover for the porta-cacher, the outdoor kitchen is being finished and the boat slips are yet to be constructed. I viewed the 30th floor penthouse which looked to be 90% complete. The 5000+ sq ft unit was listed at over 3 Million and was impressive. The view are amazing, you could clearly see downtown from the north balcony and all of Clear Lake, Taylor Lake and the bay to the south.  One down fall of the property is the fact that there are no boat slips on-site for residents. 20 Slips will be built for day use. Not having permanent boat slips is common for high rise condos, but buyers in our market expect one when they spend $400 a square foot. Some other building amenities include an indoor lap pool, sauna, cabana and a small theater. The property has a minimalistic decor with light blues and greens.

The real question is how many units are sold or how many were investors who will be shortly putting them back on the market. Of course on-site sales is never open about what kind of inventory they have left.  There were numerous rumors within the real estate community that the building was sold out before construction. Its obvious from my visit that is far from the truth.   While the building sold quickly it did not sale out. During my visit we looked at three vacant units. There are currently four listed on MLS and from conversations there seems to be at least 2 or 3 more in addition to what was on MLS. If there are only 6 left that would that would be an impressive amount of sales before completion. Time will tell how many units are left.

Nationally the condo market is bad shape, but again Clear Lake is bucking the trend. We only have a 6 month supply of condos when the national average is 11 months. This shows a strong demand in our area. One thing that helps our market is the average sales price is only a little over $110,000 per unit. Unfortunately because of the national market commercial lenders are moving away from lending new money on condo developments which may negatively impact financing for future buildings on the lake.  To view the current units for sale at Endeavour Click here, its updated instantly.

On March the FHA (Federal Housing Administration) increased it’s single family home loan limits from $200,160  to $271,050.  FHA provides mortgage insurance on FHA loan programs through their approved lenders. FHA is a quasi-government agency that is a part of HUD. FHA operates as a business generating enough income so that it does not have to rely on the government for income. The great thing about FHA loans is that people with low credit scores can get a 30 yr fixed mortgage with a market interest rate. Loan requirements for private banks are becoming stricter every day which will push more buyers towards FHA loans.

The FHA only requires a borrower to have 3% invested into the property. I have heard of many instances where borrowers had fico (credit) scores well below 600 and were still able to obtain financing. FHA does require no late payments or charge offs within the past year to two years on your credit report. FHA loans are great things for people trying to rebuild their credit or coming off a financial hardship. In the past FHA would require the appraiser to attest to the condition of the home. There were a number of things the appraiser had to certify were in good condition or working order.

Many appraisers felt uneasy about this and frequently called out things that were not real issues. Unfortunately the appraiser was the only party that made the decision. We would have appraiser stating that homes need painting or that the side walk is cracked. These items would be required to be corrected before the loan closed. All of those certifications are no longer required so a FHA loan is very similar to a conventional loan from a private bank. Higher loan limits will help home sellers because it will open up a new pool of buyers.  This increase is only temporary, but hopefully FHA will make it permanent.

Clear Lake’s largest and most popular community South Shore Harbour, is still turning out new homes 20 years after breaking ground in League City. South Shore Harbour is popular because it is a true master planned community. Some of the developments amenities include a 27 hole golf course, fitness center and marina. South Shore has always sold well and homes have appreciated nicely. Here is our current market information. Homes in South Shore are priced from the  160′s to over 1 Million.

Average Sales Price – $241,658

Months of Inventory – 7.4 Months (If no other homes were listed, every home currently for sale would be sold in 7.4 months) This shows a stable market, not a buyers or sellers market. Anything less than 7 months is typically considered a seller market.

Home sold in the past 365 days – 123

Current Number of Homes on the market – 76

For the most part the League City area has been spared from the flurry of foreclosures that we read about daily. We do have foreclosures but they amount to less than 1% of the properties on the market. Its even more rare for two waterfront homes in popular communities to be in foreclosure. 4 Mariners in Waterford Harbor and 115 Blue Water in Marina Del Sol are two recently built waterfront homes that were foreclosed on and put on the market. Both properties are priced well below market.

4 Mariners – Waterford Harbor  -  3884 sq.ft.  – 4 Bedrooms - 3/1 Baths
Custom home built by Masterpiece in the gated subdivision of Waterford  Harbor. Viking appliances, exterior pool with flagstone. Property needs exterior paint but the interior looks to be in good cosmetic condition. Waterfront with walking access to pier 19. Listed By:USA Asset Group

List price – $669,900   Galveston County Assessed Value – $772,000  Last Purchased for $866,000

More Information Here

115 Blue Water – Marina Del Sol – 4489 sq.ft. – 4 Bedrooms – 3/1 Baths

Custom Home built in 2006 by Dan Wallrath  in Marina Del Sol.  Waterfront on canal with direct access to Clear Lake. The home looks to be in move in condition. Recent sales in the area have went well over $175 a foot. Listed by: J.D. Rankin

List Price – $734,900 Galveston County Assessed Value – $603,222   Last Purchased for $796,000.

More Information