Kennedy Wilson is auctioning off 27 unsold condos from the developer of Palisade Palms, a hi rise luxury condo development in Galveston. There advertisement in the Houston Business Journal grabbed my attention because it listed starting bids from $125,000. Like most auctions, the auctioneers advertise low starting bids but when you read the terms its auction is far from absolute and they have a unpublished reserve.  What that means is you can go through the entire process win the auction well over the starting bid of say $125,000 and the seller can still refuse your bid. I have had numerous investors go to auctions like this and report back that the seller demand a much higher price than the winning bid.

In looking over the terms you must do inspections up front on the units before the auctions, be preapproved with a lender and then provide proof of a $5000 cashiers check before even bidding. You get to keep your $5000 check unless you win. I am guessing with those kind of restrictive auction requirements and little demand in the 2nd home market there will be little demand.

Auction Brochure (PDF)

Floor Plans (PDF)

Auction Website

If you are interested in bidding contact me to find out what past condo’s have sold for in the development and how long the units have been for sale.

By David S. Jones, senior editor, Real Estate Center

COLLEGE STATION, Tex. (Real Estate Center) – A new study from the Real Estate Center at Texas A&M University explains why Texas’ housing market fared far better than other states during the current downturn. It also suggests why the state’s economy is expected to continue to do better than the rest of the nation in the coming months.

“Texas’ lower-than-national-average housing cost is one reason for the state’s higher-than-national-average growth rate,” said Dr. Ali Anari, a Center research economist and one of the study’s authors. “When Texans are able to spend more on nonhousing goods and services, the state’s economy is strengthened and more people attracted. “These results illustrate one of the key reasons the Texas economy outperforms the United States in terms of job growth almost every year,” said Center Chief Economist Dr. Mark Dotzour. “The fact that Texans pay less of their income for housing means they have more to spend on other things that add to the overall quality of life. Texas offers a lower cost of living than many places in the United States.
“This allows Texas employers to be able to attract workers at a reasonable wage rate that allows them to compete successfully in the global economy,” said Dotzour.

Since 1987, the average annual expenditure for shelter per consumer increased in every major American metropolitan market. Texas data for the study came from the Dallas-Fort Worth and Houston-Galveston-Brazoria metro areas because they are among the major metropolitan areas for which consumer expenditure data are available. These two metros accounted for 60.3 percent of Texas labor force last year and 64 percent of Texas GDP the previous year.

“Houston and Dallas consumers spent the smallest shares of their incomes on shelter in 2008 (18.6 percent),” said Anari. The two Texas metros in the study had virtually no increase in their shelter expenditure shares from 1987 to 2008. Houston’s share rose 1 percent while Dallas’ share increased 2.2 percent.

According to the National Association of Realtors, Houston was the only metro in the study to post a home price appreciation, albeit a small one. Dallas had the nation’s smallest home price decline (-3.8 percent). “It is not surprising that the two Texas regions are experiencing normal home price fluctuations,” said Anari. “The risk of a home price decline in Texas is low.

“The study found that the larger the share of housing expenditures in the consumer’s budget, the more home prices in their region have fallen since 2007,” said Anari, who conducted the study along with Center Chief Economist Dr. Mark Dotzour. “Consumers allocate their income among various goods and services,” said Anari. “By doing so, they determine the quantities produced and prices of consumer goods and services. “Regardless of income level, the most important items in a consumer’s budget are food, shelter and clothing. However, no matter how important an item, its share of a consumer’s total expenditures cannot continually increase for a long time.”

When expenditures in a particular category in the consumer’s budget take larger and larger shares of total expenses, consumers look for less expensive substitutes, which can lower demand for more expensive goods and services, leading to lower prices for those goods and services. “For example,” said Anari, “if the price of beef gets too high, people eat more chicken.”

Consumers have two basic shelter choices: buy or rent. Shelter expenses run the gamut from rent to mortgage interest, to property taxes, to insurance, to repairs, to security and other expenses.

“Even when on vacation, consumers have shelter expenses,” said Anari, “from costs on vacation homes to hotels and motels. Family members in college must be housed, and that’s another shelter expense.”
Anari points out that home price changes affect expenditures and wealth. Lower housing costs allow consumers to spend more on other goods and services, leading to higher regional economic growth, increased growth rates, a larger labor force and more demand for goods and services.

“At the same time,” he said, “lower costs and prices of real estate properties can significantly increase economic productivity, lead to more investments and increase economic growth rates.” Where were shelter shares of income highest? California. San Diego-Carlsbad-San Marcos led the nation with 30.8 percent of income going to shelter.  Spending by U.S. consumers accounts for about 70 percent of the nation’s gross domestic product (GDP). Consumer expenditures are critical to the nation’s economy, and since 1980, the U.S. Census Bureau has conducted the Survey of Consumer Expenditures for the U.S. Bureau of Labor Statistics.

Texas Real Estate Center

• Update on Tuscan Lakes in League City: 592 homes are now built; the master plan calls for 1,659 single-family homes. The 870-acre development is at FM 270 and the League City Parkway (SH 96). Four new builders were recently added to the mix with home prices ranging from the $130’s to $300’s.
• First residents at the Voyager Apartment Homes at the Space Center are moving in. The 313-unit complex is the first development to be completed at the new Nassau Bay Town Square. Sizes range from 670 – 1,422 SF, one, two and three-bedroom homes. Location is 18101 Point Lookout Drive, directly across from the Johnson Space Center.
• Fifteen more lots have been purchased by K. Hovnanian in Bentwood at Bay Colony, a Dickinson subdivision.
• The engineering phase is underway for Section 3 of Bayou Lakes on FM 517 in Dickinson.
• Two million dollar renovation and repair is underway on the Clear Lake-waterfront Endeavour condominiums in Pasadena. Available units will be marketed this spring.
• A new builder, Highland Homes, has been added at Creekside in Friendswood’s West Ranch. The south side of FM 518 will be under development sometime this year. Plans include lakes, a community clubhouse and larger swimming pool, parks, greenbelt trails and commercial development.
• Rolling Meadows is a new 124-unit apartment community planned in Kemah on FM 518 near Wal-Mart. It’s affordable housing for active people 55+ — high quality units and monthly rents that are below the market rate. One and two bedroom units will be
  available; amenities include a swimming pool, computer center, perimeter fencing and controlled gate access.

The rapidly approaching April 30 federal homebuyer tax credit apparently inspired Houston-area consumers to house shop, as sales of single-family homes throughout the Houston market rose in March with the strongest sales volume continuing in the upper housing segments. Prices of single-family homes also continued their months-long appreciation.

Overall March sales of single-family homes across greater Houston climbed 10.8 percent compared to March 2009, according to the latest monthly data compiled by the Houston Association of Realtors® (HAR). All single-family home pricing segments except the under-$80,000 market experienced gains, with the sharpest increases in homes priced from $250,000 and above. Sales of all property types rose 14.5 percent in March on a year-over-year basis.

The average price of a single-family home appreciated for the sixth straight month, reaching $212,403, up 10.2 percent versus March 2009. That represents the highest pricing level for a March in Houston. At $154,250, the March single-family home median price—the figure at which half of the homes sold for more and half sold for less—rose 6.4 percent from one year earlier. That represents the 11th consecutive monthly increase in median price and is the highest dollar figure for a March in Houston.

Foreclosure property sales reported in the Multiple Listing Service (MLS) fell by 14.1 percent in March compared to one year earlier. The median price of March foreclosure sales rose 4.2 percent to $87,500 on a year-over-year basis.

Sales of all property types in Houston for March totaled 5,758, up 14.5 percent compared to March 2009. Total dollar volume for properties sold during the month was $1.2 billion versus $938 million one year earlier, representing a 24.2 percent increase.

Homebuyers are nearly out of time to take advantage of the credit since a contract must be in the title company by midnight on April 30, although closing can take place as late as June 30.”

March Monthly Market Comparison

The month of March brought Houston’s overall housing market positive results when all listing categories are compared to March of 2009. Total property sales, total dollar volume and both median and average single-family home sales prices all increased on a year-over-year basis.

The number of available properties, or active listings, at the end of March rose 7.1 percent from March 2009 to 49,030. That represents 2,372 more active listings than one month earlier, in February 2010, and is widely thought to reflect increased activity stemming from the homebuyer tax credit.

Month-end pending sales for March—those listings expected to close within the next 30 days—totaled 4,242, up 14.3 percent from last year. The months inventory of single-family homes for March stretched slightly to 6.7 months compared to 6.1 months one year earlier, but remains better than the national months inventory of single-family homes of 8.6 months, reported by the National Association of REALTORS® (NAR).

Single-Family Homes Update

March sales of all single-family homes in Houston totaled 4,832, up 10.8 percent from March 2009. The increase ended three consecutive monthly declines in sales. Broken out by segment, sales of single-family homes priced between $250,000 and $500,000 rose 30.6 percent in March while sales of luxury homes—those priced from $500,000 to the millions—soared 49.5 percent. Homes priced between $80,000 and $150,000 were up 6.5 percent while those in the $150,000 to $250,000 range rose 11.8 percent. By contrast, sales of homes in the below-$80,000 segment were off 8.4 percent.

Heightened sales activity in the higher end of the housing market drove pricing up again in March. At $154,250, the median sales price for single-family homes rose for the 11th consecutive month, up 6.4 percent from March 2009. The national single-family median price reported by NAR is $164,300, illustrating the continued higher value and lower cost of living that consumers enjoy in the Houston market. The average price of single-family homes in March was $212,403, an increase of 10.2 percent from one year earlier. That represents the sixth straight monthly jump in the average price. Both median and average pricing reached the highest levels ever recorded for a March in Houston.

Townhouse/Condominium Update

The number of townhouses and condominiums that sold in March jumped 30.4 percent compared to one year earlier. In the greater Houston area, 463 units were sold last month versus 355 properties in March 2009.

The median price of a townhouse/condominium slid 8.9 percent year-over-year to $123,000. The average price was flat at $160,886 from March 2009 to March 2010.

This is my April newsletter I e-mail out to my clients. If you would like to receive it monthly enter your e-mail address here.

The media continues to talk about the real estate market “stabilizing”. The reality is until our economy starts to add jobs, real estate sales will be stagnant. Unemployment in Houston decreased from 8.8% to 8.5% in February but that is still well above the 2009 rate of 6.7%. Every market is different. There are areas in Houston that values have actually increased in the past three years and others that have been heavily affected by the recession. The Houston economy for the most part is still driven by the energy sector and the price of oil. Once energy companies start hiring as energy prices increase there should be an increased demand and sales should return to more normal levels or beyond. Energy prices won’t increase until there is more demand which will only happen when the global economy recovers.

I am frequently asked “what will be the impact of the tax credit expiring?” People buy homes because of life events (births, deaths, new jobs, divorces, etc) not because of tax credits and for move up buyers $6500 is not enough to motivate them to move because their costs to buy and sell far exceed the credit. Receiving a tax credit has motivated those who qualify, mainly first time home buyers to act before the April 30th deadline. Once the credit expires I believe there will be a slight short term drop in demand for homes under $150,000 that are typically purchased by first time home buyers.

My biggest concern for the rest of the year is sharp increases in interest rates. Many economists believe rates will increase to 6.5. – 7% by December. While historically that is a very good interest rate it is something that current home owners and buyers are not use to. While 2% increase doesn’t sound like much but that would increase a buyers payment by $192 a month on a 30 year conventional $150,000 note. The total cost of the loan would increase by $52,430. As of today loan rates for non government backed loans (commercial and jumbo loans) are around 7% because investors are expecting higher rates of return with real estate loans. Today the rates for conventional government backed loans (FHA) are 5%. With large deficits looming many economist believe the bond investors will require greater return on US bonds which will raise mortgage rates for consumers. Obviously if the end of the year rolls around with little to no job increase and 7% interest rates the real estate market will be in a tough spot. Only time will tell.

Below information about the National real estate market and Houston real estate market.
Nationally
Unemployment – March 9.7% Unemployment

* Pending home sales have increased across the board with an 8% increase in the South Region.
* Existing-home sales, slipped 0.6 percent nationally to a seasonally adjusted annual rate of 5.02 million units in February from 5.05 million in January, but are 7.0 percent higher than the 4.69 million-unit pace in February 2009.
* Total housing inventory at the end of February rose 9.5 percent to 3.59 million existing homes available for sale, which represents an 8.6-month supply at the current sales pace, up from a 7.8-month supply in January. Raw unsold inventory is 5.5 percent below a year ago.
* The national median existing-home price for all housing types was $165,100 in February, which is 1.8 percent below February 2009.
* Distressed homes, generally sold at discount, accounted for 35 percent of sales last month.
* First-time buyers purchased 42 percent of homes in February, up from 40 percent in January.
* Investors accounted for 19 percent of transactions in February, compared with 17 percent in January; the remaining sales were to repeat buyers.
* Regionally, existing-home sales in the the South, slipped 1.1 percent to an annual pace of 1.85 million in February but are 6.9 percent above a year ago. The median price in the South was $139,600, down 4.2 percent from February 2009.

Houston

Unemployment – February 8.5% Unemployment

* February sales of all single-family homes in Houston totaled 3,251, down 5.8 percent from February 2009. This is the Houston market’s third consecutive monthly decline in sales.
* Sales of single-family homes priced between $250,000 and $500,000 rose 15.8 percent in February while sales of luxury homes—those priced from $500,000 to the millions—climbed 14.9 percent.
* Sales of homes in the below-$80,000 segment fell 27.5 percent
* Sanes of Homes priced between $80,000 and $150,000 were unchanged.
* The months inventory of single-family homes for February grew to 6.3 months compared to 5.9 months one year earlier.
* At $147,000, the median sales price for single-family homes rose for the tenth consecutive month, up 6.5 percent from February 2009.
* The average price of single-family homes in February was $203,271, an increase of 12.3 percent from one year earlier. That represents the fifth straight monthly jump in the average price.
* In February 2010, existing home sales totaled 2,681, a 5.1 percent drop from February 2009.

Mortgage Industry

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dipped to 4.99 percent in February from 5.03 percent in January; the rate was 5.13 percent in February 2009. Single-family home sales declined 1.4 percent to a seasonally adjusted annual rate of 4.37 million in February from a pace of 4.43 million in January, but are 4.3 percent higher than the 4.19 million level a year ago.

Houston’s Luxury Home Market Gets a Boost in January Surge in sales of homes priced $500K a and above promotes double-digit price appreciation

The Houston real estate market opened 2010 with a mixed bag of readings, making it difficult to determine a clear direction for the months ahead.

January sales of single-family homes across the greater Houston area slid 12.3 percent compared to January 2009, according to the latest monthly data compiled by the Houston Association of REALTORS® (HAR). When broken out by segment, sales of single-family homes priced from $500,000 and above showed dramatic gains in January while sales of homes on the opposite end of the spectrum, those priced from $80,000 and below, fell. Sales of all property types declined 7.4 percent in January on a year-over-year basis. [...]

Houston Home Market Sees Strong Price Appreciation in December

2009 year-end sales figures reflect normalization following distortions caused by Hurricane Ike

The Houston real estate market closed out 2009 with a more realistic snapshot of local conditions, ending three months of sales readings that appeared high when compared to the fall of 2008 due to Hurricane Ike’s crippling effects on housing back then.

According to the latest monthly data compiled by HAR, December volume of single-family home sales across the greater Houston area dipped 2.1 percent compared to December 2008. That represents the first decline since last August. Total December property sales were flat on a year-over-year basis.

At $152,550, the December single-family home median price—the figure at which half of the homes sold for more and half sold for less—rose 5.2 percent from one year earlier, representing the eighth consecutive monthly increase in median price. The average price of a single-family home in Houston appreciated for a third straight month, reaching $219,214, up 15.1 percent versus December 2008. That figure represents the second highest for all of 2009 and the highest for a December in Houston.

Foreclosure property sales made up 21.0 percent of all single-family home sales in the Houston area in December compared to 25.5 percent a year earlier and the 2009 peak of 34.0 percent last January. The median price of December foreclosure sales reported in the Multiple Listing Service (MLS) rose 4.2 percent to $89,900 on a year-over-year basis.

Sales of all property types in Houston for December totaled 5,267, flat compared to December 2008. Total dollar volume for properties sold during the month was $1.1 billion versus $976 million one year earlier, representing an increase of 12.9 percent.

“The December housing data suggests that we are finally out from under the veil of Hurricane Ike and probably seeing some of the seasonality that typically affects real estate markets during the holidays,” said Margie Dorrance, HAR chair. “Houston begins 2010 on strong footing compared to much of the country, and between the homebuyer tax credit and low interest rates, we anticipate healthy growth in the months ahead, provided there is stability in the local job market.”

2009 Annual Market Comparison

The Houston housing market concluded calendar year 2009 on sturdier ground than 2008, with only a slight decline in property sales and pricing that was generally flat.  There was an 8.2 percent decline in volume of total property sales and total dollar volume tumbled 10.7 percent.  The median single-family home price edged up 0.7 percent in 2009 to $153,000; the average sales price for a single family home was $203,626, down 2.2 percent on a year-over-year basis.

December Monthly Market Comparison
The month of December brought Houston’s overall housing market mixed results when all listing categories are compared to December of 2008. Total property sales were flat while total dollar volume and both median and average single-family home sales prices climbed on a year-over-year basis.
The number of available properties, or active listings, at the end of December declined 1.3 percent from December 2008 to 43,185. That represents 2,267 fewer active listings than one month earlier, in November 2009, and reflects what the industry considers a healthy absorption of housing inventory from the marketplace.

December’s month-end pending sales—those listings expected to close within the next 30 days—totaled 2,700, which was 17.9 percent lower than last year and may signal another decline in sales volume in January. The months inventory of single-family homes for December came in at 5.8 months, up from 5.6 months one year earlier, but remains better than the national months inventory of single-family homes of 6.5 months, reported by the National Association of REALTORS® (NAR).

Single-Family Homes Update

At $152,550, the median sales price for single-family homes rose for the eighth consecutive month, up 5.2 percent from December 2008. The national single-family median price reported by NAR is $171,900, illustrating the continued higher value and lower cost of living that consumers enjoy in the Houston market. The average price of single-family homes in December was $219,214, an increase of 15.1 percent from one year earlier. That represents the third straight monthly jump in the average price, which reached the second highest level for all of 2009 and the highest for a December in Houston.December sales of single-family homes in Houston totaled 4,456, down 2.1 percent from December 2008. This is the first decline in sales volume since last August.

HAR also reports existing home sales statistics for the single-family segment of the real estate market. In December 2009, existing single-family home sales totaled 3,611, a 3.0 percent increase from December 2008. At $138,950, the median sales price for existing homes in the Houston area rose 7.7 percent compared to last year. The average sales price of $202,019 shot up 19.7 percent from its December 2008 level.

Townhouse/Condo Update

The number of townhouses and condominiums that sold in December rose 11.7 percent compared to one year earlier. In the greater Houston area, 429 units were sold last month versus 384 properties in December 2008.

The median price of a townhouse/condominium dipped 1.6 percent year-over-year to $123,000. The average price retreated 6.2 percent to $156,026 from December 2008 to December 2009.

Lease Property Update

Demand for single-family home rentals rose 3.1 percent in December compared to a year earlier. Year-over-year townhouse/condominium rentals climbed 4.7 percent.

Houston Real Estate Milestones in December

How long it will take to sell your home in League City depends on a lot of factors like condition, demand, price and marketing. Homes in high demand areas, priced right and marketed correctly can sell within days while others make take much longer. On average for all homes sold in League City it took [...]

While the number of sales in League City are down the over the past three years home appreciation in League City was up in 2009. Why ? Inventories have stayed very low, meaning the ratio of homes on the market when compared to those that have sold recently. As of typing this the monthly inventory [...]

This is the first article in a series reviewing the past year  in League City real estate. Its no secret that all over the nation sales volume has been down for single family homes and League City is no different. What is different is that League City never experienced the dramatic drop in sales like [...]

Is the economy turning around? It looks like employment is stabilizing which is good news for real estate markets. Today unemployment unexpectedly dropped from 10.2% or 10%. The numbers are better than expected and the first time since [...]

The luxury marketing in League City is moving but not as fast as it did last year and at a much slower pace than in 2007. Looking at the table above when you compare the number of luxury home sales over $1,000,000 in 2009 to 2008 they are down by 42%.  As you can see the higher the sales price the larger the drop off in sales activity. This is a trend I am seeing in all price ranges. With the current recession homes that are selling and selling quickly are under $250,000 which is being driven by the $8,000 tax credit.  Like in any recession prices are contracting because of decreased demand and an increase in foreclosures. To get a detailed report about the luxury home market contact me here.

Wondering what’s going on in the Clear Lake home market? Curious what the average sales prices is for your city?  How long  is it taking for homes to sell? Below is a link to the “Clear Lake Market Report” for  3rd quarter of 2009. The report provides detailed market information about homes in League City, Clear Lake City, Friendswood, Kemah, Seabrook, El Lago and Clear Lake Shores.  I provided stats on how long it takes for a home to sale, the average sales price, how many homes sold in that area and the sales combined value of those sales (sales volume). When opening up the report you will see that values throughout the Clear Lake area have fallen when compared to the 3rdQ of 2008 except in League City. Sales volume has fallen slightly in almost every area. The good news is that there are fewer homes for sale and demand has increased slightly. The Supply of Homes on the market shows a stable or even a sellers market in all areas of Clear Lake except Kemah and El Lago. If you know of someone selling their home please feel free to send this to them.

Click ——-> to download the Clear Lake Market Report – 3Q.

Texas based Guaranty Bank was shut down by the FDIC as the 2nd largest bank failure of the year . The bank’s assets and deposits were sold off to the U.S. division of  BBVA (Banco Bilbao Vizcaya Argentaria) Compass, Spain’s second largest bank.  FDIC and BBVA will share in $11 billion assets. Guaranty Bank had over 150 locations in Texas and California. BBVA indicated that acquiring Guaranty Bank’s asset will help reach Spanish speaking markets in both states. The FDIC has taken over a record 81 banks in 2009 and that number is expected to rise with mounting loses in commercial real estate.

BB&T Bank

Guaranty Bank

Despite a growing labor force of more than 12 million and adding job growth in multiple sectors the unemployment rate for Texas increases to 7.9% in July. A positive note is nonfarm payroll grew by 37,900 jobs with growth in professional/business services, education, healthcare and construction. In Houston the unemployment rate grew from 8% in June to 8.4% in July. While the unemployment rate in Texas has risen much higher then 2008 levels it still well below the national unemployment rate of 9.4%.