Posts Tagged ‘recession’

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Recession Recap: Houston Housing Market

Monday, October 3rd, 2011

A hundred years ago, a handful of brave souls discovered that you could plop down a city on a mosquito-infested swamp and, apparently, spawn a deeply resilient housing market (even if a little bit prone to bubbles around the edges). We’ll explain.

As we mentioned last week, Houston mirrored the awesome August recently experienced by the Austin and Dallas housing markets. According to the Houston Chronicle:

The local housing market continued to favor buyers last month, although that may be changing.

At the end of August, there was a 7.1-month supply of homes for sale – meaning it would take that long to sell all the homes on the market based on recent activity, according to the Houston Association of Realtors. A year ago, the area had an eight-month supply. [...]

Single-family homes sales rose sharply in August, jumping 30 percent over last year, the association said. Sales totaled 5,543, marking the third straight monthly increase this year. All segments of this area’s housing market saw higher sales in August – from properties less than $80,000 to the $500,000 and above range. Townhouse and condominium sales jumped 19.5 percent.

Houston has several factors working in its favor. Simply put, it’s one of the most recession-proof cities in America. Let’s take a look at what makes the Bayou City tick:

1. Jobs

Houston has lots of ‘em. Unemployment in Houston is currently hovering somewhere around 8.6 percent, compared to 9.1 percent nationally. Why? Its strengths aren’t things like finance and real estate (which suffered severely in the 2008 crash). It’s energy, shipping and medicine.  America will always need ports. America will always need energy. America will always need healthcare.

Each of these sectors is volatile in their own way (especially energy), but they’re more resilient than most industries. Houston is in good shape until we all stop driving, aging, and ordering cheap goods from China.

2. Land

Houston has lots of land. Tons of land. It could expand all the way west to Austin and all the way north to Dallas if it wanted to. There’s simply nothing hemming it in.

Look at many of America’s classic cities: Manhattan. Los Angeles. San Francisco. Seattle. Each of these cities are largely walled in by some combination of a coast and mountains, limiting sprawl and driving up housing prices. Mountainous and coastal areas also pose expensive infrastructure challenges, limiting the availability of cheap, massive highways like the ones found all over Houston.

Houston can build and build and build — both houses and roads — keeping housing costs low.

3. Labor

Without getting into political issues, large immigrant populations do help fuel construction booms, especially in housing and infrastructure. And Houston has an excellent diversity of skill in its labor pool. When conditions are ripe for a housing boom, it can quickly tap into the labor supply needed to do it.

These factors, combined with all the other state-wide elements that make Texas an excellent place to start a business and the fact that the 1980s oil crisis culled many of the weaker businesses that would’ve collapsed in the 2008 economic crisis, make Houston abnormally resistant to a recession-fueled housing crisis. Here at Texas Lending, we’re proud to offer a full line of Houston home purchase loans, Houston home equity loans and Houston home refinance loans for folks looking to take advantage of this environment.

Of course, there are a couple negatives that limit home price growth in certain parts of the city as well, which makes housing both accessible and a poor investment. We’ll explore those — and similar negatives in Dallas and Austin — next week.

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Lone Star Recession Recap: Austin Housing Market

Monday, September 19th, 2011

The skyline in Austin never stopped morphing during the recession. Startups are flocking to the city, as well as hip heavyweights like Facebook and Google (who have both set up offices in Austin recently). Add in longtime employment hubs like Dell, plus employment anchors like the state government and the University of Texas (sources that are both stable and dynamic — meaning lots of people moving in and out, creating all sorts of real estate opportunities), and you’ve got a robust city determined to roll right through the recession.

So what does the housing market look like post-recession in one of America’s most recession-proof cities? A glance at the numbers says it’s in better shape than most cities, but not immune to broader economic problems. In fact, many Austinites have been in this situation before.

According to KUT:

Jim Gaines has been in the Central Texas real estate business for over thirty years. When asked if the housing market is the worst he’s ever seen it, he laughed and said, “Certainly not. The oil bust in the 80s was far worse.” Texas’ booming oil industry went belly up in the 1980s and dealt a major blow to the economy. Gaines explains that this concept of big boom equals big bust may be the very thing that has saved most of Texas from the current recession.

The rest of the nation started gaining steam through the 1990s, creating the slowly inflating economic bubble; Texas, however, was still licking its wounds from the oil bust so it did not boom along with everyone else. When the bubble burst, Texas was relatively unaffected

So let’s compare 2010 to 2007 with some data compiled by the Austin Board of Realtors:

  • Across the city, per-square-foot prices declined by 3.39 percent. Home prices stagnated, dropping slightly from $315,281 in 2007 to $314,704 in 2010.
  • Within the city limits, the total number of homes sold dropped 26 percent from 10,831 sold in 2007 to 7,997 sold in 2010.
  • Almost every zip code in Austin experienced declines, including highly coveted neighborhoods in West Lake, Tarrytown, Downtown, and around the UT campus.
  • Unemployment in Austin rose from 3.62 percent in 2007 to 7.12 percent in 2010.

In other words, it’s a great time to buy a home in Austin. Overall, the picture is rosy, and a robust recovery seems inevitable. But, currently, steals abound.

Here at Texas Lending, we’re proud to offer a slew of Austin home purchase loan options, as well as Austin home refinance loan options if you already own a home in the capital city and would like to take advantage of historically low Austin home interest rates. Contact our Austin home loan specialists for more information.

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Awesome August: Dallas Home Sales Surge

Monday, September 12th, 2011

Two bits of great news about Dallas home ownership in three weeks. What is this strange phenomenon?

According to the Dallas Morning News:

North Texas home sales surged in August by 27 percent — the biggest gain in more than a year. Local real estate agents sold more than 6,800 pre-owned single-family homes last month.

It was one of the highest monthly sales totals recorded since federal homebuying incentives ended in early 2010.

“The low mortgage rates have to be helping,” said James Gaines, an economist with the Real Estate Center. “And Dallas continues to do well businesswise — employment is still going up… This home sales rebound is a lot better than we thought it would be. If the pattern continues, we could be up 10 percent or more for the year.”

August marked the second consecutive month with double-digit increases in home sales for DWF, compared to a year earlier. Condo and townhouse sales were also up 34 percent compared to this time in 2010, according to to the Real Estate Center at Texas A&M University and North Texas Real Estate Information Systems.

Well. Alright. Another week highlighted by some good news. We could get used to this.

Of course, we’ve seen a plethora of recovery “false starts” since the housing bubble popped in 2008, and pulled the economy down with it. And there are about a hundred different spots on the horizon where gathering black clouds are gathering to potentially reverse these gains again.Europe and China are both staring down banking crises of their own, which could sink economic recoveries in all corners of the globe — and the U.S. economy seems bent on sliding back toward a recession all on its own.

So it might be a good idea to pounce on these rare windows of opportunity while you can. If you’ve been holding your home off the market until it returns to more normal levels, it might worth a shot to test the Texas housing market again. Because if you can sell, it’s still an extraordinary time to buy.

Our Dallas home interest rates are historically low, and stand to rise again as soon as we see a real recovery. If you need to sell in order to move to another part of Texas, we’re also proud to offer extraordinarily low Austin home interest rates and Houston home interest rates. Contact our Texas home loan specialists for more information.

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Recession Pt. II: How Could It Effect Housing?

Thursday, August 25th, 2011

Here’s something amazing: interest rates on U.S. Treasury bonds have gotten so low, so cheap, that if you invest in them (widely considered the safest investment you can make), there’s a good chance you’ll end up earning less in interest than the rate of inflation. On a five year bond, for example, you’d lose .75 percent.

In other words, you’re choosing to lose a little bit of money, rather than risking losing a lot of money. You’d be better off sticking your money in a giant piggy bank under a humongous mattress inside of enormous safe).

So why are investors still flocking to U.S. bonds? Well, as we mentioned last week, even a U.S. downgraded by a credit ratings agency is still truly one of the safest investments you can make. We have all the fundamentals for a robust economy — unmatched natural resources, (comparatively) effective governance, and rule of law that is (comparatively) strong. And despite how close we came to defaulting on our debts for self-inflicted reasons, no one really thinks we’ll be unable to pay debts for economic reasons anytime soon. We’re safe.

Plus, foreign countries simply love having dollars, even when it’s a little bit shaky. Global trade relies on a dominant “reserve” currency, and there’s simply nothing else out there to replace it.

But there’s another explanation. According to Bill Gross of PIMCO, the world’s largest bond fund: “They certainly reflect, in terms of their yields, not only a potential for a recession but the almost high probability of recession and the result of lowering inflation.”

So there you go. People are investing in treasuries both because the American economy is awesome, as well as because people think the American economy is about to tank again.

Only in America.

Regardless, it’s good for potential homebuyers. Here’s why:

If we slide back into a recession, the effect on housing won’t be the same. The housing market is holding the recovery back, yes. But it’s not like the housing bubble has re-inflated and is about to pop again. Prices are already about as low as they can get, and they’re going to stay low for a little bit longer. That’s not helping the economy, but it’s not the same as in 2007 and 2008, when so many homeowners saw the value of their homes plummet so precipitously almost overnight.

In fact, one of the most encouraging sign we have for the medium-term outlook in America is that — slowly but surely — the housing mess is sorting itself out. Americans are paying down debts, and the biggest drag on the economic recovery is slowly going away.

For potential home-buyers, this means historically low home prices, historically low Texas home purchase interest rates, and historically low home refinance rates. And here at Texas Lending, we’re proud to boast the lowest Texas home interest rates in the state.

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Home Interest Rate Limbo: How Low Can They Go?

Tuesday, August 16th, 2011

What do you call it when something hits rock bottom — and then keeps right on dropping?

Home interest rates continued to intrepidly explore the geologic depths of the housing market this week — both in Texas and across the country. As result, it’s simply cheaper now than it’s been in several decades to buy a home in Texas.

According to real estate database Zillow.com:

With this week’s Fannie/Freddie downgrade, stock market tumble, and the Fed’s promise to keep interest rates low until 2013, many have been left wondering what the impact will be on the housing market and, more specifically, how mortgage rates will change. As it turns out, Zillow Mortgage Marketplace shows that today’s 30-year fixed mortgage rate has taken a fall from Tuesday’s 9-month low of 4.14 percent to a new all-time low of 3.92 percent. This rate represents the first time the rate has dropped below 4 percent as well as the lowest rate recorded since Zillow Mortgage Marketplacelaunched in April 2008. Prior to today, the lowest rate recorded on Zillow Mortgage Marketplace was 4.07 percent on Nov. 9, 2010.

Or, as economics blog Modeled Behavior put it: “If I wanted to be a homeowner, I’d strongly consider buying right now.”

As we mentioned during the debt ceiling negotiations, there was concern that a credit downgrade would cause U.S. treasury bond rates jump, which would make mortgage rates jump as well. But, as we mentioned last week, when credit rating agency Standard & Poors actually did downgrade the U.S. treasuries, a remarkable thing happened — the buying of U.S. bonds only accelerated. In other words, even a congressionally dysfunctional U.S. is still one of the safest investments anywhere in the world.

Eventually rates are going to go back up. But, for now, it’s still a historically great time to buy — especially if you don’t need to sell a home in order to do so. Here at Texas Lending, we boast some of the lowest Texas home purchase loan interest rates and Texas home refinance rates in the state. 30-year fixed rates have hit 3.875 percent. 15-year fixed rates have hit 3.25 percent.

We’re eager to make it easy for folks to start buying again. If you’re in position to buy a home, don’t wait until rates and prices rise again.

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Will the S&P Downgrade Affect the Texas Housing Market?

Monday, August 8th, 2011

Credit ratings agency Standard and Poor’s (S&P) followed through on its warnings and downgraded U.S. treasury bonds from AAA to AA-plus. Depending on how you look at the move, its impact on local housing markets could either be real or overblown.

Let’s take a look at why a single ratings firm downgrade could or could not be a problem for the Texas housing market (or, for an inside look at how ratings firms rate a nation’s credit, check out Planet Money’s fantastic podcast about the subject):

No biggie:

America is still an investment safe haven.

U.S. treasury bonds are still just about the safest investment you can make, despite the big economic issues facing our country. Europe is on the brink of collapse. Despite China’s enormous growth, it faces some severe structural issues that will likely keep it from ever becoming an America-esque superpower. Meanwhile, America still has the best combination of fundamentals needed for growth, like natural resources, the ability to collect tax revenues, military protection of our shipping lanes and economic interests, etc. Housing factors like interest rates will likely reflect this.

In fact, after Japan’s credit rating was downgraded in 2001, its interest rates actually sank. True to form, U.S. treasury interest rates also fell this morning. S&P doesn’t have any insider knowledge about the U.S. economy, so they’re essentially making the same judgement calls as individual investors who—according to today’s news—seem eager to keep buying.

Bad News Ahead:

It’s a blow to consumer confidence.

In aggregate, markets are largely irrational things. Consumers will usually make decisions based on their own desires and fears. So even if America has strong fundamentals, if people don’t feel very confident about the future, they won’t buy things like clothes, cars, and (yes) homes. A prominent ratings firm like S&P can fuel the fire of uncertainty.

Furthermore, folks with large stock portfolios have been slammed over the past few weeks, which means there will be both less of a mood to buy homes and less money to do so.

Pension rules punish.

Some prominent pension funds are required to hold only AAA-rated corporate and treasury securities, and will have to sell their U.S. bonds as result of the downgrade. This withdraws liquidity from our markets, and could make it more expensive for the government to borrow funds.

The downgrade isn’t entirely groundless.

Even if we’re better off than most countries around the globe, we’re still facing some steep challenges. There’s no easy way to slow the growth of healthcare costs — the main driver of our long-term deficits. Employment is dragging its feet. And, right or wrong, the fact that a sizable faction of Congress was willing to blow through the debt ceiling and begin defaulting on some of our obligations should rightly make U.S. bonds seen as not entirely risk-free.

Here at Texas Lending, we’ll make it as easy as possible for Texans to get the loans they need when it’s time to buy. Between our Texas home purchase loans, Texas home equity loans, and Texas home refinance loans, we can find a loan solution perfect for your family’s unique needs.

Let us know what you think — will the S&P downgrade impact the local housing market?

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Get the Cash You Need to Invest in Home Savings

Monday, August 1st, 2011

Last week, we talked about how lots of Dallas homeowners are choosing to reinvest in their homes, instead of trying to make a move during a slumping housing market.

Here’s the strategy: Invest now in value-boosting home upgrades like a new kitchen, patio, or pool. Sell later when the housing market recovers. Reap the benefits.

But there’s another cost-effective reason to invest in a home remodel: Green home renovations are a great way to boost long-term value, while lowering your month-to-month energy bills as well.

Utility bills soar during scorching summer like this one, but a green retrofit can help bring them back to earth. For example, consider the savings reaped by one of America’s famous buildings — as recently pointed out in an article by former president Bill Clinton:

Just look at the Empire State Building—I can see it from my office window. Our climate-change people worked on their retrofit project. They cleared off a whole floor for a small factory to change the heating and air conditioning, put in new lighting and insulation, and cut energy-efficient glass for the windows. Johnson Controls, the energy-service company overseeing the project, guaranteed the building owners their electricity usage would go down 38 percent—a massive saving, which will enable the costs of the retrofits to be recovered through lower utility bills in less than five years.

Of course, you probably won’t see the same savings as a 102-story tower built in 1931. But a green retrofit is still an excellent way to lower the long-term month-to-month costs of living in your home — and some retrofits could eventually end up paying for themselves.

You need cash to do this. At Texas Lending, we’re proud to offer the best rates on Dallas home equity loans and Dallas home refinance loans available anywhere. Get the cash you need to invest in your family’s future.

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Banks Bailing on Reverse Mortgage Market. We’re Not.

Tuesday, July 5th, 2011

Let’s say you’ve spent years and years building up equity in your home, and steadily seen its value rise. But suddenly, in the wake of the recession, you’re facing a cash-strapped retirement. Normally, a reverse mortgage would be a great way to turn that equity into a stress-free future.

The big banks can no longer help you do that. We can.

According to Aol’s DailyFinance:

Last week, Wells Fargo, the biggest name in the nation’s reverse mortgage market, announced that it was getting out of the business, citing concerns that housing prices could continue to erode further. That move followed in the footsteps of No. 2 reverse mortgage player Bank of America, which exited the business earlier this year. Combined, the two banking behemoths represented 43.6% of the reverse mortgage market, based on a 12-month trailing period ending in April, according to industry researcher Reverse Market Insight.

If you didn’t catch that, the two largest banks in the reverse mortgage market (43.6 percent of the market, in fact) just aren’t in the mood to ride out the unstable market any longer. To that we say: “Surfs up!” We’ll stick with you on this bumpy wave until we’re all on calmer seas again. Here’s how one of our Texas reverse mortgages can help:

For elderly homeowners over the age of 62, reverse mortgages are a great way to access the equity they’ve spent decades building up in their homes. Basically, we “buy” the home from the homeowner while letting them live in it as long as they’d like. They only pay insurance, property taxes, and general upkeep (some upfront fees also apply). This gives the homeowner a hefty sum of cash and the chance to enjoy their golden years without financial stress.

After the homeowner either passes away or simply moves out, we sell the house in order to make up the difference. If the market has recovered and the home sells for more than it was worth when the reverse mortgage was purchased, remaining funds will go to homeowner’s heirs.

In other words, it’s an innovative way to make what’s probably your biggest asset — your home — carry you through retirement. Contact one of our Dallas reverse mortgage specialists for more information.

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Feds Sticking With Low Home Loan Interest Rates: How It Affects You

Monday, June 27th, 2011

It looks like historically low home interest rates will be here for the foreseeable future — great news for folks in Texas looking to buy a new home.

According to AdvisorOne:

Federal Reserve policymakers are expected on Wednesday to keep interest rates at their historic lows and to make no plans for a third round of quantitative easing after the second round ends on June 30.

They’ll keep the supply of bonds that they hold relatively stable, and that will help keep intermediate- to longer-term interest rates low,” he predicted. “As interest rates stay low, that will hopefully encourage lending, and that lending will encourage growth in the economy. The Fed’s primary tool is monetary policy and interest rates, and they’ve really done everything they can to keep interest rates low.”

The Federal Open Market Committee (FOMC) meeting will be its first since April 27 when it maintained the federal funds rate at 0% to 0.25% and said that conditions in the U.S. economy “are likely to warrant exceptionally low levels for the federal funds rate for an extended period.”

Got it? Gibberish? We’ll explain:

What the Federal Reserve does matters to folks in need of a Texas home loan for several reasons. Primarily, however, it’s because Texas home purchase loan rates and Texas home refinance rates tend to rise and fall almost exactly alongside the Fed’s rates.

Here’s why — in an oversimplified (but hopefully helpful) nutshell:

Interest rates rise when money in the economy gets tight. In a weak economy like the current one, when overall consumption is still far below where it needs to be to sustain a full recovery, the Fed wants to keep interest rates low to make it easier for folks to get loans and start businesses, use credit cards, and buy homes. To achieve this, the Fed increases the money supply, which lowers rates by limiting competition for the available dollars.

This can lead to inflation, debt, and dangerous currency devaluation on the global market if its not carefully controlled, which is why the Fed will eventually reverse course and try to shrink the money supply following an economic recovery.

In other words, eventually federal interest rates will rise, and home loan and home refinance rates will as well. But, if the Fed’s recent moves tell us anything, we’ll see historically low home interest rates for a while longer.

This is excellent news for Texas folks in need of a home loan, home equity loan, or home interest loans. Interest rates are anchored to the rock bottom, and here at Texas Lending, we’re offering the lowest home interest rates of anywhere in the Texas.

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Taking the Long View: The Housing Crisis Turns Five

Tuesday, April 19th, 2011

Happy birthday, housing slump. My, how much you’ve grown, and how much you continue to confound us, teach us, and shape our future housing situations.

According to NPR’s Planet Money:

It’s been five years — five years! — since home prices peaked.

And the bust is still grinding on: too many houses for sale, not enough buyers, falling prices. Sales of newly built homes hit a record low last month, according to figures out today. Sales of existing homes also fell, according to numbers released on Monday. At current rates, it would take more than eight months to sell all of the homes on the market. In an ordinary market, it’s six months or less. In other words, there’s a glut of homes on the market. The glut is driven in large part by a wave of foreclosures.

It’s a good reminder of the way today’s housing picture is shaped both by month-over-month news, and the slow, significant market sweeps that stretch back for decades. Potential homebuyers should look at it the same way.

The housing picture that matters to your housing decisions shouldn’t begin the day Lehman Brothers collapsed in September of 2008, triggering Wall Street’s meltdown. Nor when the banks were rescued shortly thereafter. Nor even five years ago when prices peaked. Instead, new policies, cultural attitudes, and market shifts matter—no matter when in recent history they were instituted. And, of course, where prices are today and where they’re heading tomorrow matter.

This mix of short-term information/long-term clarity is the best way to look at your own home investment as well.

It’s important to evaluate both what fits your financial picture today, and what will be beneficial long into the future.

If you take the cheapest, easiest loan now with no regard for how its terms might change in the future, you could find yourself in unexpected trouble. Similarly, if you take high back-end savings in exchange for higher monthly payments now that you can’t really afford, you might not make it to the end of the loan.

Here at Texas Lending, we’ll do our best to help you understand both what’s happening today and how it fits into the larger economic picture. And we’ll do everything we can to put you in a home situation that’s financially healthy both now and ten or twenty years down the road.

We provide a full suite of Dallas home loans, refinance loans, and financial tools in order to find a customized solution that matches your unique financial situation.

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