When you hear bad news about the real estate market....

The bad news comes primarily from two sources--the Case-Shiller Index and the misreporting of the foreclosure data. Whenever someone brings up a story based on this data, here's how to respond:

1. The Case-Shiller index only has complete data for sales of single family residences in nine states. Even in those nine states, it does not include condominiums, apartments, co-ops, or multi-family residences. So how accurate is this data when it doesn't even include all the sales in 82 percent of the states?

2. Most of the foreclosure data reports the number of "filings," not the number of properties in foreclosure. When you see one of these negative articles, read it carefully to determine if they are reporting the "filings." (U.S.A. Today does this regularly.) The problem with filings is that it reports the number of notices that have been filed on the property, not the number of properties actually in foreclosure. For example, a property in California with a first and a second equity line of credit that goes into foreclosure, would have a total of eight filings prior to the foreclosure taking place. Thus, the reporting may over report the foreclosures by up to 80 percent. In addition, somewhere between 50 and 75 percent of the loans that are in trouble are being worked out. This is great news....

Updated Real Estate Price Trends for March 2008

Based on information from the MLS, the most sales occurred in S.E. Arlington (south of I-20 & east of Cooper), followed by Mansfield, followed by S.W. Arlington, followed by North Arlington. With prices falling nationally, our area saw less than a 1% drop in prices compared to last year.

For more information on the local real estate market for Arlington, Mansfield, and Kennedale, visit www.donlawyer.com.

Congress Hammers Out Tax Breaks for Homeowners

Origanally published from AP...

In just a couple of years, Congress has gone from considering ways to collect more taxes from homeowners and individual real-estate investors, to dreaming up new tax breaks for homebuyers.

With foreclosures hitting about 7,500 a day nationwide in March, and median home prices declining in most U.S. markets, the shift in attitudes is no mystery. Gone are the days of 2005, when an advisory panel appointed by President Bush recommended trimming the home-mortgage interest deduction to pay for lower income-tax rates. Many lawmakers scoffed at the proposal, but the fact that it was even put forward by the distinguished, bipartisan panel was remarkable in itself.As recently as this past October, the House of Representatives passed a provision that would have raised taxes on some owners of vacation homes. It targeted owners who moved into those houses for two years before selling them, in order to benefit from the full $500,000 maximum income exclusion available for the sale of a principal residence.That provision is now nowhere on the radar. Moreover, Congress is moving toward enacting new tax credits for home buyers, and tax breaks for millions of homeowners who don't currently benefit from the ability to write off property taxes.

"The world has changed dramatically," says Linda Goold, tax counsel for the National Association of Realtors, of the rush by Congress to aid homeowners and the real-estate industry.Who is likely to benefit from tax changes in the pipeline? And for how long? The Senate and the House Ways and Means Committees have each passed packages of tax breaks aimed at easing the housing slump. Both enjoyed broad support from Democrats and Republicans.

The first thing to know is that in order to claim any tax benefits in the current proposals, you must live in the house you are claiming them for. None of the provisions likely to become law are written to help the small-time investor in a single-family home.Second, the tax breaks under discussion are temporary, so lawmakers can advertise them as being available "for a limited time only." However, if history is any guide, Congress is loath to let tax cuts for individuals expire once it creates them.Both the Senate and House bills would increase the standard deduction for one year to allow those who don't itemize their taxes to take a deduction for property taxes. The increase would be capped _ the additional standard deduction is worth up to $1,000 for joint filers under the Senate plan, for example.

But nearly all homeowners already itemize so they can write off their mortgage interest, right?Wrong. Roughly 40 percent of all homeowners _ about 28 million _ don't itemize. The additional standard deduction would particularly benefit people who live in modest homes and have paid off or nearly paid off their mortgages, many of whom are seniors. As such, those people would also likely not have charitable or other deductions totaling more than the standard deduction amounts _ in 2008, $5,350, or $10,700 for married taxpayers filing jointly.Besides the standard-deduction increase, Congress-watchers say some kind of tax credit for home buyers has a good chance of becoming law. The House wants to give first-time home buyers a $7,500 credit. The $7,000 credit offered in the Senate bill, not limited to first-time buyers, would apply only to new, unsold homes or homes in foreclosure."The whole goal here is to create a buyers' psychology," says Ms. Goold of the Realtors' group.

But some tax experts say it is more like a psyche-out. Take the proposed first-time home buyers credit, for instance. A qualified buyer can receive a maximum $7,500 from the federal government, similar to an interest-free loan, repayable over 15 years. That works out to an average of an additional $42 per month paid back to the government.But what if, in lieu of borrowing from Uncle Sam, the strapped buyer had simply borrowed an extra $7,500 from the bank? Spread out over the life of a 30-year mortgage with a 6.5 percent interest rate, the borrower would end up paying an extra $48 a month.Of course, the buyer who takes the tax credit saves $9,500 in interest costs over the long run. But the difference on the monthly payment side is small. "It raises the question: Is it really increasing the ability of the buyer to purchase that home?" says Clint Stretch, managing principal of tax policy for Deloitte Tax LLP.The measures could still get tripped up by concerns about their cost, or by disagreements between the White House and Democrats over Federal Housing Administration provisions that are also expected to become part of the package.

Good News Regarding Home Sales...

Quoting from an AP report today...

National numbers

Sales rose 2.9 percent in February, the National Association of Realtors said. They last rose in July. In another encouraging sign, the inventory of homes for sale fell. It would take 9.6 months to exhaust the supply of homes for sale at the February sales pace, down from 10.2 months in January.

Local numbers

North Texas existing-home sales, reported earlier, fell in February for the 12th month in a row, to 5,556. However, the pace is off only 10 percent from a year ago.
And although North Texas median home prices fell in February, they are down only 3 percent from February 2007, according to the North Texas Real Estate Information System.

My Opinion...

Personally, I am seeing more buyers in the marketplace vs. a few months ago, less overall inventory (especially inventory of "special" homes), & more sign calls and internet inquiries. The most strength seems to be in the $140,000 to $175,000 range right now. Also, all homes with swimming pools do not have very much direct competition, so they are doing well.

What are mineral rights really worth?

Charles Newman, an attorney with Landamerica Title recently spoke to a group of Realtors in Arlington and shared some very interesting numbers as far as the true value of mineral rights after the gas companies start producing from the well. I have seen many buyers and sellers recently that are expecting a major financial windfall from their lease and this might help quantify what someone could expect..



BARNETT SHALE PRODUCTION PROJECT

Premise: A well produces 2,400,000 cubic feet per day for the first year; production drops in half in second year and to 300,000 cubic feet per day for years 3, 4, and 5. Gas valued at $7.00 mcf.


Monthly royalty of 25% for a 1/3 acre lot in a 400 acre pool.

First year - $105.00/month

Second year - $42.00/month

Third then Fifth year - $13.00/month

TOTAL for 5 years: $2,232.00

If natural gas sold for $9.00 for the 5 years period;

TOTAL would be: $3,033.50

Keeping the Foreclosure Numbers in Perspective

The foreclosure crisis is a regional problem, not a systemic problem.
It could become a systemic problem, of course, but we're a long way from that now.
While the national rate of foreclosure had increased by a whopping 79 percent in the previous year, it was still only 1.033 percent. Since about 30 percent of homes are owned mortgage-free, this means that only 7/10 of 1 percent of all homes are in foreclosure.

In the top 100 housing markets, the average foreclosure rate was somewhat higher, 1.38 percent. Many of the areas suffering the highest increases in the foreclosure rate were rising off a rate that was tiny.


The top 10 foreclosure areas in America are generally areas of extreme price change – changes far from the national average of 46.92 percent home price appreciation over the last five years.

Seven of the top 10 foreclosure areas experienced major price spikes in the last five years.

That pattern continues when you examine the top 25 foreclosure areas as well.

The seven areas with the top price appreciation for the last five years averaged a stunning 91.6 percent increase, nearly double the national average.

Statistics for our Area

Sales Statistics for TARRANT County TX

Realist's most recent recording date for this county is 02/04/2008

Single Family Residence

Number of Sales

Dec 2007
2,162

Dec 2006
2,974

Nov 2007
2,281

Nov 2006
2,982

2007 YTD
32,630

2006
37,769