Buffett Real Estate CEO Sees Housing Comeback

The battered housing market has steadied and is ready to bounce back off an inevitable pullback from its boom times in the earlier part of the decade, said Ron Peltier, the CEO at Warren Buffett's Homeservices of America real estate company.

"I think the real truth is the market has been in a phase of correction," Peltier said.

"We are seeing some light at the end of the tunnel." At the same time, Peltier gave a candid analysis of what led to the housing meltdown in the first place.

He said the market sprinted ahead of itself price-wise, while unscrupulous lenders and appraisers compounded the industry's problems by putting too many people in houses they couldn't afford.

As for how things shape up going forward, Peltier said market has returned to its pre-boom times, with home sales tracking at about 5 million annually.

"I think that's a normalized market and I think that's a sustainable level," he said.

But he divides the market into two parts: the primary market of discretionary sellers, and the distressed market, which includes some of the areas that saw the meteoric rise and now are suffering the consequences of excess. read more ...

The pain of America's housing bust varies enormously by region. Hardest hit have been the “bubble states”—California, Nevada and Florida, as well as parts of the industrial Midwest. read more ...

The question is: Will it be an even better time to buy in six months or a year from now?

The short answer is yes, although much depends on where you plan to live. If the local economy is strong and jobs are plentiful, any recent (and likely temporary) surge in the housing stock could give you the upper hand in negotiating a deal you can live with. That is, if you plan to stay put for at least four or five years.

"You may not see much appreciation in the next couple of years," says McCabe, who expects the downward cycle in South Florida, for example, to play itself out over the next three years. "But buying is still an excellent investment in the long term. And in the meantime, you'll have your own place and get all the tax advantages that go with it." read more ...

Finding Opportunities in Slumping Market
New home sales fell 8.5% in March, according to the Commerce Department. The vacancy rate for homes is at 2.9%, the highest level recorded since the Census Bureau started keeping track in 1956. Over 18 million U.S. homes were empty in this year’s first quarter. Sound like bad news?

Not everybody thinks so. There are those who believe that the bottom of the real estate market is either here, or will be here soon. The optimists, on whose side Topretirements rests, believe that the mismatch between inventories (still way too high), demand (pathetic), and prices (still too high in spite of very big reductions in some markets) will eventually be resolved and the real estate market will return to equilibrium.

The pessimists believe that news like the 32% decline in the median price of existing condos in the Bradenton-Sarasota market from March 2007 to March 2008 will continue well into the future, fueled by factors like baby boomers fleeing the suburbs for low tax sunbelt retirements.

In the meantime for any optimists out there, there are deals to be had. A number of developers are offering incentives, which include: guaranteed buy-backs, help selling your existing home (Erickson Communities), special prices, reduced interest rates (Lennar Corp.), and lots of “frees” (landscaping, granite countertops, finished basements, etc.). Shea Homes says they won’t offer incentives, but will offer lower no-haggle prices (e.,g.; like Saturn automobiles). Sellers of existing homes, faced with pages and pages of competition, know that they have to offer a deal to rise to the point of being noticed, so there are plenty of deals to be had there too. As always, cash buyers who are ready to sign a contract will get a better deal than a window shopping customer who needs a mortgage.

Of course there is always the difference between a come-on and real deal. So if you are tempted by an incentive, analyze it carefully to find out its real benefit (or get your lawyer or financial advisor to help). Go out and visit the property and ask questions of the neighbors and HOA (Home Owners Association). The bold and the brave can easily find deals - if they do their due diligence and are willing to be patient. Then time can tell if their instincts were correct or not. read more ...

I would imagine that many more people will be moving to Texas with the refinery projects in Port Arthur creating so many jobs. read more ...

I visited Palisade Palms while in Galveston from Key West. I must say i was impressed. Quite a stunning project. The prices are unbelievable compared to Florida. This just might be my retirement choice because the bang for my buck is better than anything i have seen. read more ...

See the Fox Video Story at
http://alicedonahue.com/PalisadePalms read more ...

Home insurance....nonsense. Who needs insurance when there's FEMA read more ...

Fortified homes on the Gulf coast...Genius!!! who thought of this one.
$500K home on the gulf coast....what an investment!! read more ...

Beach, Bay or Both read more ...

Texas – the new hot spot for retirement and vacation homes. See them at the Second-Home Expo this April 19-20th.

Dr. James Gaines, research economist at Texas A&M University’s Real Estate Center, said that a boom is coming that “will be sparked with the retiring baby boomers who have the finances, ability and desire to purchase second homes.”

And it appears that all the talk about the nation’s unstable housing market does not apply as heavily to Texas or to those looking for a retirement or vacation home. According to Gaines, these buyers are normally in a different financial situation and have different needs when it comes to home buying.

“The market for second homes is good in Texas and interest rates are still low,” Gaines said. Texas has much of what people want — “water, good weather and views. Those are the elements that attract people to second-home locations.”

The Lone Star State is thriving economically. It is the new hot spot for retirement, according to a recent study using U.S. Census data. Texas, formerly the No. 4 retirement destination in the U.S., has now leapt past Arizona and California to the No. 2 spot. Florida is still No. 1, but Texas is gaining.

The Escapes Second-Home Expo features a dynamic lineup of speakers, including Gaines, and exhibitors representing the hottest second-home properties in Texas. This includes those in the Texas Hill Country and all along the booming Texas Gulf Coast.

South Padre Island has the finest beaches in Texas, The water is clear and the climate is mild. Here, you definitely know you are on an island. We have an impressive skyline and a nice, relaxing feel.

Moving north along the Texas Gulf Coast, other hot spots, each with its unique beauty, are the Port Aransas/Mustang Island area, the arts-oriented community of Rockport, the Port O’Connor Intracoastal Waterway and the historic community of Galveston.

See EscapesExpo.com

The Woodlands Waterway Marriott Hotel and Convention Center

1601 Lake Robbins Drive, The Woodlands, Texas 77380

Dates: Saturday and Sunday, April 19-20, 2008
Hours: Saturday, 9a.m. – 6p.m.; Sunday 10a.m. – 6p.m.  read more ...

AARP - How to Ride Out a Recession

Slumping housing. Tightening credit. Shaky stocks. Spiking oil prices. Whatever adjectives economists attach to current conditions, the forecast seems to be the same: a financial storm is threatening our pocketbooks and savings. Even the R word—recession—is getting airtime.

True, we’ve been here before. Through terrorism, war, even Katrina, the economy has shown its resilience, says Lakshman Achuthan, managing director of the Economic Cycle Research Institute, one of the nation’s leading forecasters. “A shock alone won’t cause a recession if the economy is otherwise strong,” he notes. But here’s the rub: “With the housing slowdown and subprime mess, this is the first time in a long time that we’ve had the combination of a big shock and an economy showing real signs of weakness. That combination is a recipe for recession.”

What changed? In brief, your home lost value. The air began escaping from the housing-price bubble in 2006, pressuring millions of homeowners who’d wagered that rising real estate or their own income gains would keep them ahead of their precariously high debts. Then it turned out that mortgage lenders had encouraged too many of those bad bets—and that still more financial institutions owned a piece of the problem because they’d purchased securities based on these risky loans. By last July, the ripple effects from mortgage losses hit big banks, and the stock market began to seesaw downward.

Home Values

The story so far Overall housing prices peaked in 2006 and have declined almost 7 percent since, according to the S&P/Case-Shiller Home Price Indices. Foreclosures were at an all-time high last year, rising to nearly 2 million from 1.2 million in 2006, the marketplace RealtyTrac reports.

How bad could things get?

A big wave of adjustable-rate mortgage resets hits in the first half of 2008. Robert Shiller, the Yale economics professor behind the Case-Shiller indices, says it’s possible housing prices will decline 30 percent from their peak. That’s as much as they fell from 1925 to 1933, the low point of the Great Depression. Others predict a 15 percent drop.

Conventional wisdom Ride it out.

“If you can stay put until the storm passes, the market will be positioned for a healthy rebound,” says Achuthan. If you must move, try to sell your property before you buy a new home, so you don’t get caught short. And, yes, fixed-rate mortgages are the only way to go.

The new wrinkle Renters in a position to buy may find bargains—including their current home.

That’s because investment homes aren’t in line for breaks taking shape for some overextended homeowners, so your landlord might sell to you on the cheap. Less happily, if you aren’t buying and your landlord is facing foreclosure, you may have to act quickly to avoid eviction (laws vary by state). Keep paying rent and negotiate with the lender to stay, at least for a while. read more ...

Up in these new High-Rises or at Audubon Village and Island Park Estates - you can watch the sunrise over the ocean and the sunset over the bay.

That what really makes these particular products remarkable. You get two fantastic views everyday.

Having lived in them I know that - you look forward to the sunrises and sunsets like a kid on Christmas eve. read more ...

“The world has discovered the Gulf Coast,” said James Gaines, research economist at the Real Estate Center at Texas A&M University.

“You want a second home on the East Coast at an affordable price, and you’re not going to find anything. Here, it’s still available and affordable.”

The Falcon Group, a commercial and residential developer in Houston, is building Palisade Palms, two 27-story condominium towers. They will be the tallest buildings on Galveston Island read more ...

The big idea as I see it is that real estate is in the tank nationwide, but certain beach projects for higher end clientele on the Texas Gulf Coast are booming.  read more ...

Wow! read more ...

For real estate value, you need to know where to look. Today, many in the industry are looking to the coast.

News of the real estate market over the past six to eight months has come in two types: bad and worse. Headline stories about the subprime mortgage crisis and its deleterious impact on the world economy have become staples on newspaper front pages. The effects of that crisis on the real estate market — on individuals, businesses, investors, and the economy as a whole — have been deep and wide.

Still, it would be a mistake to believe that the real estate business, particularly the market for second homes and vacation properties, is moribund everywhere. In fact, if you look carefully, there are vibrant pockets where development continues at a brisk pace, both within the United States and beyond its borders.

“There are still great opportunities in areas that maybe have not been the traditional markets,” says Mitch Creekmore, senior vice president of the Houston-based title company Stewart International and co-author, with Tom Kelly, of Cashing In on a Second Home in Mexico (Crabman Publishing).

Creekmore, not surprisingly given his international expertise, sees much of the most promising second-home activity — both in terms of the progress of developments and, importantly, the prospect for buyers to see their assets appreciate — happening outside the United States, in places like Mexico, Panama, and Costa Rica. “The international arena is still a viable investment alternative,” he says. Whether within or outside the United States, the second-home markets that seem to be doing the best have one thing in common: water. Which is hardly surprising given real estate’s cardinal rule for success: location, location, location.

From Mexico to Costa Rica and from Florida to Texas, we went on a search for some of the most appealing sundrenched and ocean-splashed second-home locales.

Texas-Size Appeal
When Jeff Lamkin looks at the coast of Texas, he sees Florida — well, sort of. “What Florida was 20 years ago, where everyone could afford a great vacation home on the beach, that is exactly what Texas is now,” says Lamkin, who is CEO of Sea Oats Group, an Atlanta-based developer.


A giant egret in flight off the coast of FloridaLamkin should know. He has spent years developing coastal projects in Florida and has seen how prices for even the smallest lots have skyrocketed. A few years ago, the native Texan returned to the Lone Star State and was stunned with the quality, and affordability, of beachfront land. Not that there’s a lot of it available: “Only 14 percent of the Texas coast can be developed,” he says. “Most is tied up in state parks and places that can’t be developed.

Lamkin and his company have moved fast to snap up whatever land they could — in fact, he says that more than 80 percent of Sea Oats Group’s land portfolio is now in Texas. While Lamkin was quick to seize what he saw as an opportunity to purchase land, he has been decidedly methodical in developing his first project, Cinnamon Shore, located on Mustang Island, a Gulf Coast barrier island just 30 minutes from Corpus Christi. To a certain extent, Lamkin knew the location itself would be a sufficient draw: Outside magazine recently declared Mustang Island one of America’s top 10 beach getaways; the island boasts some of the country’s best bay and deep-sea fishing and is known as the fishing capital of Texas; and it’s a mecca for bird-watchers, who can view hundreds of species that either live on or migrate to the island. In addition, the island’s only town, Port Aransas, is a lively community of just over 3,000, rich with restaurants and arts venues.

Instead of just letting the island sell itself, Lamkin and his colleagues worked hard to carefully plan Cinnamon Shore as a new-urbanist development — one that emphasizes pedestrian-friendly neighborhoods and minimal environmental impact.

Texas-Size Appeal
When Jeff Lamkin looks at the coast of Texas, he sees Florida — well, sort of. “What Florida was 20 years ago, where everyone could afford a great vacation home on the beach, that is exactly what Texas is now,” says Lamkin, who is CEO of Sea Oats Group, an Atlanta-based developer.


A giant egret in flight off the coast of FloridaLamkin should know. He has spent years developing coastal projects in Florida and has seen how prices for even the smallest lots have skyrocketed. A few years ago, the native Texan returned to the Lone Star State and was stunned with the quality, and affordability, of beachfront land. Not that there’s a lot of it available: “Only 14 percent of the Texas coast can be developed,” he says. “Most is tied up in state parks and places that can’t be developed.

Lamkin and his company have moved fast to snap up whatever land they could — in fact, he says that more than 80 percent of Sea Oats Group’s land portfolio is now in Texas. While Lamkin was quick to seize what he saw as an opportunity to purchase land, he has been decidedly methodical in developing his first project, Cinnamon Shore, located on Mustang Island, a Gulf Coast barrier island just 30 minutes from Corpus Christi. To a certain extent, Lamkin knew the location itself would be a sufficient draw: Outside magazine recently declared Mustang Island one of America’s top 10 beach getaways; the island boasts some of the country’s best bay and deep-sea fishing and is known as the fishing capital of Texas; and it’s a mecca for bird-watchers, who can view hundreds of species that either live on or migrate to the island. In addition, the island’s only town, Port Aransas, is a lively community of just over 3,000, rich with restaurants and arts venues.

Instead of just letting the island sell itself, Lamkin and his colleagues worked hard to carefully plan Cinnamon Shore as a new-urbanist development — one that emphasizes pedestrian-friendly neighborhoods and minimal environmental impact. Just up the coast in Galveston, Tofigh Shirazi is following the same philosophy.

Shirazi is the founder of Beachtown, located on the water on the east end of Galveston Island. Like Cinnamon Shore’s developers, Shirazi sees affordability as a big part of the allure of Beachtown. “Even though the rest of the country is suffering right now, we are still below the national prices for beachfront properties,” he adds. Equally important, he says, is Beachtown’s proximity to Galveston, which he terms as being within “European walking distance,” or about one mile. “The city of Galveston is a treasure that a lot of people don’t know about. It’s the largest historic district in the state of Texas,” he says. “It’s hard to find anyplace in the country where you have a historic opera house right next to you.”

Of course, a development called Beachtown has to have some connection to the water. Its good fortune is to be located on a beach that, unlike many around the country, is actually growing rather than eroding, thanks to beneficial tidal shifts.

Besides wide, and growing, beaches, Beachtown boasts huge dunes and proximity to protected land that will never be developed. “The uniqueness of the project is that you are right in the middle of a beautiful preserve,” says Shirazi. read more ...

Fears that the housing slump will send the economy into free fall may be seriously overdone.

That's the conclusion of an analysis by Bill Wheaton, professor at the Massachusetts Institute of Technology and one of the leading experts on the real estate market.

Prof. Wheaton's analysis coincides, by happenstance, with some better-than-expected housing data too.

Sales of second-hand homes posted a surprise 2.9% jump in February, possibly because frustrated sellers at last began cutting their prices.

As for those hoping to bottom-fish the US housing market itself, Prof. Wheaton said three things have to happen before that will have a chance to bottom out. First, construction of new homes has to stop. Second, someone -- possibly foreign investors -- have to swoop in and start snapping up some of those leftover second homes. And third, the wave of foreclosures has to stop. Until it does, of course, it will just keep adding to excess inventory. read more ...

It could be the best time to buy real estate since the Great Depression. The masses are almost always wrong.

So what’s it all mean?

Always run in the opposite direction. It’s in moments of mass indecision that fortunes are made. read more ...

From a National Prospective:

After hitting a record in 2006, sales of vacation homes declined in 2007 as would-be buyers held off purchasing retreats according to the national association of Realtors.

Nationwide, Vacation-home sales fell 31%

Why? 2007 saw speculators exiting the housing market: Homes bought purely for investment dropped 18%

That is versus a 10% decline in primary-residence sales.

59% of vacation homes purchased in 2007 were detached single-family homes, 29% condos, 7% townhouses or rowhouses, and 5% other.

In 2006, single family homes were 8% higher (67%) and condos 8% lower (21%).

This suggests that some vacation home buyers are shifting towards purchasing smaller, less expensive properties.

Those who did buy vacation homes last year saw more affordable prices.

Twenty-eight percent of vacation-home buyers made the purchase with cash. read more ...

TEXAS DOMINATES BEST INVESTING LIST
DALLAS (HomeVestors of America)

With the Lone Star State’s economy faring better than the nation, it should be no surprise that Texas cities dominate the just-released list of ten top cities that are prime locations for real estate investing.

HomeVestors of America, the company famous for the “We Buy Ugly Houses” billboards, said the best investment locations are:

1. Dallas
2. Houston
3. Atlanta, Ga.
4. Fort Worth
5. St. Louis, Mo.
6. Philadelphia, Penn.
7. San Antonio
8. Denver, Colo.
9. Minneapolis, Minn.
10. Phoenix, Ariz. read more ...

Second-Home Sales Accounted For One-Third of Transactions in 2007

The combined total of vacation- and investment-home sales declined with the overall market in 2007, but still accounted for 33 percent of all existing- and new-home sales, which is close to historic norms, according to the National Association of Realtors®.

The market share of homes purchased for investment last year was 21 percent, down from 22 percent in 2006, while another 12 percent were vacation homes, compared with a 14 percent market share in 2006. The total share of second homes declined from 36 percent of transactions in 2006.

NAR’s annual Investment and Vacation Home Buyers Survey shows vacation-home sales dropped 30.6 percent to 740,000 in 2007 from a record 1.07 million in 2006, while investment-home sales fell 18.1 percent to 1.35 million last year from 1.65 million in 2006. At the same time, primary residence sales declined 10.0 percent to 4.34 million in 2007 from 4.82 million in 2006.

Lawrence Yun, NAR chief economist, said the findings suggest different cycles for each of the sectors over the past two years.

“Investment-home sales declined sharply in 2006 as speculators disappeared, leaving the market to serious buyers, with the pattern continuing in 2007,” he said. “Vacation-home sales rose to a new record in 2006 because there was a pent-up demand from buyers who couldn’t find a property as a result of tight supplies in preceding years.”

The overall sales decline in 2007 resulted from a combination of factors. “Certainly, second homes are discretionary purchases and there is a natural tendency to pull back from big-ticket items in periods of uncertainty,” Yun said. “The other factor is the disruption in the mortgage market, with a significant tightening of credit during the second half of 2007. Some buyers simply adopted a wait-and-see attitude.”

Yun said lifestyle factors and strong demographics remain positive for the vacation home market. “Investment considerations are secondary for vacation-home buyers, so there is some dormant underlying demand,” he said. “A peak of population is moving through the prime years for buying recreational property. It is welcoming to see investment sales returning to pre-boom sales activity.”

The median price of a vacation home was $195,000 in 2007, down 2.5 percent from $200,000 in 2006. The typical investment property cost $150,000 last year, unchanged from 2006.

Fifty-nine percent of vacation homes purchased in 2007 were detached single-family homes, 29 percent condos, 7 percent townhouses or rowhouses, and 5 percent other. In 2006, single family homes accounted for 67 percent of vacation-home sales, while condos were 21 percent.

There were no significant changes in investment housing types. Sixty-one percent of investment homes purchased in 2007 were detached single-family homes, 20 percent condos, 11 percent townhouses or rowhouses, and 8 percent other. Twenty-eight percent of vacation-home buyers paid cash for their property, as did 35 percent of investment buyers.

Sixty-five percent of vacation home buyers and 71 percent of investment home buyers purchased existing homes, while the remainder purchased new homes.

The typical vacation-home buyer in 2007 was 46 years old, had a median household income of $99,100, and purchased a property that was a median of 287 miles from their primary residence.

In listing the reasons for purchasing a vacation home, 84 percent of buyers wanted to use the home for vacation or as a family retreat; 30 percent to use as a primary residence in the future; 26 percent to diversify investments; 25 percent to rent to others; 16 percent for the tax benefits; 14 percent for use by a family member, friend or relative; and 6 percent because they had extra money to spend.

Last year, 19 percent of vacation homes were purchased in the Northeast, 16 percent in the Midwest, 41 percent in the South and 24 percent in the West. In terms of location, 30 percent of vacation homes were purchased in rural areas, 20 percent in resorts, 20 percent in a suburb and 14 percent in an urban area or central city.

Investment-home buyers last year had a median age of 42, earned an income of $92,900, and bought a home that was relatively close to their primary residence – a median distance of 27 miles.

When asked about the most important reasons for their purchase of an investment home, 51 percent said to provide rental income; 39 percent to diversify investments; 21 percent to use for vacations or as a family retreat; 16 percent for use by a family member, friend or relative; 11 percent for tax benefits; 10 percent to use as a primary residence in the future; and 4 percent because they had extra money to spend.

Twenty-three percent of investment properties purchased in 2007 were in the Northeast, 19 percent in the Midwest, 38 percent in the South and 21 percent in the West.

Thirty-nine percent of investment homes were purchased in a suburb and another 20 percent in an urban or central city area, 21 percent in a small town, 15 percent in a rural area, and 5 percent in a resort area.

Vacation-home buyers plan to keep their property for a median of 10 years; 38 percent plan to keep their vacation home for 11 years or more. Investment buyers plan to hold their property for a median of four years, with 29 percent planning to keep for six years or more. However, 10 percent of investment buyers plan to sell in one year or less.

Eight in 10 second-home buyers consider it a good time to invest in real estate, compared with 59 percent of primary residence buyers. Forty-four percent of vacation-home buyers and 57 percent of investment buyers said they were likely to purchase another property within two years. read more ...

Sales on the coast are brisk for existing homes where picky buyers are finding deals from sellers who are offering their property below the market values from the peak in 2006.

As Vacation homes/Second homes are a discretionary purchase, many willing and able buyers are just sitting on the sidelines to see how the housing market works out.

Pre-construction sales have almost stopped, as the more speculative the product, the more buyer fears take effect.

New development Lot sales are also very slow, same reasons, buyer's fear the developer will not finish the project or that the project could be a construction zone for a prolonged period of time.

New products that are moving well are either very remarkable products, such as luxury high-rises or new developments where all the common amenities are completed (pool, landscaping, etc.), many of new homes are already completed - and a sense of community is already established. read more ...

The Houston metropolitan area ranked fourth in the nation for overall population growth between 2006 and 2007, according to new census data — an increase demographers attributed largely to the region's economy.

The Houston-Sugar Land-Baytown area attracted slightly more than 120,500 new residents from July 2006 through July 2007, according to U.S. Census Bureau estimates released today for geographic regions known as metropolitan statistical areas.

The Dallas-Fort Worth-Arlington area ranked No. 1 in the nation in terms of raw population growth, and Austin-Round Rock and San Antonio also made the top 10. Karl Eschbach, director of the Texas State Data Center in San Antonio, said the job market and economy are driving the state's population growth.

"It's the combination of international and domestic migration that's pushing Texas cities to the top," Eschbach said.

New Orleans showed the first signs of recovery in the population estimates, though Eschbach warned that does not necessarily herald a "rapid recovery." After reporting record-setting population losses after Hurricane Katrina in 2005, the New Orleans metropolitan area had an estimated population increase of about 39,885 from summer 2006 through 2007, making it the eighth-fastest-growing in the nation.

"The most important thing about the data for the New Orleans area is how modest the population gains have been, given the magnitude of the losses there," Eschbach said. "It's not cause for excitement."

Barton Smith, a University of Houston economist, said about two-thirds of Houston growth is from migration, surpassing additions from the birth rate.

"That only happens when the economy is doing substantially better than other places," Smith said. "Houston's economy is going to continue to outperform the national economy in a significant way, so when unemployment starts to creep up in other parts of the country, many people are going to leave Michigan and Ohio and Florida and look for jobs in Texas."

The Dallas-Fort Worth region increased by 162,250, followed by the Atlanta (151,063) and Phoenix (132,513) areas. Austin-Round Rock was the nation's fifth-fastest-growing metro area, at 4.3 percent, as well as the eighth-largest overall population gainer, at 65,880, according to the census. read more ...

Dallas-Fort Worth and Houston Lead Metro Areas in Numerical Growth

Dallas-Fort Worth had the largest numeric gain of any metro area between 2006 and 2007, increasing by 162,250, according to July 1, 2007, estimates of metro area population size and growth released today by the U.S. Census Bureau.

Houston gained (120,544)  read more ...

Watch out, Florida. Texas has emerged as the No. 2 retirement mecca, vaulting over Arizona and California. And the Lone Star State is gaining on the Sunshine State.

The North Carolina Center for Creative Retirement, which is nationally known for tracking retirement migration trends, studied data from the U.S. Census Bureau on the number of Americans who move out of state to enjoy their golden years.

Texas, which was the No. 4 destination based on 2000 data, has leapt past No. 2 Arizona and No. 3 California.

Texas' lower living costs give it a distinct advantage, he said, especially over states like California and Florida, where home price increases in the last few years hit bubble proportions. read more ...

The Texas Public Policy Foundation hosted a lively discussion on wind energy in Texas, as part of our policy primer series. The standing-room-only crowd heard from experts on both sides of the issue. Paul Sadler, executive director of the Wind Coalition, and Mike Sloan, the founder and president of Virtus Energy, attribute Texas’ being the nation’s wind energy development leader to Texas’ location, cost of fuel supply, and competitive market structure, saying Texas’ wind power is the nation’s best wind power, in terms of price, performance, and value. Both advocate for state action encouraging further wind energy development. Rob Bradley, president of the Institute for Energy Research, and Jeff Pollock, president of J. Pollock, Inc., maintained wind simply cannot meet demand and that wind transmission costs will run into the billions of dollars.

This issue is an emerging topic in Texas and a hot topic at the Texas Legislature. Texas leads the nation in installed wind power capacity, with 4,356 megawatts (MW) by the end of 2007, accounting for approximately 26% of total U.S. capacity. Robust wind power expansion is expected, as Senate Bill 20 increased Texas’ renewable portfolio standard to 5,880 MW by 2015 and 10,000 MW by 2025. However, challenges stand in the way of wind energy’s becoming the cure-all for Texas’ growing energy needs.

First, given current population growth rates, ERCOT estimates Texas’ electricity demand will rise 20% by 2015 and 43% by 2025 and that Texas may need up to 66,000 MW of new peak generation capacity by 2020, an 85% increase from 2005.

Additionally, because wind blows intermittently, wind is an unstable power source. When power is needed the most—the summer—the wind blows the least. ERCOT calculates that about 2.6% of wind power is available during peak electricity demand.

Finally, there will be tremendous costs in transmitting energy from the areas of Texas most suitable for wind energy generation (West Texas and the Panhandle) to areas of the state needing energy the most (I-35 eastward). These costs do not include the cost of building transmission stations. In early April, ERCOT is expected to release transmission cost estimates, but high-voltage transmission lines have cost over $1 million per mile.

This issue will continue to be of interest to the Foundation and the work of its new Center for Natural Resources and the Center for Economic Freedom, which recognize the state’s need for reliable and affordable energy resources but caution that wind energy alone will not be enough to meet the state’s growing energy needs. Later this spring, the Foundation will publish a paper on wind’s role in the Texas energy portfolio. read more ...

Strong in-migration and local economic pop carried Austin as a seller's market.

It finished fourth overall in sales rate to inventory size and has had the fifth-best home price appreciation figures of the large markets Moody's measured. Its mediocre 14th best market tightening ranking can be attributed, in large part, to its small inventory excess.

A 1.5% vacancy rate, like Austin's, is where the national average stood during the most recent housing boom. In other words, that low a vacancy rate indicates a housing market at close to full capacity. read more ...

The fast-growing areas in the United States are in the Sunbelt, with Texas leading the way, according to data released today by the U.S. Census Bureau.

Dallas-Fort Worth added more than 162,000 residents between July 2006 and July 2007, more than any other metro area. Three other Texas cities — Houston, Austin, and San Antonio — also were in the top 10.

Experts credit much of the growth in the South to strong local economies and housing prices that are among the most affordable in the United States.

A report earlier this month by Global Insight found that housing prices in the Dallas area were undervalued by as much as 30 percent. read more ...

Checkout The HomeAway Vacation Home Rental Community!

I am excited to bring to you a website that you should find to be very useful for running your vacation rental business.

You'll find innovative strategies for renting, advertising, furnishing, maintaining and enjoying your vacation rental property.

This website is filled not only with my own research, observations and experiences, but also with information I've compiled from conversations with thousands of owners.

Be sure to visit regularly for the latest information, including my “How to Rent Vacation Properties by Owner Internet Radio Show,” updated news, new tips & advice, industry trends and developments.

Also, I'll be out in the field conducting workshops, promoting vacation rentals to travelers, and meeting with industry leaders.

http://ownercommunity.homeaway.com read more ...

As a soon to be retiree who has been investigating the Texas coastline properties for a couple years, I can certainly say I am nearly ready to make the move. I must say, however, that the tax structure of Texas is definitely NOT of the the reasons. Sure there is no income tax, but when you are retired, that is not such a problem. Most states have low income taxes for seniors. What is causing an exodus out of the market and creating a glut of homes is the high property tax rates. As a Californian, I was shocked to learn that the taxes on the home I wanted to purchase were higher than my current mortgage payment including taxes. Texas lawmakers would be wise to consider changing this tax structure. Charge income or increase sales tax, and reduce property taxes. This will encourage retirees with a nest egg to purchase homes, thereby increasing home values.  read more ...

The opportunity to protect hard earned equity in the sale of an investment has been available to consumers since 1921. However, complexities and details of the tax code prevented only the most knowledgeable from using this option. In 1990 the Omnibus Budget Act clarified the process an opened this option to a broader set of consumers.

Section 1031 Exchanges, which have become more popular since the mid-90s, allow investors to defer the tax on capital gains until some point in the future.

Section 1031 of the Internal Revenue Code provides that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business, or for investment. A tax-deferred exchange is a method by which a property owner trades one or more relinquished properties for one or more replacement properties of "like-kind", while deferring the payment of federal income taxes and some state taxes on the transaction.

The theory behind Section 1031 is that when a property owner has reinvested the sale proceeds into another property, the economic gain has not been realized in a way that generates funds to pay any tax. In other words, the taxpayer's investment is still the same, only the form has changed (e.g. vacant land exchanged for apartment building). Therefore, it would be unfair to force the taxpayer to pay tax on a "paper" gain.

The like-kind exchange under Section 1031 is tax-deferred, not tax-free. When the replacement property is ultimately sold (not as part of another exchange), the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax. read more ...

Loans to homebuilders and other developers are the latest slice of the credit market under duress, and analysts say banks could face hundreds of millions of dollars in losses as a result.

As commercial and residential real-estate prices decline, banks of all sizes face a growing number of loan defaults from builders unable to sell houses, and from developers whose malls and other properties turned out to be less desirable than anticipated.

Homebuilders know exactly how that hit feels. David Seiders, chief economist of the National Association of Home Builders, said Tuesday that the housing downturn is likely to be the “deepest downswing, the most rapid downswing, probably since the Great Depression.”

Seiders projects that the market — measured by home sales and housing construction — will hit bottom by the end of the summer and rebound gradually. But he emphasized that any recovery could be pushed back should predictions of recession come true. read more ...

The Department of Housing and Urban Development implemented temporary increases in FHA loan limits in every housing market that it estimated will allow nearly 240,000 additional families to take advantage of the government-backed mortgage insurance program.

The new limits for Federal Housing Administration loan guarantee programs are based on median home price, and range from a new floor of $271,050 up to a cap of $729,750 in the highest-priced markets.

See https://entp.hud.gov/idapp/html/hicostlook.cfm read more ...

To help bolster a faltering housing market, the National Association of Home Builders (NAHB) called on Congress to move quickly to enact comprehensive regulatory reform for housing government sponsored enterprises (GSEs) Fannie Mae, Freddie Mac, and the Federal Home Loan Banks that will ensure their financial safety and soundness and allow them to vigorously pursue their housing mission.

“With the U.S. housing market now in the contraction phase of the most pronounced housing cycle since the Great Depression, passage of a GSE regulatory reform bill has the ability to greatly relieve liquidity and inventory pressures in the nation’s mortgage markets, help stabilize housing prices and bolster consumer confidence. This would bring immediate benefit to the overall economy,” said Howard.

For more information, visit www.nahb.org. read more ...

Building on the Edge - Challenges and opportunities in coastal construction.

It should raise an eyebrow that the Federal Emergency Management Agency publishes a manual dedicated to coastal construction, but it should not deter those with true grit.

It sound’s like a street gang: The FEMA 55. This three-volume coastal construction manual advises on the special considerations involved in planning, siting, building and maintaining in coastal areas.

The official summary for chapter two alone should sufficiently prevent the feint of heart from breaking ground near the beach.

It reads: "A history of selected coastal hazard events from the 1900 hurricane that struck Galveston, Texas, to Hurricane Georges, which struck Puerto Rico and the U.S. Gulf of Mexico in 1998, including descriptions and photographs of flood, wind and tsunami damage; findings of post-event evaluations; documentation of successful building performance and a discussion of the lessons learned.”

That’s enough to make you want to put homes in Carefree, Ariz., far from the coast and all its perils. But where’s the fun in that? More importantly, where’s the money in that? Those undaunted by talk of hurricanes and flooding and dramatic erosion events will read on, and discover The FEMA 55 is a solid resource.

It gives comprehensive information on the coastal environment and identifying hazards such as storm-induced and long-term erosion, earthquakes and tsunamis. The manual also explains regulatory requirements and gives a treatment of the special needs for insurance near the ocean. Most importantly, the manual gives guidance on material selection and construction methods.

The FEMA 55 is a solid resource. It gives comprehensive information on the coastal environment and identifying hazards such as storm-induced and long-term erosion, earthquakes and tsunamis.

The manual also explains regulatory requirements and gives a treatment of the special needs for insurance near the ocean. Most importantly, the manual gives guidance on material selection and construction methods.  read more ...

Retirees, Followed By Boomers, Will Redefine Retirement

A report from The Media Audit - adults who are nearing retirement are now one of the fastest growing demographics in the country. 17.9% of all U.S. adults are now retired, a figure that has increased by 6% in the last five years and will rapidly increase as Boomers exit the workforce over the next few decades.

Consumption habits of aging Americans are likely very different from those of their predecessors because they are living longer, achieving higher levels of education, are wealthier, and redefining what it means to be retired. read more ...

About 141,000 people moved to Texas from other states last year, giving the Lone Star State the highest domestic migration figures of all fifty states.

North Carolina, Georgia and Arizona rounded out the top four, according to U.S. Census Bureau figures reported by the Western Blue Chip Economic Forecast.

The Western Blue Chip Economic Forecast is published by the JPMorgan Chase Economic Outlook Center, an affiliate of the L. William Seidman Research Institute, College of Business, Arizona State University. read more ...

TEXAS HOUSING MARKET ISOLATED, NOT IMMUNE

While Texas is somewhat isolated from the storms in the national housing market, it is not completely immune, said Real Estate Center Chief Economist Dr. Mark Dotzour during a series of speaking engagements yesterday in the nation’s capital.
“The difficulties in the mortgage market are impacting buyers in all 50 states, including Texas,” said Dotzour, speaking at the Economic Policy Conference of the National Association of Business Economics. The economist was serving on a panel discussing the regional differences in the housing markets across the country.
Dotzour noted that home prices are still increasing in most Texas metro areas, foreclosure rates are much lower than the national trends, and the inventory of unsold homes in Texas is currently at 5.7 months, well below the national average of 10.1 months. However, he also noted that the most recent numbers from the Office of Federal Housing Enterprise Oversight show the rate of price increases in most Texas metros to be getting smaller.

Earlier that day, when asked by Bloomberg’s Kathleen Hays about the efficacy of further rate cuts by the Federal Reserve, Dotzour stated that he "wasn't a big fan of government intervention, but since they are going to intervene in a big way they should do something that might actually help solve the problem."

Dotzour said that the recent "helicopter drop" of $150 billion would not help the housing situation and would only exacerbate inflation.

"If they really want to help solve the housing problem more quickly, we need to see a tax credit for people to buy a home,” he said. “We've got excess inventory that needs to be soaked up."

Dotzour also noted that the ten-year treasury rate is moving back down to the 3.5 percent range because of the continued fear of the credit markets. When the rate gets near 3.5 percent, a short window of opportunity opens for existing homeowners to refinance their homes.

"I thought that window had closed a few weeks ago as the ten-year moved back toward 4 percent,” Dotzour said. “But news of continued difficulties in the banking system has caused the rate to move lower again."
 read more ...

In Texas, there's still room for single-family coastal homes. In beach towns along the Texas Gulf Coast, there is no shortage of towering condominium projects, but there's also quite a market for beachgoers who have no interest in sharing walls with somebody else.

For those folks, single-family properties in communities near the beach are more attractive than a Gulf-view high-rise.

"Here, there's still room to build," says Alice Donahue, a real-estate broker who operates TexasGulfCoastOnline.com, a site that tracks real-estate trends in the area. "You don't see as many hotels and condos as you would in Florida, where it's gotten overpriced and congested."

Simply put, the Texas Gulf Coast remains a great place for a bargain beach house, says Jim Hayes, managing principal of Crown Team Texas, a Beaumont-based development group that created Laguna Harbor, a development on the Bolivar Peninsula near Galveston.

The single-family development route is less risky than a high-rise condo project, says Jeff Lamkin, chief executive officer of Seat Oats Group, which is developing the "new urbanist" community Cinnamon Shore near Port Aransas.

"I'm selling lots for $595,000," he said. "In Florida, that same lot is $2.5 million. There are still a boatload of people who can afford it here."
Here is a look at some of the single-family developments that are popping up along the Texas coast.

Cinnamon Shore
Situated on Mustang Island, just outside Port Aransas, the development has introduced "new urbanism" to Texas' Coastal Bend area.
The 64-acre community, which began infrastructure construction in spring 2007, aims to create a mixed-use, pedestrian-friendly development with a neighborhood feel and a limited impact on the environment.

Sales began in February, and the company says about half the 82 homes in the first phase of construction have been sold. The second phase of construction is to begin this spring and will include a town center with offices and retail shops.
Lamkin, the project's developer, said his decision to use the principles of new urbanism was pragmatic.

"In doing our research, we realized that the production type that held its value best and appreciated most was new urbanism," Lamkin says. "Folks want to live in a community, just to know your neighbor and know you belong."

Cinnamon Shore is modeled after communities such as Seaside, the development in the Florida Panhandle made famous when it served as the set for the "The Truman Show."

Cinnamon Shore is in a more secluded area of the coast. Lamkin said he has sold about a third of the lots to Austin-area families.

Among those buyers are Kevin and Julie
Cunningham, who are about to begin construction of a four-bedroom house. In addition to Cinnamon Shore's proximity to Austin — it's about a three-and-a-half-hour drive from their home — the less-touristy feel of the Port Aransas area was a key selling point, said Julie Cunningham, 44.
"South Padre Island is too far; Corpus Christi is too big. Port Aransas has a life of its own, a lot of character," she says. "And we liked the restrictions of Cinnamon Shore. It seemed a little quieter."

The Cunninghams, who have four children, plan to use the house as both a vacation home and as an investment, possibly renting it, Julie Cunningham says.

"We've just always preferred a home; you just get a little more room that way," she says. "A condo wasn't really an option."

The Shores of South Padre
Down the coast on South Padre Island is another community that embodies some of the elements of new urbanism. The Shores of South Padre, a 240-acre beachfront development that sits at the northern edge of the island, strives for a neighborhood feel. Shops, cafes and offices are grouped around a general store and marina. Houses and townhomes sit on red-brick streets. Also in the gated community is a sprinkling of condos.

"The Shores will help bring upper-end clientele to South Padre, and that's a positive thing for the whole area," says developer Dennis Franke, who created the community along with his brother Richard Franke.

In agreement is Gary Sanner, president of The Shores' property owners association. Sanner, 62, initially bought 12 lots in the project, and recently completed the construction of a 2,800-square-foot house on one of the lots. He is selling the home for just over $1 million.
"There are a number of nice properties on South Padre, but none of them are of the quality that The Shores will be," says Sanner, a Michigan native who also owns homes in his home state, as well as in Florida and Tennessee. Sanner says he has been investing in South Padre Island properties since 1983, and he has no plans for that to change.

"Things don't go at the same pace in Texas as they do in my island part of Florida," says Sanner, who owns a home near Stuart, Fla.

Laguna Harbor
A look farther north along the Texas coast shows another single-family community being built in an eco-sensitive manner. Laguna Harbor, on the Bolivar Peninsula near Galveston, is an 80-acre development where the homes are built to be hurricane-resistant, with modular factory-built sections that are bolted onto concrete and steel pillars.

"We're introducing 'Fortified ... for safer living' construction to the area," says Jim Hayes, the project's developer. The Institute for Business & Home Safety's "Fortified ... for safer living" program offers guidelines on how to construct disaster-resistant homes.

The company has sold about 60 of its 87 lots, Hayes says.

"Modular production is really coming on," Hayes says. "It used to be that modular meant mobile homes; now it means high-quality products."
Laguna Harbor also created a few restrictions that will please environmentally minded homeowners. When a home changes hands, an environmental impact fee of 0.5 percent of the sales price will be assessed and donated to the Audobon Society or similar environmental group "to promote and enhance issues involving coastal environment," Hayes says. The community also prohibits residents from mowing in a 25-foot-wide section at the water's edge and has set aside 15 acres as a wetlands area.

"People here realize that when there is a development, there is an impact on the environment," Hayes said.  read more ...

Condo boom on Texas coast defies national downturn Luxury towers adding new dimension to coastal skylines

By Carrie Alexander SPECIAL TO THE AMERICAN-STATESMAN

Condominium developers along the Texas Gulf Coast are doing something strange these days: They're continuing to build.

As a housing slump grips much of the nation, beachfront development in long-hot locales such as Florida and California has ground nearly to a halt. But the real estate market on the Texas coast — and specifically, the condo market — has managed to stay strong.

"We did feel the downturn, but not the devastation some markets have had," says Alice Donahue, a real estate broker who operates TexasGulfCoastOnline.com, a site that tracks real estate trends in the area.

Jim Gaines, a research economist at the Real Estate Center at Texas A&M University, says that while the national credit crunch has had an impact on the Texas Gulf Coast condo market, most developers "still feel things are pretty good."

"I think for the future (of the condo market), the coast still gets an excellent grade," Gaines says. "The development potential is still very, very high."

Despite national housing concerns, "I feel highly confident in the Texas market, and the Galveston market, for high-rise condos," says Richard G. Anderson, vice president of development for the Falcon Group of Houston, which is developing the $170 million Palisade Palms condo project in Galveston. "Texas, by and large, wasn't able to take advantage of the go-go days of 2004 and 2005, but at the same time, the oversupply didn't hit us like it did in Las Vegas, Florida and San Diego. Texas is fortunate enough that right now we seem to be insulated from a lot of that."

Here is a look at some of the condo developments that are either in the planning stages or are recent additions to the Texas Gulf Coast.

Palisade Palms

At the north end of the Texas coast, a giant condo project has sprung up to dominate the beach-front skyline.

With its twin 27-floor towers, the luxurious Palisade Palms development casts a long shadow over Galveston Beach. The project, developed by the Falcon Group of Houston, began construction in late 2005, and the first residents are scheduled to begin moving in this spring.

Together, the two towers have 288 suites, and about 250 of those have already been sold, says Anderson. The residences will have the amenities of a resort — multiple pools and spa areas, on-site cafes and restaurants and balconies in each unit.

Anderson says the initial two-tower project is just the first step in what could be a four-phase development. "We have enough land to build $750 million worth of project," says Anderson, who has taken the unusual step of being both developer and customer. He has purchased two of the Palisade Palms units himself.

Anderson said the story of a California buyer illustrates what's attractive about the Texas Gulf Coast market for condos. "She lived in San Diego and told us she was planning to make this unit her permanent home. I was wondering, why would you move, as a primary home, from San Diego to go to Galveston?" Anderson said. "So we asked, and she said ... she could sell her house in San Diego and she could buy in Galveston and still have $1 million in her checking account."

Maravilla del Mar

Construction hasn't even started, but the Maravilla del Mar condo project on Mustang Island near Port Aransas is already one of the most talked-about developments along the Texas coast these days, simply because of its size.

The plans call for a huge, 500-unit complex of luxury condominiums in three towers, with the tallest tower about 35 stories, says project engineer David Underbrink, who is president of Naismith Engineering Inc. The Maravilla del Mar, planned to occupy 23 acres near Mustang Island State Park, is being developed by Mustang Island Investment LLC, a group of Wisconsin investors.

"There's nothing as big as this project in this area of the world. You have to go to San Antonio or Houston to find another one like it," says Underbrink, who estimated the project at $325 million. He said the project is about a year from construction.

The Maravilla del Mar plans call for a light, airy beach-town look with the amenities of a five-star resort. Underbrink says he's not sure the Corpus Christi-Port Aransas area will ever see another development of its magnitude.

"I'm not sure that there would be another of this scale allowed in this area, with the regulations that are in place," Underbrink says. "It might be a one-time-only project. There could be others something like it, but not nearly as tall."

The Sapphire

At the south end of the Texas coast, on South Padre Island, yet another high-rise project is drawing attention. The Sapphire South Padre, a 31-story, twin-tower project with about 220 luxury units, is due to complete construction this summer. Dubbed "The Crown Jewel of South Padre" by its developers, Randall Davis Co. of Houston, the project will be the tallest structure on South Padre. The development's two towers are connected for the first 19 floors, then divide into separate spires.

The Sapphire's focus will be on high-end, resort-style living with concierge service, pools and a private, on-site movie theater. The development is expected to be ready no later than December.

The Sapphire is designed by Ziegler Cooper Architects of Houston, which designed the Austonian condo tower currently under construction in downtown Austin. R. Scott Ziegler, one of the founding principals of the architectural firm, says the narrow nature of the island presented an opportunity to build with an unusual feature — waterfront views from both sides. "You get fantastic east views of the Gulf, and the west views are of the back bay," Ziegler says.

Ziegler said that the Sapphire is built to take advantage of the setting on Texas' southern Gulf Coast. "South Padre Island is a lot more precious part of our coast than other areas, such as Galveston might be, as far as raw natural beauty," he said. read more ...

Gulf Coast living 'New urbanism' makes inroads along the Texas shore

It might sound like a contradiction in terms, but the Texas Gulf Coast, long known for its remote stretches, is undergoing a "new urbanism" movement.

Nearly two-thirds of the state's shoreline is protected from development. But where it's permitted, development has been revving up, from Galveston to Mustang Island.

The new, 260-acre Beachtown project in Galveston is typical of what's going on. The community is master-planned by Duany Plater-Zyberk & Co., the firm behind the noted new urbanism developments in Florida — Seaside and Rosemary Beach — that became popular in the 1980s and '90s.

Such communities feature narrow, pedestrian-oriented streets, a mixture of housing types surrounding retail and office space, and numerous squares, plazas and parks.

Waterfront lots at Beachtown go for about $300,000, but lots without a view are selling for as low as $80,000.

Even The New York Times has taken notice of the often-overlooked Texas coast, recently proclaiming Galveston Island as "an emerging Lone Star equivalent of the Hamptons." Coastal Living magazine chose Beachtown as the site of its 2008 Idea House.

Farther south, a project similar to Beachtown is going up on Mustang Island. The $235 million Cinnamon Shore project will have a town center as well as a golf course and multiple parks.

Cinnamon Shore eventually will have about 200 single-family homes and 56 condos, with homesites ranging from $125,000 to $595,000. Prices for completed homes start at $379,900 and go above $1 million.

The big driver behind such projects on the Texas coast is simple: money.

"For anyone interested in oceanfront property, it's the only game left where you can get in for less than $1 million," says Jim Gaines, research economist at the Texas A&M University Real Estate Center.

"The only disadvantage to buying on the Texas coast was that you wouldn't be near a principal, major city, except for the Galveston and Corpus Christi areas. The rest of the coast had been considered fairly remote," he says.

But Gaines says that much of the Mexican Gulf Coast once was considered remote and that Cancún and Cozumel, both in Quintana Roo, sprang up because the government stepped in and helped turn them into tourist destinations.

Texas hasn't had such government-driven developments. But for communities up and down the coast, "new urbanism" projects are getting approved in part because they include retail and restaurants, providing a much-needed sales-tax base, Gaines says.

"A lot of the local coastal communities have fought the pace and level of development and have required developers to do something that was like the new-urbanism approach," Gaines says. "They want it to be controlled, planned, to be mixed-use. They wanted developers to create bigger tax bases by including retail and other things.

"It has been an attitude of 'growth is coming, how do we control it and create a better atmosphere?' "

Gaines says he thinks the coast "is one of those markets that's really waiting to catch on fire."

Part of the expected growth will come from baby boomers buying retirement homes, he says. Also, "land that has been formerly unavailable for development, land owned by families and trusts, is coming on the market, and that will speed things up," he says.

Then there's the factor of foreign investment. "Because of the falling dollar, it's like a 30 percent-off sale for homes in the States. And if you're a European or Mexican who's looking for coastal property, it's far more affordable here than anywhere else."

cealy@statesman.com; 445-3931  read more ...

HOPE NOW releases list of all alliance members' toll-free numbers

HOPE NOW has released a list of the toll-free service numbers for every alliance member as part of its unprecedented effort to encourage distressed homeowners to get in touch with their servicers. This phone list represents over 90 percent of the servicers of the subprime market and over 80 percent of the prime market.

"It is a top priority for all those involved in HOPE NOW to get in contact with the at-risk borrowers," said Faith Schwartz, executive director for HOPE NOW. "We strongly encourage any homeowner in distress to call their mortgage company or the Homeowner's HOPE Hotline 888-995-HOPE, to discuss options." read more ...

The Wall Street Journal Reports - affluent retirees are transforming rural communities.

Affluent retirees are descending on remote areas and creating demand for amenities like interior-design stores, spas, and organic markets. For many of the communities, this is the biggest change since the interstate highway system was built in the 1960s.

What’s driving the transformation is a shift in the nature of the economy – thanks to the computer, many good jobs can be done anywhere, says Peter Nelson, an associate professor of geography at Middlebury College and an expert on rural migration.

The impact of rural gentrification drives up the price of property and the influx of money creates new jobs in lodging, restaurants, and other service industries. "What we’re seeing is a class colonization," says Nelson.

One indicator of rural gentrification is an increase in residents’ total dividend, interest and rent income. That measurement, tracked by the Commerce Department, is a sign that new residents – usually retirees – are living off their investments rather than salaries.

For instance, in Teton County, Wyo., home of Jackson Hole Mountain Resort, total dividend, interest, and rental income has risen 177 percent between 1996 and 2005, one of the largest increases in rural America.

Locally, the rural Bolivar Peninsula coastal area has seen vacation home rental incomes rise dramatically over the past several years.

"We now have many homes with rental incomes that exceed 50,000 a year" - says Anne Willis of Swedes Real Estate - who manages over 300 properties on the Peninsula. read more ...

From the New York Times

The real estate market these days is a tale of two Americas, and one of them is not doing too badly.

In the America of big-city housing markets, especially on the east/west coasts and in the struggling industrial Midwest, the huge run-up in values in recent years has given way to big drops in prices and sales volume. Millions of people owe more than their houses are worth.

But in the other America, places like Texas and the Texas Gulf Coast, the available evidence suggests the real estate market is holding up.

Prices there never boomed as crazily as they did in the big cities, and now, even though volume is down almost everywhere, prices in many of these towns are firm or rising. read more ...

Southeast Texas chamber of commerce executives told an industrial group Tuesday they are striving to attract new workers to the region.
It's an issue central to the industrial expansion that will result in an outside investment of about $12.8 billion in Port Arthur and Beaumont that also affects Hardin and Orange counties.

Added to that figure is another estimated $1 billion in school bond issues approved by voters in various districts.

Everyone needs to join in the effort to bring in an expected 15,000 workers needed for the projects, said Jim Rich, president of the Greater Beaumont Chamber of Commerce.

Rich, and his Port Arthur and Orange counterparts, outlined their efforts to members of the Golden Triangle Business Roundtable's monthly meeting in Port Neches.

"We have a tremendous need to attract people here," Rich, addressing members of the Golden Triangle Business Roundtable, said.

"We all have to be salesmen for this area. We need to all be out there trying to recruit people because the communities that can attract talent are the communities that are going to be successful," he said.

Rich, along with Sabrina Gray and Mary Ann Reid, presidents of the Orange and Port Arthur chambers of commerce respectively, also noted an accompanying commercial and residential construction in their communities.

Although local workers will be able to fill many of the job openings additional laborers need to be attracted to the region, Rich said.

Toward that end each of the three chambers is engaged in a marketing effort for their communities, although Orange is the only city to have announced a new slogan.

Gray said community leaders plan to market the city as a place with "small town charm and world class culture."

Gray said they hope to raise awareness of the Stark Museum of Art, the Lutcher Theater for the Performing Arts and Shangri La, a series of botanical gardens set to reopen in March.

"The rebuilding of Mr. (H.J. Lutcher) Stark's gardens has brought an excitement to Orange we haven't seen in many, many years," she said.

The consulting firm, North Star Destinations Strategies of Nashville, Tenn., is working on a branding campaign for Beaumont.

A presentation on the plan for Beaumont will be made Tuesday at City Council.

While city leaders from each community are working to raise their city's profile they have also worked well as a team, Rich said, particularly when attempting to acquire relief funds following Hurricane Rita.

He stressed the need to continue to work together and indicated a delegation will travel to Lake Charles, La., to visit with officials there about joining in a cooperative effort to address common issues such as a shortage of skilled labor. read more ...

Congress is looking at more incentives as ways to address problems in the housing market.

Top Democrats, who successfully backed the just-passed economic-stimulus bill, say they will push through a second measure that will allow bankruptcy judges to alter the terms of certain mortgages.

Another measure under consideration is a tax break allowing companies with operating losses this year or the two previous years to apply them to past years for a refund. This idea is popular with home builders.

A third proposal would allot an additional $10 billion in bonding authority so housing-finance agencies can give more help to people refinancing subprime loans or first-time buyers. President Bush recently backed this idea.

Lawmakers also are considering $4 billion in block grants so localities with high foreclosure rates can buy and rehabilitate unoccupied property and $200 million for pre-foreclosure housing counselors. read more ...

Airline traffic falls for first time in 2007

U.S. airlines carried fewer passengers in November, the first time in 2007 that traffic declined compared with the same month a year earlier.

This could indicate vacation home goers are more interested than ever in close drive to their destinations.

And that bodes well for the Texas coast, where the bulk of its tourism and second home buyers come from within a 2 hour drive. read more ...

Texas Homeowners Hold Winning Hand, Says Real Estate Center

Affordable housing is the state's ace in the hole in the predicted future high-stakes real estate version of Texas hold 'em. In fact, the state's leading expert on residential real estate is betting housing affordability will be the "most significant growth stimulant" for Texas over the next 25 years.

"Texas is the most housing-affordable, high-growth state in the nation," says Dr. Jim Gaines, research economist for the Real Estate Center at Texas A&M University. "So far, skyrocketing home prices common to fast-growing states like California and Florida have not occurred in Texas."

In mid-2007, the state's median-priced home was $151,000 - some two-thirds the national median of $229,000 and about 75 percent less than California's $589,000.

According to the Texas Housing Affordability Index compiled by Gaines, a Texas family earning the statewide median income has 152 percent of the income required to qualify for financing on the median-priced home. Nationally, families have about 16 percent more than is required.

Other measures show just how affordable Texas homes are. One expresses median house value as a multiple of median housing income. The lower the multiple, the more affordable the housing.

"In 2005, the national median home value was 3.62 times the median household income," says Gaines. "In Texas, the median value was only 2.52. Current median prices to median household income multiplies are even higher, and the difference between Texas and the nation are even more pronounced."

Gaines says housing affordability is just one card in a deck stacked in the state's favor. The other winning cards include lower cost of living and cost of business, greater employment opportunities and an appealing lifestyle.

"Events and circumstances point toward a Texas-sized boom between 2005 and 2030," Gaines writes in the latest issue of Tierra Grande magazine, a periodical sent to all the state's real estate licensees. "The state's population and economy -- as well as its housing and commercial real estate markets -- are poised to explode in volume and prices."

Gaines says the real estate game is changing, and the stakes are getting higher.

"Things will change dramatically from what many Texas are used to," he predicts. Population will be a key player at the table as Texas is projected to grow by 13.6 million by 2030.

"That's the equivalent of adding another Dallas-Fort Worth metropolitan area, another Houston metropolitan area, another San Antonio metropolitan area and another Corpus Christi," he says.

"Growth and prosperity will spread throughout the state, but most of the growth will occur in the state's urban areas," says Gaines. "Four out of every five Texans will live in the Dallas-Fort Worth-to-Houston-to San Antonio triangle."

New Texans will bring new jobs.

"Texas leads the nation in job creation. If Texas maintains its average employment-to-population ratio as expected during the next 25 years, the state will add another 4.5 to 5.8 million jobs," says Gaines. "Job growth is expected to be stimulated by overall U.S. economic growth and enhanced by Texas' employment-friendly characteristics."

More people and more jobs will lead to higher personal income.

"Extending the long-term trend that began in 1969 suggests the state's total personal income could increase by $1 trillion by 2030," says Gaines. "The 2005 Texas median household income of $42,139 could reach nearly $68,000 by 2030."

With the gains will come pains, says the noted economist.

"The projected population and employment boom will also strain local and state resources to provide public services and infrastructure," he said. "Texas will experience the same growing pains as other high-growth states. State and local fiscal capacities will be stretched, and Texans will debate the level and type of growth they want in their communities."

For more on Gaines' Texas economic outlook for 2030, including his thoughts on what might disrupt the ideal game plan, see "Looming Boom: Texas Through 2030" available online at http://recenter.tamu.edu/pdf/1841.pdf.

The Real Estate Center (recenter.tamu.edu) has been providing solutions through research for 35 years. Funded primarily by Texas real estate licensee fees, the Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers and the general public.

Real Estate Center at Texas A&M University
Dr. James Gaines, 979-845-2079
or
David S. Jones, 979-845-2039
or
Bryan Pope, 979-845-2088 read more ...

Tighter Lending Standards "Hurt" Those Needing Help, for all the talk we do about refinancing loans and helping troubled borrowers and saving the housing market with lower interest rates, the bottom line is that tighter credit is the culprit.

Banks simply aren’t willing to lend to the even slightly less than credit-worthy customers. I hear it from industry insiders and outsiders for that matter. It’s one thing to offer all these bailout plans, to beg people to call their lenders to refi, to lower interest rates in order to lure buyers off the fence. But the bulk of those people everyone’s trying to lure and help and bail out are inevitably being turned away by the very banks and lenders that created this problem in the first place.  read more ...

Gov. Rick Perry identified Petroleum Refining and Chemical Products as one of six industry clusters in is long-term, strategic job creation plan announced in 2004. Each cluster was selected because of its powerful potential for future economic growth.

The Petroleum Refining and Chemical Products cluster is responsible for more than $82 billion in gross state product, almost 870,000 total jobs, and $3.6 billion in annual state revenues. Major employers include Exxon Mobil, El Paso Corp., CITGO, Conoco Phillips Refinery, Shell Oil, and Valero. Petroleum Refining Across the state, crude oil and natural gas are produced in 218 of 254 counties. About 250,000 Texans are employed in oil and gas exploration, production, refining, and related industries.

Texas’ oil and gas industry contributes about $63 billion annually to the state’s economy. Texas is the No. 1 producer of oil and gas, refined products, and chemicals in the United States, and its marketed production of natural gas represents one-third of total U.S. supply. As an oil and gas producer, the state of Texas also is a global leader, contributing approximately 5.3 percent of worldwide refinery capacity. Texas is home to 26 operating refineries that produce an average of 4.3 million barrels of petroleum products per day. Natural gas production in the state exceeds 5 trillion cubic feet a year. Texas’ Gulf Coast refineries account for 86.7 percent of the state’s oil and gas capacity. Texas’ refinery business is working hard to reduce refinery emissions and to produce a variety of differing grades of lower-emitting fuels. Over the past decade, as much as 50 percent of the refinery industry’s overall capital investment costs is spent to meet federal environmental mandates.

Texas is the nation’s largest chemicals producer, manufacturing 14 percent of the nation’s value of chemical output. The Gulf Coast complex of chemical plants and refineries is the largest petrochemical complex in the world, home to more than 200 chemical plants. At least 124 of Texas’ 254 counties have some amount of chemical manufactured output. read more ...

Fed Rate Cut Spurs Mortgage Applications

Mortgage applications rose another 7.5 percent last week on a seasonally adjusted basis, compared to the previous week, according to the Mortgage Bankers Association’s weekly mortgage applications survey.

On an unadjusted basis, the index increased 10.5 percent compared with the previous week and was up 70.7 percent compared with the same week a year ago.

The increase reflected a rush to refinance even though rates were up slightly from the previous week when the Federal Reserve responded to recession fears by cutting key rates by three-quarters of a percent. The refinance share of last week’s mortgage activity was 73 percent, up from 60 percent the previous week.

Mortgage rates rose:

* 30-year fixed-rate mortgages increased to 5.6 percent from 5.49 percent.
* 15-year fixed-rate mortgages increased to 5.04 percent from 4.96 percent.
* 1-year ARMs increased to 5.7 percent from 5.51 percent. read more ...

Affluent retirees and other high-income types have descended on remote areas, creating new demand for amenities like interior-design stores, spas and organic markets. For many communities, it's the biggest change since the interstate highway system came barreling through in the 1960s and 1970s.

With the Internet allowing people to work from almost anywhere, the distinction between first and second homes has become blurred. Many people are buying retirement property while they're still employed. Millions of soon-to-retire baby boomers, say demographers, will propel this trend for years to come.

Baby Boomers and the previous generation are moving to rural areas in increasing numbers, according to Kenneth Johnson, senior demographer at the University of New Hampshire's Carsey Institute.

76% more people over age 50 moved to recreation counties, places with lots of amenities and seasonal housing.

This suggests that people who are now in their 50s and 60s are moving into these recreation counties more than in the past read more ...

Strong Housing Demand Means Better Times Ahead

Factors that will drive up demand:

1. Net household growth should total 14.6 million from 2005 to 2015

2. Considering only changes in age distribution of the population, the period should see demand for 1.2 million additional second homes. The true demand could even be much higher.

On the strength of demographically-driven demand for housing, the market will bounce back from its currently suppressed levels read more ...

Demand Versus Buyer Hesistation
by Lawrence Yun, NAR Chief Economist

Pent-Up Demand
The pent-up demand is indeed sizable once we run through the tapes. Job and income gains have risen solidly over the past two years – interesting when at the same time home sales have been falling. Net job gains have increased by 4.3 million according to both company payroll data and household survey data. U.S. aggregate personal income has risen by $1.4 trillion over the past two years. Such job gains should have translated into about 2 million additional homeowners, yet the actual rise over the two-year span was only 600,000. Over the same time period, housing affordability has actually improved with incomes rising, home prices falling, and conforming mortgage rates at near historic lows, yet … a very slow rate of net new homeowners.
Furthermore, household formation has mysteriously slowed. With normal population and job increases, household formation typically expands by 1.2 million to 1.5 million per year. The latest Census data points to only 650,000 net new households formed in 2007. Many people have evidently doubled-up with additional roommates or have moved back with parents and family members.

But buyers are hesitant. Why? Anticipated lower home prices are holding back many people from buying a home now. Foreclosures will continue to rise in 2008. There are many research reports and media reports (irrespective of validity) pointing to further price declines. Anticipated lower interest rates are also holding back many potential buyers. It is widely believe that the Federal Reserve will be cutting rates in the next two or three meetings. Though there is no direct relationship between a Fed rate cut and mortgage rate changes, many consumers perceive that mortgage rates will fall with the later Fed rate cut. Given this perception, it would be wise to make a one-time large rate cut rather than a series of small rate cuts in order to end the delay in home buying. Since the Fed Funds rate is likely to be at 3.5% by late spring, why not just cut it to that level (from its current 4.25%) at the next FOMC meeting?

Though pent-up demand clearly exists, it is still tricky to anticipate when a meaningful recovery will take place. I do not foresee any major existing-home sales declines from this point onwards, but sales could remain at their current soft pace for a while. Will it be spring or summer or fall when we will see a notable pick-up in home sales? Difficult to say, but it will happen in 2008. read more ...

Insurers overcharge and underpay

Even in years of significant hurricane activity, U.S. insurers are reaping record profits by overcharging for policies, underpaying claims, dumping thousands of coastal customers and shifting costs onto taxpayers, according to a report released Thursday by a national consumer group.

The Consumer Federation of America’s report concludes that overcharges by insurers in the past four years amounted to an average of $870 per household.

It also accuses the property/casualty insurance industry of engaging in anti-consumer practices that led to “bloated surplus and reserve levels.”

“Consumers ultimately pay the price for the unjustified profits, padded reserves and excess capitalization that exist right now in the industry,” said J. Robert Hunter, an actuary, former state insurance commissioner and former federal insurance administrator who authored the study.

Industry Responds

Industry representatives said the study was “fatally flawed” and “grossly distorts” their financial picture.

They defended profits, which they say are rare and should reassure consumers that money is available to meet obligations.

“The self-described consumer groups have been riding this tired old horse on the odd occasion the insurance industry earns a profit,” said Jerry Johns, a spokesman for trade group Southwestern Insurance Information Service.

“For years, insurers have consistently lost money on most lines of property and casualty business.”

The federation said it pored over the balance sheets for property/casualty insurers, a group lately bemoaning increasing weather-related exposure in a warming world, to find they’re in better shape than at any time in history.

Record Profits

The report also estimates that last year’s after-tax returns were about $65 billion, just less than the record set in 2006.

Profits for the record years of 2004, 2005, 2006 and 2007 are estimated to be $253.1 billion, according to the report.

“Unfortunately, a major reason why insurers have reported record high profits and low losses in recent years is that they have been methodically overcharging consumers, cutting back on coverage, underpaying claims and getting taxpayers to pick up some of the tab for risks the insurer should cover,” Hunter said.

In reaching some of its conclusions, the federation studied pure loss ratio, which is the amount of each premium dollar insurers pay back to policyholders in benefits. It found the loss ratio was only 54.6 cents last year.

The Texas Department of Insurance said in March that in 2005, the year of Hurricane Rita, the loss ratio averaged a healthy 57 percent among insurers doing business in the state.

Insurance consumers have been losing ground for two decades, according to the federation’s report.

“Over the past 20 years, the amount paid back as benefits has dramatically declined from over 70 cents per premium dollar, indicating a huge loss in the value of insurance to consumers,” according to the federation’s report.

Numbers Challenged

Robert Hartwig, an economist and president of trade group Insurance Information Institute, released a statement Thursday challenging the report and the notion that insurers were paying less to consumers.

“Insurers are protecting more cars, homes and businesses than any time in U.S. history and have been an essential component of the country’s economic growth engine for decades,” Hartwig said.

“The insurance industry has paid out billions of dollars in insured losses over the past few years and insurance proceeds constituted the single largest source of critically needed funds contributing to the stabilization and recovery of the Gulf Coast’s economy after Hurricane Katrina. So to say claims payouts continue to drop is absurd.”

The federation report also homed in on the industry’s retained earnings, known as surplus, which, by its estimates, were $687 billion for the entire industry by the end of 2007.

“An adequate surplus guarantees a safe insurance industry, but this amount is excessive by any legitimate measure,” according to the report. The federation said the insurance industry was overcapitalized.

Hartwig said the federation’s study criticized private auto and home insurers but included data from government-run insurers that sell, among other things, workers’ compensation, artificially inflating surplus figures.

“More serious is the fact that the CFA compounds this error by double counting tens of billions of dollars in surplus on the books of individual insurers,” Hartwig said.

The federation overstated the industry’s claims-paying capacity by about $160 billion in 2007, Hartwig said. Actual surplus last year was $530 billion, he said.

Hidden Profits

When industry profits are high, insurers tend to pad their reserves, removing income from profit statements and lowering their tax burden, according to the report. Reserves aren’t taxed and income is.

“This practice also allows insurers to point to inflated ‘losses,’ which rise because of reserve redundancies, as justification for not lowering rates,” the report concluded.

The report comes as Texans, specifically those living in coastal counties, are watching their homeowner rates rise and while regulators and insurers become more acrimonious in their fight about what consumers should pay for insurance.

Last month, Farmers Insurance Exchange and Fire Insurance Exchange notified the Texas Department of Insurance about their intentions to raise rates, on average statewide, 2.5 percent and 1.7 percent respectively.

But Farmers’ 10,717 Galveston County policyholders could see their premium rates increase between 14 percent and 16 percent, said company spokeswoman Michelle Levy.

Also last month, State Farm Insurance Co. filed plans that could mean homeowner premium rate increases of as much as 22 percent for some of its 13,600 Galveston County policyholders.

In October, a judge ruled that Allstate homeowner policyholders — there are 10,000 in the county — would continue paying a 5.9 percent increase in premium rates while regulators and the company slugged it out in court.

“The rates people pay in Texas are based on losses in Texas and have nothing to do with what is going on in other parts of the country,” Johns said.

“It is simply inappropriate and highly misleading for a group to draw conclusions, which plant a false sense of distrust in the minds of millions of people.”

Insurers cited rising cost of construction, labor and reinsurance — coverage insurers buy to protect themselves from catastrophes.

In recent years, insurers have dropped thousands of county windstorm policies, pushing them to a dangerously burdened state-created insurer of last resort. read more ...

Business Facilities magazine named Texas #1 in economic development.

Based on a state-by-state survey of economic development deals over the last 12 months, Business Facilities magazine named Texas--with a total of $15.4 billion in investment and 9,335 jobs to be created from new projects--its State of the Year for 2007.

States were asked to submit information on their five largest economic development projects by both job creation and total investment over the last year.

Twenty-six states completed surveys and Texas was far and away the leader, according to Business Facilities.

The five projects Texas entered for expansion were Rackspace Managed Hosting with 5,000 jobs; Fidelity Investments, with 1,535 jobs; Maxim Integrated Products, with 1,000 jobs; Fluor Corp. (NYSE: FLR), with 1,000 jobs; and Dimensional Fund Advisors, with 800 jobs.

The top five Texas projects by investment were Motiva Enterprises, with $7 billion; NRG Energy Inc. (NYSE: NRG), with $5.4 billion; Eastman Chemical Co. (NYSE: EMN), with $1.6 billion; Microsoft Corp. (NASDAQ: MSFT), with $985 million; and CitiCorp, with $450 million.  read more ...

2007 was a banner one for the wind ener