Aaron Layman's Katy Texas Real Estate Forum

KBR Cancels Katy Campus Project

After placing plans of a new Katy campus on hold last year, it appears KBR has officially pulled the plug on the proposed Katy campus.  According to the Chronicle report, KBR will instead be leasing additional space downtown.  The decision to pull the plug on the Katy campus was no doubt influenced by increased availability of office space downtown in the more competitive commercial real estate market.

Houston Makes List of Most Undervalued Cities in 2010

A recent CNN Money report of America's most undervalued/overvalued cities in 2010 shows Houston selling at a 28 percent discount to fair market value.  The report, compiled by IHS Global and PNC Financial Services, updates rankings of major U.S. real estate markets compared to the peak real estate prices in 2006.  As one might expect, most of the markets in Texas are currently listed as undervalued.

To provide a little more accuracy to the report, I looked at Houston's median home prices for January 2010 which were approximately $149,500.  That's higher than the $128,200 listed in the undervalued index.  Looking at local available data, Houston area home prices are undervalued by roughly 10 percent, not the 28.8 percent on the chart.  It's also worth noting that median home prices in Houston actually touched the fair market value of $165,000 extrapolated from the index during the summer of 2009.  It's nice to know our local real estate market is behaving quite rationally.  That's something which cannot be said for other U.S. real estate markets.

HAMP, Hope, Hype & Fraud - The evolution of the short sale movement in real estate

Having recently earned my designation as a certified distressed property expert (CDPE), I thought I would take a few minutes to reflect on the evolution of the short sale movement.  The housing bubble burst, followed by the collapse of the financial markets has spawned a new, if not unwelcome, business in the real estate industry.  Short sales, in which the property is sold for less than the outstanding mortgage balance, now comprise a large percentage of real estate transactions in some depressed housing markets.  In cities like Miami, Las Vegas, Phoenix and Detroit it's not to hard to find homeowners who are upside-down on their mortgage.

While Houston has been immune from most of the damage in the housing market, there has been a steady supply of foreclosures in the last few years.  Most of the foreclosures in the Houston area have been in the starter home market, but there has been noticeable softness in the upper end of the market lately as well.  For homeowners who are falling behind on their mortgage payments and have no equity in the home, a short sale can be the best alternative to foreclosure.

To curtail the damage in the real estate market, the government has thrown the proverbial kitchen sink at the problem.  Purchasing securities to push mortgage rates to record lows, mortgage modification programs, mortgage debt forgiveness, and tax credits for home buyers have supported an otherwise lousy U.S. real estate market.  In Houston, and much of Texas for that matter, the stimulus efforts have kept real estate prices relatively flat, as opposed to spiraling downward.  Houston, and the local real estate market, is positioned to weather the downturn better than most parts of the country.

With unemployment numbers continuing to drag on the economy, the real estate market is likely to struggle for several more years.  Mortgage delinquencies in all classes, not just sub-prime, have been piling up.  Many option ARMs are also going to reset, compounding the pile of paperwork for loan servicers.  While the government has been touting the improved success of mortgage modifications, officials have given little press to the rising number of mortgage delinquencies.  Big banks have refused, or in many cases are unable to accurately mark-to-market all the bad loans on their books.  To do so would mean another TARP bailout (spelled taxpayer rescue plan).

The reluctance by banks to admit or deal with the problem explains why short sales have to this point been so extremely difficult to actually close.  Even though banks know a foreclosure is more expensive than a successful short sale transaction, they've tried to "kick the can down the road" in the hopes of a housing market rebound.  Faced with a more prolonged slowdown, the Treasury Department has issued streamlined short sale guidelines which will hopefully speed up the process and address some of the illegal activity associated with short sales.  Legal iincentives for all parties involved should help bring more transactions to a successful closing.

As the short sale movement kicks into high gear, homeowners and Realtors alike should be careful to check the credentials of supposed professionals or companies purporting to provide assistance.  I've already noticed one company marketing to homeowners and real estate professionals with a dot.org web address and a logo designed to look like an official government program.  While they are busy duping distressed homeowners, they are also attempting to charge Realtors for bogus leads.

A Realtor's CDPE designation is insignificant compared to the experience and professionalism that individual brings to the table.  My decade of experience selling real estate is much more valuable to a distressed homeowner or buyer.  In addition to being a licensed real estate broker and MBA, I hold three different teaching certifications with the Texas Education Agency.  That gives me a unique perspective on my own business, and the industry I happen to be a part of.  When I say I am more than just a salesperson, I mean it!

Federal Housing Administration (FHA) Raising Fees For Borrowers...Again

FHA is set to announce new, higher fees which will make it harder for borrowers to obtain a government-backed mortgage.  As the economy has suffered, the popularity of FHA loans which require a minimum down payment of only 3.5 percent has swelled.  FHA loans accounted for roughly one third of all new mortgages in 2009, and nearly half of all first-home buyers utilized the FHA mortgage program.  Mounting losses on defaulting loans have forced the agency to take measure to shore up the FHA reserve fund.

Up-front mortgage insurance premiums will increase from 1.75% to 2.25 percent, and borrowers with credit scores below 580 will have to put at least 10% down.  Seller contributions for closing costs will also decrease from 6% to 3%.

Katy ISD Faces Attendance Boundary Modifications (Re-Zoning) And Major Bond Election in 2010

As Katy ISD investigates their 2010 long ranch facilities plan, they will also be looking at re-zoning  attendance boundaries for the 2010-2011 school year and a very important November 2010 Bond Election.  The district held several facilities planning workshops during December to gather input on how to address the growing needs of the district.  Despite a general area slowdown, Katy has continued to add more new homes.  That poses challenges for the district as officials attempt to maximize utilization of existing facilities and meet the needs of a growing student population and the need for new schools.  A November 2010 bond election will surely draw a large amount of interest, and a very large price tag.

Cinco Ranch New Home Sales Surge 15% in 2009

New home sales in Cinco Ranch increased 15% in 2009, with 892 closed sales  That compares to 773 sales in 2008.  According to the latest Newland Communities press release, 2009 also marked the third best year for new home sales in Cinco Ranch.  A healthy supply of available spec homes and continued traffic from out-of-town buyers relocating to the Houston area contributed to the the 2009 sales increase.  Roughly 10,000 homes have now been built in the master-planned community of Cinco Ranch.

Firethorne Sees Strong Growth in 2009 Sales, Adds new Builder

The master-planned community of Firethorne achieved a record for home sales in 2009, closing 238 new homes, topping the previous record in 2007.  That marked an increase of over 16% for 2008 totals.  At over 900 homes sold so far, it also puts the community on track to soon eclipse the mark of over 1000 home sales.

Firethorne also announced the addition of Parkwood Builders to the lineup of home builders working in the community.  Parkwood will be constructing plans from 3000 square feet up to 6000 square feet, priced from the $350s.

You can read more information about the master-planned community of Firethone at Firethorne.info.  You can also search here for available homes.

RESPA Changes For 2010 Bring New GFE and HUD-1, Business As Usual For Home Builders

2010 brings a new GFE (Good Faith Estimate) and a new HUD-1 for home buyers, and business as usual for home builders.  In an effort to streamline the mortgage lending process and provide borrowers with more accurate disclosure of important loan terms and fees, HUD has issued new forms.  HUD also caved to corporate/industry lobbyists in dropping proposed changes to 'required use".

Effective January 1st, lenders are required to use the new three page GFE.  New rules for the GFE stipulate that certain charges can not vary by more than 10 percent.  New Truth in Lending regulations  require lenders to issue new documents if the APR varies by more than 0.125%.  Besides highlighting lender charges on the first page, the new form provides a third page page allowing for comparison of multiple loan offers.  Unfortunately, the new GFE still does not address the difference in yield spread premium YSP disclosure with mortgage bankers and mortgage brokers.  To make a true comparison of loan costs, borrowers will have to look at the "Adjusted Origination Charge" and the rate for the loan.  Oddly enough, the new GFE also omits the total funds needed for closing.  The new HUD-1has been designed to look much like the new GFE, allowing consumers to match up corresponding charges. 

As a slap in the face to consumers, HUD withdrew its revised definition of "required use" which would have prevented home builders from tying incentives to use of their affiliated business partners.  After being sued by the National Association of Home Builders (NAHB), and taking in several months of public & industry comment, HUD backed down from their promise to bring more transparency to mortgage lending for new homes.  The withdrawal of the proposed "required use" rule means it's business as usual for home builders.  Builders will still be allowed to continue their shell game of advertising incentives to buyers only to recoup portions of those incentives when buyers choose their affiliated business partners.

It would appear the home builder lobby did a stellar job for their clients in 2009.  Not only did they manage to kill meaningful RESPA reform, they also managed to slide in a nice TARP accounting change, allowing them to retroactively write off recent losses against previous years' profits.  The back-door tax-loss carrybacks for home builders mean they will be receiving huge tax refunds this year, courtesy of our tax dollars.  Lennar apparently will be receiving a refund of $353 million, allowing it to pursue "distressed land-buying opportunities" according to company CEO Stuart Miller.

If it looks like a duck, and quacks like a duck...It's probably a duck! 

Katy Texas & West Houston Real Estate Market Update - December 2009

Download Jan 2010 Newsletter

Building Your Own Swimming Pool In Katy, Houston Texas - Start-Up

Start-up for your pool is a critical time for the plaster, so it's important to follow protocol and allow the plaster to cure properly.  Once the pool is filled, the filter pump should be running to keep water circulating and allow the plaster surface to cure evenly.  Besides the filter pump, all other equipment should be left off until the plaster cures and water chemistry is balanced.

To adjust water chemistry and bring the PH down, muriatic acid is added.  During the first (largest) dose of acid, we also added sequestering agent.  Addition of chlorine or other clarifiers should be kept to a minimum during start up, and all chemicals should be added in liquid form only.  You don't' want to have chemicals dissolving on the surface of your new plaster.

During the first week of start-up it's important to brush the plaster daily.  With a plaster pool, you will notice dust on the bottom of the pool as the plaster cures.  This is normal, and proper brushing brings the color of your new plaster to the surface.  After a week, I cleaned our cartridge filter and removed the accumulated plaster dust.  The result was a very nice deep blue plaster...Just what we were hoping for.

We are now some three weeks into the pool start-up, and we are ready to begin enjoying our new pool.  The water chemistry seems to be stable, and the plaster looks great.  One more week and we'll begin adding salt to activate the salt chlorinator.  At that point, our pool will be fully operational.  Here's a quick summary of Pool Plaster Start Up Do's and Don'ts.