Aaron Layman's Katy Texas Real Estate Forum

Home Price Forecast For Katy, Houston Texas Shows Little Change in 2010, 2011

While much of the nation may be looking at still lower home prices over the next 12-18 months, Katy and the Greater Houston area should remain relatively stable.  A recent Fiserv analysis shows that prices in the U.S. will fall by another 6% on average.  The forecast for the Houston area shows little change, with a drop of 0.8% this year with a gain of 0.5% next year.

Expiring stimulus efforts and a resurgence in foreclosures will challenge many markets.  A recent report on mortgage delinquencies showed that more than 10% of Texas mortgage holders had missed a payment.  While that's certainly a high number, it's still less than the national average.  Texas is still well below the national average in foreclosure rates with only 2 percent of loans in foreclosure.

Markets in California and Florida could be looking at additional price declines of 25 to 30 percent. Part of the problem with these areas is the shear number of homes on the market, and the number of borrowers who are already severely underwater beyond the point where they are willing to walk away from their mortgage.  Data suggests that the breaking point for homeowners is negative $70,000, meaning that when they are upside down by $70,000 the temptation to walk away from the debt becomes less about emotion and more simply a business decision.

Houston area housing numbers show relative stability compared to the rest of the country, and that picture looks to continue going forward.  Undoubtedly, some neighborhoods will not perform as well as others.  Much of that variation will likely be attributed to inventory levels.  It boils down to a simple supply and demand equation.  Here is a perfect example:

Cinco Ranch - 2.9 months' inventory with an average price of $304,010 (sold prices)

Royal Oaks Country Club - 18.6 months' inventory with an average price of $720,448 (sold prices)

One of these markets is going to be a poor performer during the next 12 months.  You be the judge.  

Katy ISD Board Approves Attendance Boundary Modifications and Volunteer Enrollment Option

The Katy ISD Board of Trustees officially approved attendance boundary modifications for the 2010-2011 school year, as well as a Volunteer Enrollment Option(VEO) which will allow students grandfathered to remain at their current high school to instead choose to move move to a new campus.  The district will hold an information meeting for those interested in the VEO on Monday, March 1st.  Attendees are encouraged to RSVP for the meeting.  Parents can download and print the VEO Applications for SLHS to CRHS or CRHS to THS.  The applications will be accepted between March 1st and March 12th.

The board's vote to approve attendance boundary modifications comes after hundreds of hours of staff work and evaluation of community input.  With growth in the southwest portion of the district outpacing construction of facilities, the district will seek to relieve some of the overcrowding that has occurred.  Many Kelliwood area communities will be rezoned from Cinco Ranch H.S. to Taylor H.S.  Some communities on the southeast side of district will be re-zoned from Seven Lakes to Cinco Ranch.

Citimortgage Offering Texas Borrowers Pilot Program for Deed in Lieu of Foreclosure

Citimortgage will apparently launch a pilot program tomorrow for deed-in-lieu of foreclosure.  The Citimortgage pilot program will be offered in six states, including Texas.  Citimortgage is also considering opening up the program to other states if it's deemed to be successful.  Program incentives include relocation expenses and counseling for borrowers, with the stipulation that borrowers maintain the home in good condition.  The program, targeting those who have already missed at least three monthly payments, seeks to avoid the costs and delays of the judicial foreclosure process.  Texas borrowers should be careful to read the terms and conditions of the deed-in-lieu offer.  Texas, like most other states, has specific laws pertaining to deed-in-lieu of foreclosure (DILF).

Katy ISD Addresses Rumors, Concerns About Attendance Boundary Modification (Re-Zoning)

Katy ISD is taking proactive steps to address rumors about future re-zoning in the district.  FACT! or Fiction? is the latest press release to address some of the rumors which have caused a stir among Katy residents.  A brief summary of the facts thus far are:

1. The district has not yet considered moving neighborhoods from Seven Lakes to Taylor.  The district is considering moving some neighborhoods from Seven Lakes to Cinco Ranch.

2. Current high school students should not be affected by the attendance boundary modifications.  Students in the 9th-11th grades will stay at their current high schools until graduation.  This should prevent any UIL issues with eligibility.

You can view the current district map and verify attendance zones on the district's web site.  A list of Katy neighborhoods under consideration for attendance boundary modification is also available.  Residents are urged to address their questions to communications@katyisd.org.

Katy Texas & West Houston Real Estate Market Update - January 2010

Katy area real estate continued to show signs of strength in January with higher average sales prices compared to a year ago.  Although volume is still off, prices are being supported by federal stimulus money and low mortgage rates.  The local economy and jobs picture will continue to be the the most critical factors going forward as federal stimulus efforts are set to expire in coming months.

Houston area sales were off by 7.4% in January compared to last year.  The January 2010 report for Houston showed that while luxury homes saw an unusual jump in sales, total sales activity declined.

CATEGORIES JANUARY 2009 JANUARY 2010 PERCENT CHANGE Total property sales 3,292 3,049 -7.4% Total dollar volume $535,131,442 $565,091,875 5.6% Total active listings 44,178 45,210 2.3% Total pending sales 3,216 2,783 -13.5% Average single-family sales price $163,983 $194,154 18.4% Median single-family sales price $129,110 $144,500 11.9% Months inventory* 5.7 6.1 6.4%

Successful Short Sale May Not Eliminate Bank's Right To Sue For A Deficiency Judgment

With short sales and foreclosure prevention making more headlines, it's easy for borrowers to be mislead that a successful short sale will eliminate their financial obligation to pay the mortgage.  That's not always the case.  As this example points out, the lender can often pursue a deficiency judgment on any short sale debt that is not expressly forgiven.

Homebuyers need to make sure they are working with competent professionals and seeking legal advice when necessary.  Section 51.003 of the Texas property code allows for a two year statute of limitations on deficiency action relating to foreclosure.  A local attorney confirmed this statute does not apply to short sales in Texas.  A bank may have up to six years to pursue a deficiency action on debt resulting from a short sale.

With new regulations in place, a qualified real estate professional has a better chance of negotiating a successful short sale and helping the homeowner to reduce or eliminate future financial obligations.  Banks will often ask the homeowner to sign a promissory note for a portion of the debt, but those offers are not set in stone.  The loss resulting from an actual foreclosure usually exceeds that of a successful short sale, and the banks know this.  Both the bank and the homeowner benefit by mitigating the size of the deficiency.  It's often better for the bank to simply write off the loss and get back to the business of lending.  Banks have different policies, so it pays to read any short sale approval carefully before signing off on the deal.  Ultimately it's up to the seller to decide what's in his/her best interest.

FHA Opens Its Arms To Investors, Fannie Provides Seller Assistance To Buyers

HUD's waiver of the 90 day flip rule on investors went into effect yesterday.  The temporary waiver will allow faster turnaround of homes.  The 90 day rule prevented an FHA buyer from purchasing an investor owned property until 90 days from the date the investor purchased the home.  This one-year waiver is only good for arms-length transactions and additional appraisals and/or inspections may be required if the new contract price is 20% above the investor purchase price.

Ironically enough, HUD is also predicting a rising percentage of FHA foreclosures in the coming years.  It's no surprise FHA borrowers are at higher risk of default with only a 3.5 percent down payment and more lenient underwriting standards.  As conventional sources of financing were drying up, FHA saw a resurgence in popularity with borrowers.  To convolute the issue even more, Fannie Mae is now offering 3.5 percent seller assistance for buyers of HomePath properties.  These are foreclosures owned by Fannie.  Until May 1st, you can essentially get 100 percent financing on a HomePath Property.