Brown Square Bullet Point

Custom Builder of the Year

Custom Builder of the Year

Just wanted to share how proud I am of Michael’s hard work over this past year! He was honored to be named Custom Builder of the Year at the 2014 ARC awards a few weeks ago. I thought I would share the video of him winning the award. I hope you enjoy seeing his special night!

Congratulations to all the nominees. It was tough competition!

Video of the Custom Builder of the Year announcement!

 

Brown Square Bullet Point

Current market update

Well to say we have a housing shortage in the Dallas market is an understatement. I attended a housing updated for the DFW market last week and Ted Wilson with Residential Strategies Inc. and his outlook for next 4-5 years is very strong.

As far as housing inventory goes a health market is considered to be at equilibrium with a finished vacant inventory of 6 month supply. Current inventory levels are right around 2 months and some areas of town are below that.

I feel their are many factors driving this with 2 of the biggest drivers being pent up demand and a ever growing population (notice how traffic is picking up everywhere!!).  I mentioned in a blog post early last year about pent up demand. I think as the recession get further behind us, at least in our local economy home buyers are feeling a little better about looking for that new home. With current inventory so low many are turning to custom building as their  option for a new quality home.

We currently have 6 custom builds under construction and the phone continues to ring. For many of us who held on by the skin of our teeth its a welcome sound. Most of our builder friends are experiencing the same kind of increases.

 

Next issue,  labor shortage

 

stay tuned………………

 

Brown Square Bullet Point

Happy New Year

Happy New Year………….. I know I’m a little late. There is a good reason for that. Things have really picked up, not just for CUH but for just about every builder I know. Its been slowly building and now I would say we are at a slow simmer. Which is good, we need a slow and steady start up to this next cycle. Too much activity too quickly leads to……well we have been down that road before.

As I drive through neighborhoods I am finding more homes coming out of the ground than we have seen in several years. There is little finished vacant inventory on the ground, about 3 1/2 months at the last briefing I was at.

Another sign of a real estate market on the mend has been the very recent spike in lot prices. Potential tear down candidate have gone up by as much as 10-20% in hot markets, sometimes with multiple offers some by builders, some by individuals looking to build. Bottom line is if its a deal its gone quickly.

Another positive sign is number for speculative homes that are being put on the ground right now. I know several builders who have specs under construction and some of them more that one. I personally think its a good time for a spec and we are definitely considering putting down one this year. That being said I would still guess that 80% of the new construction we are seeing are of the custom build variety.

To summarize, I am very optimistic about where we are headed in the housing market and  the economy as a whole, yes we have problems and major debt issues as a county, but you need revenue to pay your debt and I see revenue increasing in several sectors . Housing has always been a major economic driver and as it goes so goes the county. Bottom line,  you just cant keep a good county down. Now if we can  avoid short term memory loss we might be OK.

Next post labor shortage, stay tuned…………..

Brown Square Bullet Point

Improving housing market

The housing market is looking up. I currently have 5 articles in my inbox all commenting on the uptick in the housing market. Ted Wilson of Residential Strategies was on Fox 4 yesterday morning talking about the lack of good inventory. Ted speaks at quarterly meetings I attend where he gives us a briefing of the past quarter in the housing market. Mr. Wilson stated we have just under a 3 months’ supply of finished vacant inventory where as a 6 month inventory is considers healthy.
I by no means pretend to be an economist, but for the last 3 years sales have outpaced construction by 12-15% all the while our population has continued to increase. About a year ago I and several of my builder buddies all agreed we were heading for a housing shortage. I think its safe to say that day is here. There is very little good quality inventory on the market and I think a lot of people who never considered building now are left with no choice if they want a new home. Spec home building is still down as lending requirements for builders is difficult to come by and can require north of 30% down on a interim construction loan.
We have been getting between 3-5 phone calls a week inquiring about the build process. What a pleasant change from 2 years ago when we were lucky to get 3-5 calls a month. We are also getting calls from Realtors with clients inquiring about the build process as they can’t find their clients what they want in current inventory.
With permanent lending rates at or near all time lows and spec home lending still difficult to come by I think custom builds will continue to be majority of the residential construction we see for the next year or two, maybe more in the luxury home market.
For those of us who have been fortunate enough to weather the storms and are lucking enough to still be around the immediate future looks much more promising.

Brown Square Bullet Point

Just now trying to blog……

Okay, I have yet to post a blog. Not sure why, life is busy I guess. I’m not sure I have much to say but I guess I will give it a try. Anyway, I have been the interior designer for Classic Urban Homes since it’s inception in 2005. I have a degree in interior design from the University of North Texas and have a passion for design that functions. My view on design is to incorporate how the home will be used or lived in. Is it for a family, couple, or are they young, empty nesters? When you start asking questions of how the space will be used, the design starts to take shape. Whether the house needs a functional home office (not just a pretty space that looks like an office) or a space where you can entertain or is it a house full of kids with tons of stuff you start to understand public vs. private areas in the home. When we build a home for a client, they become our friends not just clients. We get to know them, their families, their pets. All of this plays a role in the design of our homes. I think this is why our homes are getting attention. Not only are they modern in design and function but they are suited to our clients needs. Everything form where the laundry room is located to not having to climb the attic ladder to get the Christmas tree down because we have designed a place for their stuff. As we know, we all have stuff we just need a place for it. So I try to be logical and creative at the same time!

Well, not sure if this is much of a blog but I guess it is a start. I will try to post things regularly about what we are doing or articles that I find interesting. Thanks for reading, Jane

Brown Square Bullet Point

D Magazine: Why Homes in the Exurbs Aren’t Built to Last

Excellent article in the latest D Magazine: Why Homes in the Exurbs Aren’t Built to Last (Does it make any sense to buy a disposable house?). The general thesis of the article is this – homes built way out in the “exurbs” are not built with quality and are not built to last. The author uses the pricing in several neighborhoods to support his value premise. He highlights the pricing in Craig Ranch, Swiss Avenue, and Hollywood Heights as example of how pricing has changed since 2008.

Overall, the thesis is spot on and is exactly why Classic Urban Homes builds in the neighborhoods we do. We build in infill locations in established neighborhoods. Sounds kind of like the author’s quote:

Perhaps we trade some of that excess space for durable, well-crafted houses located in complete neighborhoods.

I do have an issue with his methodology on pricing though. Using the tax assessor’s price to gauge the relative price appreciation or depreciation is hugely flawed. I fight the assessor’s office all the time on multiple properties we own, so I am intimately familiar with their tactics. Problems with the county offices are:

  1. They have no uniform pricing criteria. The price a neighborhood and then essentially force the individual property owners to come in and fight it. They are not assessing the value of each particular house.
  2. Sales prices are not publicly disclosed in Texas, so the appraisal district does not necessarily have correct sales prices. Although, when they do get a copy of a closing statement, they will usually use it. I have, though, seen examples of times when they say that you bought it too low, we’re going to price it higher.
  3. Since it’s up to the individual property owner to fight the appraisal pricing, you have to realize that not everyone will do so. Obviously lots of factors involved as to why, but, in the end, it means that the pricing for individual property is not accurate. As an average across the neighborhood, is probably reasonably close, but not for individual homes.
  4. The appraisal districts do not use standard appraisal guidelines like licensed appraisers do. Licensed appraisers use strict guidelines dictated by Fannie Mae that they have to follow. The district does not. They have their own methodology that they consistently refuse to share. I know, because I ask to see it every year!

If you want to truly gauge price changes in neighborhoods, you have to look at disclosed paired sales prices from MLS. In order to do this, you need a realtor who will pull numbers for you.

But, overall, I think his thesis is spot on. Cheaper tract homes in outlying areas will face a lot of pricing pressure for numerous reasons. 1) The next farmer’s field over will have newer homes in a matter of years, so the “older” homes will immediately be discounted. It’s like buying a new car and having it depreciate as soon as you drive off the lot. 2) Tract homes are built cheaply! In order to get to an “affordable” price point, they have to squeeze every nickel they can. 3) As energy and gas prices increase, people are going to want to be close in, not far away.

If you’re interested in a quality, infill home in an established neighborhood, look no further and give us a call!

Brown Square Bullet Point

Case-Shiller update

It’s been a while since I’ve taken a hard look at the Case-Shiller data. I don’t really like the data for three reasons – 1) it only measures existing homes being resold from one period to another (they call it a paired sale), 2) it doesn’t include new homes (and thereby the improvement of the index number when a poor house is replaced by an improved one), and 3) real estate is LOCAL – how the market in Denver does has absolutely zero to do with the market here in Dallas. People are too obsessed with the data and always talk about “the market”…what’s the “housing market” doing…. the “market” is down. Well, not really.

The only thing I think the data is good for is to compare how, in general, based on caveats #1 and #2 above, your market is doing as compared to the rest of the country.

My suspicion from watching the home and lot prices as closely as we do, is that the data will show that we’ve been bouncing along a bottom for a couple of years. At least in Dallas, that is. I don’t care about anywhere else. I suspect and have read that the homebuyer tax credit also produced a bump in prices that was followed by a return to the bouncing along the bottom.

So, I quickly dusted off my Excel skills, and viola! updated the three charts I like to use. The first is an absolute return of the Dallas area vs the the two composite indexes starting in January 2000 through the latest data point of May 2011. The second is the same, but with a period from January 2008 to now. The third is just from January 2010 to now. All three charts are below.

In summary, they all fall in line with what I thought had been going on. Dallas never had a speculative bubble as compared to the rest of the county. Since the 2006/07 peak, our prices are down like everyone elses, but not by nearly as much.

Since 2008, Dallas has lost 3.5% versus the 22% of the whole index.

Since 2010, Dallas is in line with the index with a loss of 2.5%.

What is interesting - and what I don’t think most people recognize – is that if you measure from the start of 2000, with the exception of Detroit and Las Vegas, all other 18 city areas have had POSITIVE appreciate in their real estate prices. During that time, the average appreciation across all 20 cities is 2.9%. I think the lesson here is simple – home ownership is a investment where the long-term return will not be much different than inflation. If you are buying and hoping to flip – that’s not investing, that’s speculating. You can, and often will, get burned by speculating. Go look at that third first chart and see if you can spot the speculation. There are obviously other benefits to home ownership, but that’s for another post.

Brown Square Bullet Point

DFW Housing starts up, and down

Good local housing data article on the D Magazine Real Points blog by Ted Wilson of Residential Strategies. Several times a year, we go to presentations by Ted and his crew to review the current state of housing in the DFW area.

Short summary – new home starts in Q2 2011 is down from Q2 2010, but up from Q1 2011. The year over year drop is likely due to Q2 last year being the last quarter of the (misguided, in my opinion) home buyer tax credit.

But Ted is encouraged overall and sees the same thing that we have been seeing lately – sales and traffic has definitely been picking up.

So, what’s the new dynamic this year? Most builders are on plan, reporting steady traffic and sales for the spring and early summer months. With no artificial stimulus out there in the market today, the general expectation as we head into the rest of 2011 is that we’ll see more of a balance, with year-over-year numbers gradually improving and annual rates starting to pick back up a bit.

We’ve also seen a dramatic increase in the number of calls we’ve been fielding. In addition to our finished Lakemont house, we’ve currently got two major remodels going on and three custom jobs about to start any day. On top of those, we’ve got three or four more that are in plan stage and about ready to go!

It’s going to be a busy rest of the year for us and we look forward to it!

Brown Square Bullet Point

The Swiss Avenue Historic District: Mother’s Day Home Tour

We love home tours! Go check this one out! From the Swiss Avenue Historic District website:

SATURDAY 10AM-6PM, SUNDAY NOON-6PM
MOTHER’S DAY BRUNCH, SUNDAY 11AM-2PM

One of our city’s favorite annual events is just around the corner. Join us on Mother’s Day weekend, Saturday and Sunday, May 7th and 8th, for the 38th Annual Swiss Avenue Mother’s Day Home Tour. During this weekend-long celebration of Dallas’ historic past, you’ll explore some of the city’s most fabulous Early 20th Century homes.

Travel between the homes on air-conditioned mini coaches, or amble down the avenue in horse-drawn carriages, both provided at no charge. Between tours, relax and refresh in Savage Park. Enjoy great food and beverages provided by Penne Pomodoro and other local eateries. Listen to fabulous live music performed by area talent. And browse the displays of local artisans who will be showcasing their wares on the median in front of Savage Park.

A Mother’s Day Champagne Brunch in Savage Park on Sunday from 11AM to 2PM will feature entertainment by Matt Tolentino & The Singapore Slingers, a big-band-era orchestra specializing in music written between 1900 and 1935. Brunch tickets are $20 per person and can be reserved by calling 214.701.3396.

Home Tour tickets are $20 in advance and $25 the weekend of the event and can be purchased at any area Whole Foods Market, Forestwood Antique Mall, Lakewood Orthodontics, and at Uptown Yoga and Talulah Belle in Lakewood. During the weekend of the Home Tour, tickets can be purchased at Savage Park, Munger Place Church, or at any of the tour homes.

Their website is here: Swiss Avenus Historic District

Brown Square Bullet Point

Figures show Texas’ economic recovery continues

AUSTIN – According to the Texas Quarterly Housing Report released yesterday by the Texas Association of Realtors (TAR), Texas homes maintained their value in first quarter 2011. This despite a decrease in sales volume, indicating that economic recovery continues in Texas.

“While Texas has not been untouched by the recent economic downturn as indicated by the decrease in sales, it is encouraging to see home prices hold their value in the first quarter,” said TAR Chairman Dwight Hale.

In the first quarter, the median price of existing single-family homes increased 1.3 percent to $143,300 compared with first quarter 2010. During the same period, the volume of home sales was 40,192, 7.3 percent less than the previous year.

“In evaluating the first quarter of 2011, we must remember we’re comparing it to the first quarter of 2010,” said Dr. Jim Gaines, research economist with the Real Estate Center at Texas A&M University. “That time period included March, which was one of the most heavily government-stimulated months of the year by the homebuyer tax credit. While we expected sales to be down given this anomaly, we expected the decrease in the sales volume to be much greater, suggesting that the market is performing well despite the absence of tax credits.”

Texas had 7.5 months of inventory in the first quarter, compared with 6.8 months a year ago.

“Texas is still performing considerably better than other states in terms of maintaining balance between home inventory and demand,” Gaines said. “Combined with the fact that Texas has maintained strong property values, this indicates that the market is absorbing foreclosed and other distressed properties without experiencing harmful excess supply.”

The Texas Quarterly Housing Report is issued four times per year by the Texas Association of Realtors with multiple listing service data compiled and analyzed by the Real Estate Center at Texas A&M University. To view the report for 2011-Q1 in its entirety, visit www.TexasRealEstate.com.