More Regulations, More Days to Close

Dr. Anari and Gerald Klassen (Aug 8, 2017)
The Takeaway
Center research reveals that Dodd-Frank regulations extend the time from acceptance to closing by one week.

Given the importance of mortgage loans for Texas real estate markets and the state’s banking industry, the Real Estate Center embarked on a research program to investigate the impact of the Dodd-Frank Act on the time it takes to sell a home. The Center leveraged its long-term time series data to investigate the length of time to complete home sale transactions in Texas after an offer is accepted.

Center researchers studied the impact of the Wall Street Reform and Consumer Protection Act on the length of time to sell homes and close transactions in Texas’ two largest metropolitan housing markets, Houston-The Woodlands-Sugar Land (Houston) and Dallas-Fort Worth-Arlington (Dallas). The research found that:

  • The length of time to sell homes in the two metro areas has trended downward in the aftermath of the recovery from the Great Recession (GR).
  • The length of time to process home sale transactions after an offer is accepted has trended upward.
  • Consequently, the percentage of time devoted to closing transactions has been trending upward to the extent that processing the transaction accounts for more than 40 percent of the time needed to sell a home.

Dodd-Frank Act Effects

Every U.S. economic recession has ended in a blame game between proponents and opponents of more or less government intervention and regulation. Among a long list of culprits blamed for nearly eight million foreclosed homes and the GR of 2007–09, subprime mortgage lending was the most prominent. Advocates for less government intervention blamed government policies that overexpanded homeownership, Federal Reserve policies that engineered artificially low interest rates, government-sponsored entities (Fannie Mae and Freddie Mac) that subsidized risky loans, and so on.

Proponents of more government intervention blamed greedy bankers seeking quick profits, rating agencies (Moody’s, Standard and Poor’s, Fitch) colluding with bankers to defraud investors by giving misleading ratings to risky mortgage-related securities, borrowers who didn’t understand what they were being offered by predatory lenders, and so on.

As Hubert Humphrey said, “To err is human, to blame is politics.” In the immediate aftermath, advocates for more government intervention emerged victorious in the GR blame game. In response to widespread calls to learn from past mistakes, the administration passed the Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) in 2010.

The 3,500-plus pages of rules targeted changes to all parts of the U.S. financial system to “promote the financial stability of the United States.” An important part of the act was devoted to regulating mortgage loans on the presumption that loose mortgage loans were the real culprit behind the GR. The Mortgage Reform and Anti-Predatory Lending Act section of the Dodd-Frank Act has more than 200 pages of regulations to “assure that consumers are offered and receive residential mortgage loans on terms that reasonably reflect their ability to repay the loans and that are understandable and not unfair, deceptive, or abusive.”

To fulfill these objectives, the act sets minimum standards for mortgage originators, appraisals, escrow accounts, title agents, and other players in the mortgage field. It prohibits “mortgage originators from steering any consumer to a residential mortgage loan that the consumer lacks a reasonable ability to repay.”

To manage new loan regulations, the act created the Consumer Financial Protection Bureau (CFPB) to “promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services.” Since its creation, the CFPB has been busy issuing rules making the Dodd-Frank Act an ongoing work-in-progress. Lenders and borrowers now need to spend more time being aware of the latest rulings of CFPB to update their knowledge of mortgage lending regulations.

The key words in the act are “the ability to repay.” The burden of verifying the ability of the borrower to repay the mortgage loan is on the lenders who are now required to check and document the borrowers’ current employment, current assets and income, credit history, monthly mortgage payments and related payments (taxes, insurance expenses), other debts, and borrowers’ debt-to-income ratios. Lenders should also determine how much income borrowers have left to pay for their living expenses after all housing costs are deducted from their incomes.

Since the passage of Dodd-Frank, there has been an ongoing debate between its advocates and opponents. Advocates argue that new mortgage regulations have prevented another nationwide mortgage default. Critics argue that the act and regulations have limited access to mortgage loans, particularly to first-time homebuyers and new retirees, resulting in fewer home sales. Banks spend millions of dollars to comply with the regulations. Compliance costs are especially important for small community banks. The increased costs have forced many of them to merge with larger banks or exit the mortgage lending business.

The debate regarding the impact of Dodd-Frank on finance and real estate markets has spurred research programs to quantify the impact of the act and empirically test the validity of various claims and counterclaims.

In a typical transaction, the time from offer acceptance to closing represents the time needed to prepare required documents, process the buyer’s mortgage application, and comply with regulations. Obviously, the more regulations and the more documentation, the more time needed to complete a homebuying transaction, but how long?

Regulations and Days-to-Close

The Center compiled monthly computations of days-on-market (DOM), days-to-close (DTC), and days-to-sell (DTS) for the two largest Texas metropolitan areas, Houston and Dallas, to test whether increased regulation has lengthened homebuying transactions in Texas. The two metros normally account for more than 55 percent of homes sold in Texas. DOM represents the number of days a house has been on the market from when it was listed for sale until an offer is accepted by the seller through a signed purchase agreement. DTC reflects the number of days from the offer acceptance date until the transaction closed. DTS is the sum of DOM and DTC. The monthly data run from January 2003 to December 2016.

The blue line in Figure 1 shows the number of DOM for single-family homes in Houston and includes short-term fluctuations and seasonality. The red line represents the long-term trend in DOM extracted using the Hodrick-Prescott filter. The trend shows decreasing DOM before the GR of 2007–09 from 83 days in January 2003 to 80 days in November 2006. This was followed by an increase to 84 days during the GR and finally trending downward during the local economic recovery after the GR to 55 days in December 2016.

The number of DTC following the offer acceptance on single-family homes in Houston trended downward before the GR, decreasing to 31 days in February 2006, then trended upward, reaching 37 days in May 2012 and 38 days in December 2016 (Figure 2). Compared with the pre-GR era, Houston’s homebuyers now need to wait one additional week to get the key for their purchased home.

The time series of DTS trended downward before the GR, decreasing to 111 days in September 2006, then trended upward to 119 days in March 2011 followed by a steep downward trend, falling to 89 days in September 2015 and ending at 91 days in December 2016 (Figure 3).

The percentage of time spent closing (mortgage application, appraisal, inspections, completing paperwork in compliance with Dodd-Frank regulations) after the offer is accepted can be calculated by dividing DTC by total DTS. The percentage of time spent closing the transaction in Houston was less than 28 percent before 2009. Since then it has risen, reaching 42 percent in December 2016 (Figure 4).

DOM for Dallas rose from 70 days in January 2003 to 82 days in September 2010. It fell during the local economic recovery after the GR to 34 days in December 2016 (Figure 5).

The DTC for Dallas trended downward before the GR, decreasing to 30 days in October 2007. Then it turned upward, reaching 36 days in December 2016, a 20 percent increase in time (Figure 6). Compared with the pre-GR era, Dallas homebuyers now also wait one more week to get the keys for their purchased home.

Dallas’ DTS was trending upward before the GR, reaching 115 days in December 2010. Since then it has decreased, reaching 71 days in December 2016 (Figure 7).

The percentage of time spent closing the transaction in Dallas was less than 30 percent before 2011. In December 2016, it reached more than 50 percent—so, shorter absolute days but longer percentage of time in closing. Favorable market conditions shortened the DOM, but regulations lengthened the DTC (Figure 8).

Mortgage Borrowers Be Prepared

Maybe waiting one more week to close a homebuying transaction is not important for some buyers, but if it is important, gathering documents showing incomes, expenses, credit history, and so on can help homebuyers minimize the days needed to close.

So what does this all mean? First, it is clear that the regulations introduced with Dodd-Frank have had a measurable impact on time taken to close a home purchase. The extra safety checks created to protect buyers and prevent another financial crisis have extended the time for transactions in Dallas and Houston to close by one week.

Second, the significant decline in DOM in Dallas and Houston reflects the urgent shortage of housing supply in Texas. While the national economy struggled to recover after the GR, the Texas economy expanded strongly, creating new jobs and attracting millions of new residents to the state.

The Dodd-Frank regulations also tightened lending conditions for builders and construction loans, leading to lower supplies of new homes. The net result is a historically low housing inventory and rapidly rising prices, threatening the affordability of housing in Texas.

____________________

Dr. Anari (m-anari@tamu.edu) is a research economist and Klassen (gklassen@mays.tamu.edu) a research data scientist with the Real Estate Center at Texas A&M University. 

Outlook for the Texas Economy

Outlook for the Texas Economy

 May 2017 Summary1

The Texas economy advanced amid increased energy activity and a strong labor market. Oil production and the number of active rigs in Texas increased, stimulating 6,600 new mining and logging jobs despite the price of oil falling to its lowest point this year. Single-family housing and nonresidential construction across the state supported higher construction values and created 3,400 construction jobs. These gains dragged down the statewide unemployment rate and sparked hourly wage increases. Overall the Texas economy remained robust, but trade uncertainty (especially with Mexico), volatile energy prices, and tax policy uncertainty present potential headwinds.

The Texas Business Cycle Index (a measure of current economic activity in the state) increased 3.7 percent year-over-year, indicating continued economic expansion. The major metro Business Cycle Indices indicated similar year-over-year growth throughout the Texas Urban Triangle. Economic activity accelerated for the fifth straight month in Houston, solidifying its recent economic recovery. The Dallas and Fort Worth indices posted the strongest growth, increasing at a quarterly annualized rate of 3.7 percent and 3.3 percent, respectively.

The Texas Leading Economic Index (a measure of future directional changes in the business cycle) flattened but maintained positive year-over-year growth. The overall health of the Texas economy balanced the index against falling oil prices. The Texas Consumer Confidence Index declined by over 8.0 percent for the second consecutive month, eliminating all of its post-election gains. Stagnant wages weighed on Texans’ confidence, but have hardly impacted consumption spending.

Multiple components generated interest rate fluctuations in May. In the beginning of the month, European political anxiety waned, elevating the ten-year U.S. Treasury bond yield to a peak of 2.42 percent. However, tensions in Washington offset this increase and dragged the yield to a monthly average of 2.3 percent. The Federal Home Loan Mortgage Corporation 30-year fixed-rate fell to 4.0 percent, despite the Fed’s 25-basis-point increase in the federal funds rate. Lower interest rates could ignite stronger demand and simultaneously stimulate residential construction.

Texas housing sales increased 8.7 percent (seasonally adjusted) after dipping last month. Current construction activity, measured by the Residential Business Cycle (Coincident) Index, was steady as construction worker wages and employment increased. The Residential Construction Leading Index (RCLI) flattened after large increases earlier this year, indicating a stabilization at the current level of activity. (For additional housing commentary and statistics, see Texas Housing Insight at recenter.tamu.edu)

The average West Texas Intermediate crude oil spot price fell to a nonseasonally adjusted six-month low of $48.48 despite OPEC’s extended production cuts. Booming U.S. production continued to offset OPEC’s market rebalancing measures. The number of active rigs in Texas increased 153.1 percent year-over-year to 4532 and crude oil productionrose above 3.3 million bpd23. The Henry Hub spot price of natural gas rose to $3.2 per million BTU2 (British Thermal Unit) despite saturated inventories. Increased oil drilling, which produces natural gas as a byproduct, contributed to a global natural gas glut. The Energy Information Administration predicts that the U.S. will be a net exporter of natural gas by 2018—the first time in nearly 60 years. Texas remained the largest gas-producing state, accounting for 23.7 percent of national production.

Texas monthly nonfarm employment added 14,800 jobs and kept pace to reach the Dallas Fed’s 2017 forecast of 289,300 new jobs. The statewide unemployment rate fell from 5.0 percent to 4.8 percent, but at the expense of a labor force contraction. The statewide labor force participation rate fell for the first time this year, dropping to 63.9 percent, but maintained positive year-over-year growth. Despite this blip, the number of initial unemployment insurance claimsremained at pre-recessionary levels, reinforcing the labor market’s strength.

The unemployment rate fell in every major Texas MSA for the second straight month. Austin boasted the lowest rate at 3.4 percent, followed by San Antonio at 3.9 percent. Dallas and Fort Worth both settled at 4.0 percent, while Houston experienced a 3 point drop to 5.4 percent. This downward trend, concurrent with recent employment growth, indicates labor force expansions throughout the major metros.

Dallas and Fort Worth led employment growth, adding 13,700 and 5,200 jobs, respectively. The number of jobs was unchanged in Austin and fell by 100 in San Antonio. Houston employment growth rose for the ninth consecutive month, supported primarily by an upswing in manufacturing and leisure/hospitality industries. Houston added over 37,000 jobs year-to-date, more than doubling the 2016 annual increase.

The goods-producing sector accounted for 80 percent of Texas nonfarm employment growth. The mining and logging subsector led the charge with 6,600 new jobs, while manufacturing posted a 1,800 job increase. The manufacturing employment percentage surged in Houston and Austin, reaching double-digit annualized growth quarter-over-quarter. The Texas Manufacturing Outlook Survey’s corroborated the industry expansion, as the production index hit a 3-year high. The hours worked and wage indices jumped 9.8 percent and 5.5 percent, respectively, and expectations soared even higher.

Construction activity accelerated, generating nearly a quarter of May’s nonfarm employment growth. Statewide construction values rose 11.5 percent on a three-month moving average (3MMA) as single-family and non-residential construction advanced. Population growth stimulated construction activity as new hospitals in Austin, Dallas, and San Antonio drove up construction values. Dallas benefitted from major investments in two-family housing and steady growth in single-family residential construction. In Houston, major increases in retail, warehouses and office buildings elevated construction values.

In Texas, the services-providing sector returned to flat growth, ticking up less than a tenth of a percent. The financial sector added 3,000 jobs, led by gains in Houston and Austin, but statewide declines in education and health care negated most of the growth. In contrast, the Texas Service Sector Outlook Survey was increasingly optimistic. Increased sales activity elevated the employment and wage indices, but respondents noted frustrations regarding burdensome taxes and regulations impeding potential growth.

Retailers expressed less optimism in Texas Retail Outlook as the retail sales and business activity indices decelerated. The employment and hours worked indices dipped below 0 and part-time employment increased, suggesting business could be slowing. The hard data confirm retail labor market struggles, where over 18,000 jobs were lost statewide since February. However, decreased optimism contradicts the steady upward trend in actual retail sales4.

Despite low levels of unemployment, Texas real personal income per capita contracted 0.4 percent year-over-year, falling further behind the national level. However, recent increases in wages and salaries, particularly in energy related industries, suggest a possible convergence. Total private employee hourly earnings in Texas rose 2.9 percent year-to-date and showed no signs of slowing. Wage growth was apparent in San Antonio, where hourly earnings increased 2.0 percent from last year, while Austin posted 1.0 percent year-over-year growth. Only recently have earnings picked up in Dallas, where the hourly rate increased 2.8 percent since February. Despite strong employment growth, falling wages continued to plague the Houston and Fort Worth economies, where hourly earnings declined 1.8 percent and 2.2 percent year-over-year, respectively.

Texas manufacturing jobs paid an 11.2 percent premium in hourly earnings relative to the national average. Fort Worth had the highest manufacturing wages, paying 65.6 percent and 49.0 percent more than the national and statewide averages, respectively. Manufacturing earnings surged in San Antonio, where the hourly wage increased 18.0 percent from last year, but remained 8.4 percent below the Texas average.

The U.S. Consumer Price Index (CPI) fell below the Fed’s 2.0 percent benchmark amid a 6.4 percent drop in gasoline prices. The core inflation rate, which excludes the often-volatile energy and food sectors, rose marginally at 0.1 percent. The CPI for Dallas fell to 2.1 percent as food, beverage, and apparel prices offset transportation and housing price inflation. The Federal Reserve considered falling prices to be transitory and remained on track to further raise the federal funds rate.

The real goods trade deficit decreased 1.6 percent as U.S. commodity export growth outpaced import growth by $1.0 billion. Total Texas commodity and manufacturing exports increased 2.5 percent and 4.0 percent, respectively, led by computer and electronic product sales. The Texas trade-weighted value of the dollar5 fell 5.1 percent year-to-date, providing favorable export conditions. Mexico remained Texas’ main trading partner, accounting for 36.4 percent of Texas exports year-to-date.

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1All monthly measurements are calculated using seasonally adjusted data, and percentage changes are calculated month-over-month, unless stated otherwise.

2Non-seasonally adjusted.

3Crude oil production data lag this report by one month.

4The Federal Reserve Bank of Dallas seasonally adjusts Texas nominal retail sales data and the data release typically lags the Outlook for the Texas Economy by one month. The series is converted into real terms using the Consumer Price Index.

5The Texas trade-weighted value of the dollar is generated by the Federal Reserve Bank of Dallas. Its release typically lags the Outlook for the Texas Economy by one month.

Texas small land sales jump 14 percent, price per acre declines in 2016

CONTACT:
Danielle Urban
Pierpont Communications
512-448-4950

 

Texas small land sales jump 14 percent, price per acre declines in 2016

Texas Association of REALTORS® releases latest edition of Texas Small Land Sales Report

 

June 23, 2017—AUSTIN—Texas small land sales volume experienced strong gains in 2016, while the average price per acre declined slightly statewide, according to the Texas Small Land Sales Report released today by the Texas Association of Realtors.

“As our state’s population continues to grow and the footprints of Texas cities expand, the demand for rural land will only increase,” said Vicki Fullerton, chairman of the Texas Association of Realtors. “At the same time, after consecutive years of rapid growth in real estate land prices, prices in many regions have leveled off.”

Texas small land sales volume jumped 14.2 percent annually to 6,992 small land tracts sold in 2016. During the same time frame, the average price per acre dipped 0.3 percent year-over-year to $5,647 an acre. The definition of a “small” land sale varies from region to region but generally is considered to be a land purchase of 200 acres or less. The exception is Far West Texas, where 500 to 8,000 acres qualifies as a small land sale.

Strong small land sales growth was evident throughout most regions, with small land purchases in Far West Texas, Northeast Texas and the Austin-Waco-Hill Country experiencing annual gains of more than 20 percent. Conversely, small land sales in West Texas declined 20.6 percent from 2015.

As demand for small land tracts continued to rise, the average tract size of Texas land purchased declined. In 2016, the average tract size for Texas small land purchases declined three acres from 2015 to 36 acres. Far West Texas and South Texas were the only regions that experienced declines in average price per acre, falling 64.9 percent and 3.9 percent, respectively.

Charles Gilliland, economist with the Real Estate Center at Texas A&M University, commented: “While the Texas land market remains strong, multiple factors are impacting land sales activity throughout the state. Rising prices of irrigated farmland and a sluggish agricultural sector are driving up land costs in the Panhandle, and residual effects of the oil and gas downturn have slowed small land sales activity in West and South Texas. Statewide, shortages in prime land are stifling land price growth as developers consider less desirable land tracts.”

Fullerton concluded: “The wise utilization of Texas land is the bedrock of our state’s economy and quality of life. As Texas continues to experience rapid population growth, it’s important that leaders across our state and within our communities take care to ensure that ongoing land segmentation and development preserves the unique culture of our state’s regions and does not harm essential industries.”

About the Texas Small Land Sales Report
The Texas Small Land Sales Report analyzes small land sales data and trends across seven regions of Texas utilizing survey data aggregated by the Real Estate Center at Texas A&M University. The Texas Association of REALTORS® distributes insights about the Texas housing market each month, including quarterly market statistics, trends among homebuyers and sellers, luxury home sales, international trends, and more.

About the Texas Association of REALTORS®
With more than 110,000 members, the Texas Association of REALTORS® is a professional membership organization that represents all aspects of real estate in Texas. We advocate on behalf of Texas REALTORS® and private-property owners to keep homeownership affordable, protect private-property rights, and promote public policies that benefit homeowners.

First-time homebuyers? Look to No. 8 ranked San Antonio

First-time homebuyers? Look to No. 8 ranked San Antonio

Real Estate Center – Texas A&M

SAN ANTONIO – According to new data from SmartAsset, The Alamo City is the eighth best city in the nation for first-time homebuyers.

Despite its booming housing market, San Antonio still remains highly affordable with a price per sf of $80.50.
San Antonio shares a place among the top ten with a few other cities in Texas: Houston finished at No. 5 while Dallas and Fort Worth tied at No. 10.
SmartAsset came up with their rankings by examining cities with a population of at least 300,000 and considering key metrics reflective of mortgage accessibility, affordability and stability in each market.
Other Texas cities made the top 20 include Arlington at No. 13, Corpus Christi at No. 17 and Austin ranking No. 20.
San Antonio’s housing market has been strong over the past several years.
According to Federal Housing Finance Agency data, prices for San Antonio’s housing market increased 8 percent from third quarter 2014 to third quarter 2015.
The Alamo City had a loan funding rate of 62 percent—third best among the top 25 cities on the list.

10 Quick Home Maintenance Tips

10 Quick Home Maintenance Tips
Excerpted from the Popular Mechanics book When Duct Tape Just Isn’t Enough, published by Hearst Books/Sterling Publishing.

Home maintenance isn’t restricted to repairs. In fact, certain tasks–when performed regularly–may actually prevent things from breaking in the first place. But when things do go wrong (and it’s inevitable that they do), we have some backup plans that you can try before you grab the phone to call for pro. Appliances and plumbing are the most frequent offenders, but they also often can be the simplest to care for. From the gutters to the living room carpet, there’s a reliable method for keeping every part of your home clean, safe, and well maintained.
MUST-DO MAINTENANCE:
The quickest fix is to not have the problem in the first place. Here’s a checklist of items every homeowner should get to regularly.

1. Test your garage door opener monthly to ensure that it reverses when it hits an obstruction or when its sensor beam is interrupted.

2. Vacuum the clothes dryer’s exhaust duct at least once a year. If the duct is plastic, replace it (it’s a fire hazard). Rigid sheet-metal ducting is best.

3. Replace furnace filters quarterly, or as recommended by the furnace manufacturer.

4. Test all GFCI (ground fault circuit interrupter) outlets monthly. Press the test button and use a voltage tester to make sure the power goes off.

5. Clean leaves and debris from the condenser of a central air conditioner seasonally.

6. Once a year, vacuum the refrigerator coils underneath the appliance.

7. Have the fireplace chimney inspected and cleaned annually.

8. Inspect window and door caulking and weather stripping yearly.

9. Replace the batteries in smoke detectors yearly. And remember, even recent hard-wired smoke detectors have backup batteries that must be replaced. If you have never checked yours, do so.

2:23 || GUTTERLY SIMPLE:
Cleaning your gutters is the chore you abhor.

THE QUICK FIX

Make gutter cleaning easier–and safer (no ladder required)–with a long spray wand made from a 1/2-in.-diameter by 10-ft.-long PVC pipe. Cut two 6-in. lengths of pipe. Then use PVC cement to join these short sections and two 90-degree elbows with what is now a 9-ft.-long pipe, forming a J-shaped hook. At the short end of the hook, glue on a solid endcap. Drill three 1/8-in.- diameter holes in the cap. Glue a threaded adapter onto the opposite end of the pipe and attach a garden hose. Place the short end of the J-shaped hook inside the gutter and turn on the hose. As you walk along the house, high-pressure streams of water will rinse the gutter clean.

Investing? ‘Best Buy’ lists San Antonio, Dallas, Austin

Investing? ‘Best Buy’ lists San Antonio, Dallas, Austin

Texas A&M Real Estate Center

TEXAS Ya’ll come! – Looking to make a big investment in 2016? According to Forbes, you’re in the right place.

Texas is the state with the second-greatest number of cities on the Best Buy list,

San Antonio (No. 3), where homes average $201,000;

—Dallas (No. 6), where home prices average $211,000; and

Austin (No. 7), $281,000.

While the rest of the country was in the depths of the recession, Texas experienced only a shallow one, and bounced back with force.

The energy boom helped fuel job growth; even with gas prices now way down and the industry hemorrhaging some 200,000 jobs, these three Texas metros are doing well overall thanks to their diversified economies.

The Gulf Coast  has welcomed a boom in petrochemical construction, and the state is seeing growth in leisure and hospitality, both activities reportedly fueled by lower gas prices.

Austin is welcoming growth in high tech.

Dallas is welcoming the relocation of Toyota, State Farm Insurance, and Liberty Mutual Insurance.

San Antonio has financial firms and data centers.

Winzer predicts that it will still be a while before Texas prices reach the point where these metro areas are no longer a good investment—by his estimate, when they are overpriced by about 20%

Year-over-year job growth is strong (San Antonio: 3.7%; Dallas: 3.5%; Austin: 3.3%) and people continue to move to the Lone Star State (three-year growth rates for San Antonio: 6.1%; Dallas: 6.2%; Austin: 9%), meaning it is an area flush with a pool of renters. Housing prices are rising but compared to the rest of the nation, still relatively cheap.

 

7 Things Your Home Inspector Wishes You Knew

By: Jamie Wiebe @ Realtor.com

No matter whether you’re buying or selling, the home inspection process can be somewhat terrifying: For sellers, it’s a stark reminder of the nagging issues you might have turned a blind eye to over the years. And for buyers, it’s a recipe for pure heartbreak—falling in love with a home that might just end up making no sense to buy.

But don’t let the inspection stress you out. And remember, that’s not what your inspector wants either—all he or she wants is a comprehensive to-do list and a happy client.

So form a team with your home inspector to make the process easier and more effective. Knowledge is key! Here are seven essential things you keep in mind.

For sellers
1. Move your pets

We know your puppy is adorable—but even if your home inspector loves dogs or cats, pets running underfoot makes the job much more difficult.

Inspections often require opening exterior doors again and again, offering pets far too many opportunities to dash to freedom. When you leave the premises for the inspection—and many inspectors ask sellers to do so—take your pets with you. Please.

With animals out of the way, “every time I walk in or out, I don’t have to worry about losing a cat or a dog,” says Alan Singer of Sterling Home Inspections in Armonk, NY.

2. Don’t forget to clean

Whether you plan on being there for the inspection or not, make sure to clean up beforehand. No, you don’t need to scrub—an inspector won’t ding you because your stove’s grimy. But all that clutter? Yeah, that’s all got to go.

“It makes a huge difference when I walk into a house where everything’s put away,” Singer says. “It’s a game changer not just for me, but for the home buyer.”

Often, the inspection is the first time the buyers are (almost) alone in the house for an extended period of time.

“If it doesn’t feel like how it did before—if we’re trying to dig through items—it can sour their experience,” Singer says.

For buyers
1. Your potential home WILL have problems

Your home inspector will likely come up with a seemingly endless list of problems after the walk-through. Don’t panic!

“I’m on their side, but still, I’m judging the house fairly,” Singer says. “Even my home has problems, issues, maintenance things.”

Yeah, there are times when you should worry (we’ll get to those a bit later). But not every issue is mission-critical, and your inspector will know which problems you should tackle first.

2. Almost anything can be fixed

There are a few starkly frightening home inspection terms that seem to be in everyone’s vocabulary: mold, radon, and asbestos.

And yes, they’re scary—but no scarier than a roof that needs replacing, home inspectors say.

“People who write articles tend to scare homeowners about mold or radon,” Singer says.

So let us—your humble (and rather defensive) writers—take a moment to correct that assumption: Don’t worry so much about mold and radon!

Singer, who started his career in homebuilding, says, “everything is upgradable, fixable, or replaceable. You just need to have a list of what those things are.”

Not convinced yet? Check out this Washington Post article about a couple who got a discount on a four-bedroom Colonial because they weren’t terrified by mold.

3. One thing you should worry about is water

Here’s one problem we give you permission to stress out about (just a little): water. No, it’s not a deal breaker (remember that part where we wrote almost anything can be fixed?). But it’s important to address any water-related issues before the deal closes—or at least immediately afterward.

Make a note of issues such as puddles and leaky ceilings. And give special attention to the basement. Addressing water problems in the basement can be an expensive and difficult proposition, Singer says. “A wet basement can be hard to fix.”

4. Home inspectors can’t predict the future

You might want to know how many more years the roof will hold up—and while your inspector might be able to give you a rough estimate, he can’t give you a precise timeline.

“People think that we as inspectors have a crystal ball,” Singer says. “Or that we have X-ray vision” to see through walls or examine the inner circuitry of your kitchen stove.

Sorry, folks: They don’t, and they can’t.

“We can’t tell you how long it will last,” Singer says. “We can just tell you if it’s in good shape.”

5. Find the balance between your heart and brain

It’s easy to forget your love for the home when you’re counting the dollar signs and hours you might have to spend on repairs. But just remember to take a deep breath, think rationally, and consider whether it’s a smart investment in your future.

Barring any major renovations needed—such as a new roof or mold removal—your inspector’s visit will simply provide a to-do list. But not everything needs fixing immediately, so don’t let a long list dampen your love for the home. Just take things one at a time.

Texas home sales, prices up 7 percent

Texas home sales, prices up 7 percent

By Bryan Pope, Associate Editor, Real Estate Center at Texas A&M University
Sept. 28, 2015/Release No. 02-0915

COLLEGE STATION, Tex. (Real Estate Center) – Latest Multiple Listing Service (MLS) data show Texas home sales had a 7 percent year-over-year increase in August while the median price was up 7.4 percent.

“Generally speaking, the market’s still going strong,” said Real Estate Center Chief Economist Dr. Jim Gaines. “However, we are seeing some slowdown in demand in areas most affected by the decline in oil prices and weakness in the energy sector.”

Last month, 29,685 homes were sold statewide, almost 1,900 more than a year ago but about 1,500 fewer than in July. Gaines said the decline from July is the typical seasonal slowdown in sales.

Gaines said the state’s low housing inventory — 3.7 months in August, well below the 6.5 months that Center economists consider a balanced market — continues to elevate prices.

Last month’s median price was $203,300 compared with $189,300 a year ago and $204,700 in July.

Here’s how the state’s major metros fared in August.


August 2015 home sales data for most Texas MLSs are online athttps://www.recenter.tamu.edu/data/housing-activity/.

Funded primarily by Texas real estate licensee fees, the Real Estate Center at Texas A&M University was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers and the general public. The Center is part of Mays Business School at Texas A&M University

Falling Oil Prices Not Stopping Texas Job Growth

Falling Oil Prices Not Stopping Texas Job Growth, Latest Real Estate Center Report Shows

By Bryan Pope, Associate Editor, Real Estate Center at Texas A&M University June 2, 2015/Release No. 21-0615

COLLEGE STATION, Tex. (Real Estate Center) – Texas’ economy continues to create more jobs despite lower oil prices, according to the latest Monthly Review of the Texas Economy published by the Real Estate Center at Texas A&M University. The state’s economy gained 304,200 nonagricultural jobs from April 2014 to April 2015, an annual growth rate of 2.6 percent compared with 2.2 percent for the United States. The state’s nongovernment sector added 282,200 jobs, an annual growth rate of 2.9 percent compared with 2.6 percent for the nation’s private sector. Texas’ seasonally adjusted unemployment rate fell to 4.2 percent in April 2015 from 5.2 percent in April 2014. The nation’s rate decreased from 6.2 to 5.4 percent All Texas industries except mining and logging (which includes oil and gas) and manufacturing had more jobs. The state’s leisure and hospitality industry ranked first in job creation followed by construction and transportation, warehousing and utilities. All Texas metro areas except Texarkana, Wichita Falls and College Station-Bryan had more jobs. Odessa ranked first in job creation, followed by Midland, Dallas-Plano-Irving, Corpus Christi and Beaumont-Port Arthur. The state’s unemployment rate in April was 4 percent. Amarillo had the lowest unemployment rate, followed by Midland, Austin-Round Rock, Lubbock, College Station-Bryan and San Antonio-New Braunfels.

The full report is online at http://www.recenter.tamu.edu/pdf/1862.pdf.

Texas Housing Market on Track for Second Best Year Ever

Texas Housing Market on Track for Second Best Year Ever

By Bryan Pope, Associate Editor, Real Estate Center at Texas A&M University Oct. 24, 2014/Release No. 4-1014 COLLEGE STATION, Tex. (Real Estate Center) –

This year will end as the second best year ever in Texas in terms of existing home sales, said a housing market expert with the Real Estate Center. “Last year was the second best year ever in the state of Texas for home sales volume,” said Center Research Economist Dr. Jim Gaines. “It was second only to 2006, which was at the height of the housing boom and all the easy financing. And 2013 wasn’t that far off from that. This is going to become the new second best year ever. We are having a really terrific year.” The latest Multiple Listing Service (MLS) data show that sales of existing single-family homes in Texas were 7 percent higher last month than in September 2013. About 24,640 homes were sold last month, over 1,600 more than the same month last year, but almost 2,800 less than in August. Gaines said the August-to-September downturn is the normal seasonal falloff. So far this year, 217,690 homes have been sold, about 1 percent more than this time last year. “We’re getting exactly what we thought we were going to get, and that’s a slowdown in the rate of increase,” Gaines said. “Last year sales went up about 16 percent. It was a big, big jump. This year it’s a little jump. Home prices are doing a very similar kind of thing. There’s been a step-up in prices the last five years, and we’re still seeing that step up. But the rise of the step isn’t quite as high. “As our prices have been going up progressively here in Texas, incomes really haven’t been going up at the same pace percentage-wise. Home prices going up faster than income means that ultimately affordability and what people can afford to pay becomes an issue.” Gaines said homebuyers getting hit the hardest are those on the lower end of the home-price spectrum. “Very few homebuilders are building homes under $200,000 or $250,000 in most of our markets,” he said. “So there’s no increase in supply on that low-priced end.” In addition, credit tightness is affecting first-time buyers and first-time move-up buyers much harder than older buyers at higher income levels. “The good news for Texas is that our prosperity is, in general, still continuing,” Gaines said. “On the horizon, it appears that it will continue. The only cloud on that horizon is what’s happening in the energy sector. In the last couple of weeks, the price of oil has dropped appreciably. When the trend is downward in the price of oil, you start looking ahead and saying ‘okay, just how far can this trend go before it really becomes a problem?’ Right now it doesn’t appear to be, but it’s one of those things we’ve got to keep our eye on.”