Housing-Insight-August-2021

Texas Housing Insight – August 2021 Summary

Texas housing sales slowed in August, trending downward as supply remained constrained. Despite lowered mortgage interest rates, double-digit home-price appreciation chipped away at housing affordability. Elevated levels of demand persisted as homes averaged less than a month on the market. On the supply side, single-family housing permits declined for the third consecutive month, and housing starts decelerated even as pandemic effects on the lumber supply improved, causing a precipitous fall in prices; other material costs remained elevated. The historically low level of inventory available for sale is the greatest challenge to Texas’ housing market. The state’s diverse and expanding economy, favorable business policies, and steady population growth, however, support a favorable outlook.     

Supply1

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction activity, elevated nationally and within Texas due to improved industry wages and construction values, while employment flattened during August. The Texas Residential Construction Leading Index, however, decreased as weighted building permits flattened and residential starts decreased, while the ten-year real Treasury bill increased. The leading index trended downward, signaling a potential slowdown in future activity. Dallas-Fort Worth (DFW) and Austin’s weighted building permits reflected the statewide fluctuations as residential starts decreased in both metros. DFW leading index decreased, while Austin’s metric flattened. Houston and San Antonio’s indexes, however, suggested steady construction in the coming months as building permits and residential starts increased.

Single-family construction permits declined for the third consecutive month, falling 7.9 percent in August. Houston topped the national list for six straight months with 4,202 nonseasonally adjusted permits despite registering a seasonally adjusted decrease. DFW posted a double-digit monthly decline to 3,389 permits. Meanwhile, Austin and San Antonio issued 1,947 and 1,279 permits, respectively. On the other hand, Texas’ multifamily sector registered a steep expansion as issuance shifted from two-to-four units to five-or-more units. The metric accelerated 41.0 percent on a monthly basis and 22.6 percent year to date (YTD) relative to the same period last year.

Despite strengthening economic conditions and ample housing demand, total Texas housing starts remained unchanged even as lumber prices declined 19.5 percent in August. Single-family private construction values, however, declined 6.6 percent in real terms as the metric trended downward in Texas’ major metros. The majority of the statewide reduction was attributed to the steep plummet in DFW values during August.

Texas’ months of inventory (MOI) ticked up slightly to 1.5 months as sales activity and new listings decreased. A total MOI around six months is considered a balanced housing market. Supply improved across all price cohorts for the third consecutive month. Inventory for homes priced between $300,000 and $399,000, the most expansive price, grew to 1.6 months, while the MOI for luxury homes (those priced more than $500,000) increased to 2.5 months.

Inventory in the major metros increased, except in North Texas, where MOI declined slightly to 1.2 months in Dallas and Fort Worth. Supply remained the most constrained in Austin at 0.9 months. San Antonio inventory expanded to 1.7 months while Houston’s MOI expanded to 1.8 months. Although overall supply increased in August, limited inventory persisted as a major headwind to the health of Texas’ housing market.

Demand

Total housing sales decreased 0.9 percent in August for the third consecutive month despite lowered mortgage interest rates. The slowdown was attributed to record low activity for homes priced less than $200,000 due to dwindling inventories. On the other hand, the number of homes sold priced more than $400,000 reached an all-time high.

Housing sales decreased at the metropolitan level except in North Texas. Reflecting statewide fluctuations across the price spectrum, San Antonio total sales declined 1.8 percent. In Houston, the metric dropped 1.5 percent, while activity in Austin contracted 0.8 percent. On the other hand, sales accelerated in Dallas and Fort Worth, increasing 1.1 and 4.1 percent, respectively, amid strong gains for homes priced between $400,000 and $499,000.

Texas’ average days on market (DOM) fell to a record-breaking 27 days, confirming robust demand and that the YTD decrease in sales was due to restricted inventory. Austin’s DOM increased slightly to 18 days, while the average in North Texas decreased, selling after an average of just 20 days in Fort Worth and 21 days in Dallas. San Antonio and Houston’s metric registered declines but hovered closer to the statewide average, falling to 26 and 29 days, respectively. 

Amid low expectations of additional fiscal and monetary stimulus, economic growth forecasts for the rest of the year cooled as the initial and strongest stage of recovery likely reached its peak, and inflation pressures are believed to be temporary. The ten-year U.S. Treasury bond yield ticked down for the fourth consecutive month to 1.3 percent2, while the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate fell to 2.8 percent. The median mortgage rate for the typical Texas homebuyer decreased in July3 to 3.1 and 3 percent for GSE and nonGSE loans, respectively. As mortgage rates dropped, Texas home-purchase applications increased over the past two months but fell 17.5 percent YTD. Refinance applications improved on a monthly basis yet were still down 12.2 percent over the same period. The annual decreases were likely due to baseline effects after a surge of remodeling and refinancing in 2020. Lenders adding more requisites, and the shrinking pool of households able to refinance is likely impacting refinance activity as well. (For more information, see Finding a Representative Interest Rate for the Typical Texas Mortgagee.)

In July, the median loan-to-value ratio (LTV) constituting the “typical” Texas conventional-loan mortgage dropped from 85.8 a year ago to 84.1. The debt-to-income ratio (DTI) was down from 36.0 to 35.8, while the median credit score increased only three points in the last year to 752. The LTV GSE borrowers also decreased from 86 last July to 85.4; however, DTI grew from 35.5 to 35.8. Overall improved credit profiles reflected the fact that only the most qualified housing applicants were able to outbid their competition for their desired homes amid exceptionally tight inventories and robust demand.

Prices

The ongoing shift in the composition of sales toward higher-priced homes due to constrained inventories at the lower end of the market supported home-price appreciation. The Texas median home price rose for the eighth consecutive month, accelerating 1.2 percent on a monthly basis and 16.8 percent YOY to a record-breaking $305,400 in August. The share of luxury homes sold in Austin continued to expand, contributing to the 34.6 percent YOY surge in the median price ($464,900). The Dallas metric ($374,200) increased 18.4 percent while annual price growth in Fort Worth ($312,600) shot up to 20.1 percent. Houston’s ($301,700) and San Antonio’s ($289,500) metrics elevated 15.5 and 16.1 percent, respectively.

The Texas Repeat Sales Home Price Index accounts for compositional price effects and provides a better measure of changes in single-family home values. Texas’ index corroborated substantial and unsustainable home-price appreciation, accelerating 18.3 percent YOY. At the metropolitan level, the repeat sales index slowed in the major metros, except Houston, as annual price growth reached a peak. The metric decelerated 38.5 percent in Austin, followed by North Texas with 23 and 20.3 percent home-price appreciation in Dallas and Fort Worth, respectively. San Antonio posted an 18.1 percent annual hike, while Houston’s index accelerated 15.2 percent. Increasing home prices pressure housing affordability, particularly in an environment of low real wage growth.

Single-Family Forecast

The Texas Real Estate Research Center projected single-family housing sales using monthly pending listings from the preceding period (Table 1). Only one month in advance was projected due to uncertainty surrounding the COVID-19 pandemic and the availability of reliable and timely data. Texas sales are expected to recover 6.1 percent in September after three consecutive monthly declines. The metric is estimated to rebound 6.9 and 5.6 percent in Austin and San Antonio, respectively, with additional increases of 7.1 percent in DFW and 4.8 percent in Houston. Sales through September 2021 should accelerate relative to the same time period in 2020. On the supply side, inventories reached a trough in May 2021 and should improve in the coming months. Listings seem to have reached a trough and are rising, easing some of the price pressures. (For more information, see the 2021 Mid-Year Texas Housing & Economic Outlook.)

Household Pulse Survey

According to the U.S. Census Bureau’s Household Pulse Survey, the share of homeowners behind on their mortgage payments increased to 6 percent nationally and 7 percent in Texas (Table 2). Houston reflected the national average, while the metric in DFW hovered higher at 9 percent. The share of Texas respondents who were not current and expected foreclosure to be either very likely or somewhat likely in the next two months rose from 14 percent in June to 19 percent (Table 3). The proportion of delinquent individuals at risk of foreclosure also grew in North Texas, increasing from 11 to 21 percent, and increasing 6 percentage points to 18 percent in Houston. The Federal Housing Finance Agency’s foreclosure and REO eviction moratoria for properties owned by Fannie Mae and Freddie Mac (the Enterprises) were extended through Sept. 30, 2021. Continued stability in the housing market is essential to Texas’ economic recovery.

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

2 Bond and mortgage interest rates are nonseasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also nonseasonally adjusted.

3 The release of Texas mortgage rate data typically lag the Texas Housing Insight by one month.

Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (October 26, 2021)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

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Republic Title’s eVolve Team Closes 1,000th RON in 2021

Congratulations to Republic Title’s eVolve team for completing their 1,000th RON in 2021!

eVolve is Republic Title’s Digital Settlement and Signing Services Division and provides a new, convenient and alternative experience in buying/selling real estate. Republic Title is leading this transformation and developing innovative and secure ways to evolve this process for our customers. Technology and added convenience is constantly changing the way people conduct business. When our customers have scheduling conflicts – whether it’s a busy day in the office or traveling on vacation – Republic Title is able to facilitate the transaction through one of our premium closing services, either at a place of business through our Mobile First experience or through our Remote Online Notary eClosing experience. Our dedicated team of professionals will provide our customers with a clear understanding of what is being signed and why it’s needed, ensuring a worry-free closing from anywhere in the world.

The eVolve team is made up a seasoned team of professionals with at least 20 years of real estate experience each. The team includes Dennis Pospisil, Senior Vice President/Digital Settlement and Signing Services; Audriana J. Laws, Vice President/Escrow Officer; Diane Sanders, Escrow Officer; and Robin Riggs, Vice President/Escrow Officer.

Dennis Pospisil was raised in Plano and is a proud graduate of Texas A&M (whoop!). He has been with Republic Title for over 20 years and has managed the eVolve Division since its inception in 2019. Dennis says that he has loved the challenge of creating eVolve from the ground up. He has enjoyed determining what works and what doesn’t and putting the many puzzle pieces together. Dennis, thank you for the time and energy you have contributed to the creation of Republic Title’s Digital Settlement and Signing Services Division!

Audrina Laws was born in New York and raised in Texas. With 21 years in the real estate industry, we are lucky to have had Audriana on the Republic Title team for the last 10 years. Audriana enjoys interacting with our clients and seeing them in a more relaxed setting during RON closings. Audriana is quick to pick up new technology has enjoyed implementing new ideas, processes and change.  In her free time, she loves spending time with my daughter, family and friends and just enjoy living life.

Diane Sanders is the newest member of eVolve and brings over 30 years of real estate experience to the team. Originally from St. Louis, Diane has title insurance in her blood. Her mother worked in the title insurance industry for 45 years so Diane learned the business at a young age. Diane says that being in the eVolve department takes her title knowledge to a whole new level with the technology advances.  In her free time, she loves to read, road trips with her husband, and volunteer at her church.

Robin Riggs is another Texas native and attended the University of Texas at Dallas. Robin has over 20 years of experience in real estate and 8 years of experience with Republic Title. Robin’s favorite part of working in the Digital Signing and Settlement Division is using the technology and interacting with the clients during the RON closings. With a background in real estate education, Robin has enjoyed learning the new, cutting-edge technology that eVolve offers our clients. In her free time, Robin loves to exercise to recharge.

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September 2021 DFW Area Real Estate Stats

September 2021 North Texas real estate stats are out and we’ve got the numbers! Our stats infographics include a year over year comparison and area highlights for single family homes and condos broken down by MLS area. We encourage you to share these infographics and video with your sphere.

In reviewing Collin, Dallas, Denton, Rockwall, and Tarrant Counties, new listings were down in all counties except Rockwall. In Rockwall County, new listings were up by almost 10% over the same time last year. Active listings were down in September by almost 30%, which is slightly better than it was last month. The average days on market was 20 days, proving that lack of inventory is still a major factor for the real estate market in North Texas. However, the average sales prices and price per square foot are still up from last year. We are still enjoying a strong seller’s market in the DFW Metroplex! Happy Selling!

For more stats information, pdfs and graphics of our stats including detailed information by MLS area and condo stats, visit the Resources section on our website at DFW Area Real Estate Statistics | Republic Title of Texas

For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Understanding-PIDS

Understanding Public Improvement Districts (PIDs)

Dr. Blake Bennett – Associate Professor & Extension Economist, Texas A&M AgriLife Extension Service

Public Improvement Districts (PIDs) are becoming more prevalent across Texas. Given recent changes to real estate transaction notice requirements, a firm understanding of PIDs, their benefits, and how they impact the real estate transaction is vital to the success of real estate professionals. A brief description of PIDs and requirements for notice is discussed below.

What is a PID?
A PID stands for Public Improvement District and represents a partnership agreement between a city and private sector. PIDs provide specific property owners with additional services from the city. The property owners can include any type of property (residential, commercial, retail, etc.). The additional services are paid for by PID assessments on the property within the district and can include security, common-area maintenance/cleaning, district promotion and landscaping just to name a few. The city provides these services and is repaid for the additional expense through an assessment on the property within the district.

Required PID Notice
Effective 9/1/2021, sellers of property located within a PID are required to provide new statutory notice to buyers1. This notice must be given to prospective buyers before executing the contract either separately as an addendum or as a paragraph of the purchase contract, and applies to all real estate sales transactions. Prospective buyers are required to sign the notice and it must be recorded once signed.

If sellers do not provide the required notice, buyers will have the right under the statute to terminate the contract at any point prior to closing. Failure to provide the required notice prior to closing to a buyer may give the buyer a right to sue for damages under the statute, but a notice being executed at closing removes the ability of buyers being able to sue for damages. Also, sellers, title companies, real estate brokers, and examining attorneys are not liable for damages to buyers for failing to provide notice to buyers if the PID service plan was not filed by the city or county with the county clerk in accordance with the statute or for unintentionally providing a notice that is not the correct notice under the circumstances.

How to Find an Existing PID
One simple approach a realtor can take when trying to determine if a property is located in a PID is to ask the seller/client. Alternatively, PID assessment values can be found on the tax notice if the tax collector is collecting the PID assessments. The information may also be obtained by contacting the city or looking on the city’s website.

Benefits of a PID
PIDs can provide very valuable services for the properties within the district. Some specific examples include:

  1. The Lake Highlands Public Improvement District of Dallas is supplementing the Dallas Police Department services with off-duty Dallas police officers in the area2.
  2. The Vintage Township Public Improvement District of Lubbock, Texas was created in part to provide lighting, street signs, park features, street trees and irrigation, drainage, as well as streets and alleys3.

You would think that these additional services would result in higher property tax values with an active PID; however, Central Appraisal Districts do not include a PID in their assessment of value for property suggesting there may be a difference in assessed and market values of property.

How Are PIDs Created?
PIDs are authorized to be created under two Texas statutes. These statutes are Subchapter A, Chapter 372, Local Government Code, and Chapter 372, Local Government Code.

To create a PID, property owners must petition the city. To qualify, owners of taxable real property representing more than 50% of the appraised property within the proposed district and either more than 50% of the property owners or owners representing more than 50% of the land area within the district must sign the petition4. The city will review a petition making sure it complies with state statues and hold a public hearing regarding the proposed PID. Within six months of the public hearing, the City Council can authorize the PID.

Is the PID a Property Tax?
A PID is not a tax on property owners. PIDs represent a special assessment. However, PIDs can work similar to a property tax because the assessment may be based on a rate per $100 of value of property. PIDs may also structure the assessment to be based on a flat rate based on the size of the property within the district.

How Are PID Assessments Paid?
Paying PID assessments vary according to the respective PID. Some PID payments are collected by the County Tax Assessor/Collector with other property taxes. Other PIDs may designate a trustee to collect the PID payments. In certain situations, mortgage companies include PID assessments within the property owner’s escrow payment and pay the assessment when ad valorem taxes are paid.

PIDs generally have a defined life span that is set at the time the PID is approved by the City Council. PID assessments can normally be paid in full at any time, or in annual installments.

Upon the transfer of ownership of a property located within a PID, assessment obligations may transfer to the new property owner for the remainder of the life of the PID.

In situations where PID assessments are not paid, the management of the PID can take legal action such as placing a lien or foreclosing on the property.

 

1 Relating to certain procedural requirements for public improvement districts and transfers of property located in public improvement districts. H.B. No. 1543. 6/4/2021.  

2 Lake Highlands Public Improvement District. “Safety.” Retrieved from: https://lhpid.org/safety/. Retrieved on 9/19/2021.

3 The Vintage Township Public Improvement District, City of Lubbock, Texas. “Service and Assessment Plan.” May 9, 2007. Retrieved from: https://www.municap.com/texas-docs/Vintage/Vintage%20PID-%20Service%20and%20Assessment%20Plan%20(Original).pdf. Retrieved on: 9/19/2021.  

Pumpkin-Patches-Blog-Header

DFW Area Pumpkin Patches

Welcome October and all things Fall including pumpkin spice lattes, scented candles, cooler weather (a bit), and best of all, pumpkin patches! Every year, families and friends make it a tradition to visit the many pumpkin patches around DFW to pick out their perfect pumpkin. We hope you enjoy this guide we have created of our favorite pumpkin patches in the DFW area.

Allen
Creek wood pumpkin patch
261 Country Club Rd.
Oct. 2nd – Oct. 31st

Canton
Yesterland Farms
15410 Interstate 20
Sept. 18 – Nov. 7th

Carrollton
Perry Pumpkin Patch
1509 N. Perry Rd.
Oct. 16th 10am – 2pm

Dallas
Autumn at the Arboretum
8525 Garland Rd.
Sept. 19th – Nov. 25th

Dallas Farmers Market
920 S. Harwood St.
Sept. 18th – Oct. 31st

St. James Episcopal Pumpkin Patch
9845 McCree Rd.
Oct. 2nd – Oct. 31st

Denison
Elves Pumpkin Patch
601 Harvey Ln.
Oct. 2nd – Oct. 31st

Flower Mound
Flower Mound Pumpkin Patch
5100 Cross Timbers Rd.
Oct. 1st – Oct. 31st

Frisco
Pumpkins on the Prairie
3521 Main St.
Oct. 17th – Oct. 31st

Pumpkin Patch at FMC Frisco
7659 Preston Rd.
Oct. 8th – Oct. 31st

Garland
Buckingham UMC Pumpkin Patch
1212 W. Buckingham Rd.
Oct. 1st – Oct. 31st

Grapevine
Halls Pumpkin Farm
3420 Hall’s Johnson Rd.
Oct. 1st – Oct. 31st

Gunter
The Big Orange Pumpkin Farm
15102 TX-289
Sept. 18th – Nov. 24th

Melissa
Lola’s Pumpkin Patch
171 Kever Main
Sept. 25th – Oct. 31st

McKinney
Storybook Ranch
3701 S. Custer Rd.
Oct. 1st – Oct. 31st

5G Farms Pumpkin Patch
6601 Country Rd. 166
Sept. 17th – Oct. 31st

Murphy
Pumpkin Patch
411 S. Murphy Rd.
Oct. 15th – Oct. 31st

Plano
CUMC Pumpkin Patch
3103 Coit Rd.
Sept. 26th – Oct. 31st

Prosper
Prosper Pumpkin Fest
1551 W. Frontier Pkwy.
Oct. 16th 3pm – 6pm

Princeton
Reeves Family Farm
3577 FM 1377
Oct. 1st – Oct. 31st

Richardson
Arapaho UMC Pumpkin Patch
1400 W. Arapaho Rd.
Oct. 2nd – Until Sold out

Rockwall
Blase Pumpkin Patch
1232 E. Fork Dr.
Sept. 25th – Oct. 31st

Southlake
The Patch
101 E. Highland St.
Oct. 2nd – Oct. 31st

Click here to download the printable/shareable resource.