Residential on the rise: The current and future state of real estate in North Texas

Expect a wave of moves to the suburbs and continued relocations as COVID-19 redirects, rather than deters, the DFW residential real estate market.

“History is the best predictor of the future, in my mind, and I feel like we’ve weathered some really great storms in the past 10 years since the last recession,” said Janet Allen, a senior vice president and leader of Republic Title’s team of Business Development representatives for the company’s 13 residential branches. “I honestly believe we’re going to be fine. I do believe that there’s going to be a big wave out to the suburbs. I’m seeing a little piece of that right now”

In addition to Allen, panelists included Fred Balda, president of Dallas-based residential development company Hillwood Communities; Rogers Healy, founder, owner and CEO of The Rogers Healy Cos. based in Dallas; and Brian Palmer, president of McKinney-based mortgage brokerage Pinnacle Funding Group Inc.

Below, panelists discuss the pandemic’s impact on the workforce, opportunities ahead in the residential space and more.


 

How has COVID-19 impacted your workforce or customers?

Fred Balda: Our two objectives were making sure the team was safe and able to work from home remotely, of course, and so I give a lot of credit to our IT group. They really got us up and running pretty quickly.

Second, the main objective was to keep the machine rolling. We needed to to continue to do business in a different manner – and I will say we fared very well. We are starting to bring our people back into the office now. I’m in the office right now and probably 20 percent of our people stayed in the office [since March]. We probably have 50 percent of our people back here working.

We are requiring testing, so before anybody comes back to the office, they must get tested. We’ve gone through two rounds of testing with our employees and it’s worked quite well. We have a pretty strict protocol. When I come to the office, I’m greeted by a nurse. I’ve got my mask on. She takes my temperature. And then she takes my oxygen level through a pulse oximeter. Only then and I able to enter the building.

I wear my mask all the way to my office. Whether I’m going to the cafeteria or to the restroom, or going to see anybody, I put the mask back on. It’s a deliberate protocol that we have instituted.

Rogers Healy: My approach is probably different than most real estate people. I’m a cautious guy and my grandma is almost 100 years old lives and in an assisted living facility and my fiancée has chronic asthma, so those two things are always going to trump bringing in revenue. I just lead with my head differently and with my heart.

We’ve adjusted well, and something that we’ve learned is in the world of real estate, especially residential, we become very routine, right?

Which means it’s hard for an older dog to learn new tricks, but we just really became attached to the word agile. And I think, being agile, you learn how to be proactive versus reactive.

The first thing I had to change was the way that I thought, because I’ve been in real estate for a long time and part of my assumption was I can’t be productive and mounted an office.

But it’s been a great surprise that our numbers have still increased year-over-year with everything going on, even with people working from home. I’m probably the most extreme business owner in terms of being cautious.

For example, our office is shut down. I can’t get into my own office. I haven’t heard of any owner locking themselves out, so it may seem extreme, but we all need to be taking precautions.

Brian Palmer: It really hasn’t been much different for me. I feel fortunate more than anything, because started to move to an electronic closing process a couple of years ago. I feel like the mortgage industry in its entirety is probably going to be forced to move into that electronic world, probably a lot faster because of the circumstances I’ve always balanced working from home, the office or wherever.

Most of our stuff is all done electronically through e-mail, phone calls and text messages until we get to the closing table, so nothing really changed for us in that regard.

Janet Allen: We have more than 400 employees spread across DFW. We did our very best to execute a plan quickly and actually had about 70 percent of our workforce working from home starting in March. Our residential people really stuck it out. They have done an incredible job and taking care of our customers, buyers, sellers, realtors, lenders and developers.

 We’ve talked about the challenges of COVID-19. What are some of the opportunities it presents?

Janet Allen: Last year, we started moving more into the digital space. I am so glad we did because it allowed us to get ahead of things, rather than fall behind when we had to move to a remote work environment.

The other thing is learning that we might be able to have people work from home a lot more often than in the past. Maybe they can actually do the job better.

This could result in more of a work-from-home situation for our employees in the future.

Fred Balda: I’m in the master-planned community business, building in the suburbs, and so the demographics are playing to our favor. You have a variety of demographics that are hitting us right now. There’s a millennial that obviously is creating families right now, and has basically located in the urban sectors, and there’s a big desire right now to move out of the urban area.

I think urban will survive, of course. But we are seeing this demand coming in, the urban sectors into suburban areas, more so than we’ve seen in the past.

The relocation activity has always been good here, so we’ve always been attracted new companies. It just seems to be accelerating more now.

I think our business in the long run, even short-term, is going to take off again. We were all expecting a bit of a drop off in 2020, maybe a hiccup. Obviously due to coronavirus, it was more than that – it went pretty deep. Nobody expected this kind of hit, so the opportunities I see are in the future. At least in our master-planned communities, we about why you’re moving out and why you are reconsidering your shelter.

You may need a bigger house, you need a better designed home, you need a cleaner home, you need to a better technology package for your home. New homes are able to really address that quite well. Our master plans right now are very appealing, because of all the normal amenities that we normally do, and you’re able to do it a little bit further out. All of our parks, and trails, and playgrounds, and those sorts of things are really a premium right now for folks coming in and want to see that sort of lifestyle. I think that’s a big focus.

But the rental side is really another opportunity now, too. We build lots of multifamily ourselves. The single-family rental right now is another focus of ours that I hope we can roll out, at least a pilot program, in the next six months or so. I think will go quite well. That’s another line of business that we’ve observed that really makes sense.

I think affordability is always going to be an issue here. We’d need to really address that interest rates have healthy affordability right now, that’s going to creep back up. How do you design homes that are semi-affordable right now in these in these places that people want to be?

Brian Palmer: I feel like it’s a great opportunity, just because there are going to be people that change their direction a little bit. For us, it’s just going to be full force ahead, to continue to try to serve the clients even better than what we already did.

We’re making sure that we can get to a full digital world. There are some things that Gov. Abbott has done in the interim that make it easier, like how notaries don’t necessarily have to be in front of anybody.

There are going to be some people that are going to be cautious and don’t want to go out, whereas others will and we want to serve those people, too.

 If Covid-19 becomes worse in coming months, do you think that it would it be a positive or negative impact on rental market? Do the obvious effects — prospective buyers putting purchases on hold; increase in unemployment numbers — balloon into something worse, or can North Texas weather it?

Rogers Healy: I think real estate is going to change to a hybrid of affordability and space.

We’re going to see that the days of the $30,000 millionaire are probably going to be over, because I think people would rather live somewhere in a rental home community. Which I think is going to be a trend we’re going to see in the next few years: people literally developing communities for that sole purpose, which we’ve never really seen happen.

Living on the penthouse right now is not as good as living on the first floor, for example, in a lot of these buildings, too. So we have seen a pretty big shift in trends and the amount of people that we’ve worked with on the first-time homebuyer front that normally would live within the loop or moving north … instead, they’re moving east and west, too.

We’re going to see pockets like Mansfield and Richardson get people in certain demographics who historically wouldn’t have purchased there. So, you know, it’s interesting to see what’s happening.

And DFW still has people moving here, too. You have to provide housing, but I think that it’s going to shift to where people are going to start renting and if they have to, they’re going to rent single-family detached homes, if they have the option to do so.

Fred Balda: I think we’ll be more prepared at this time. Chapter One was pre-coronavirus, which was stellar. It was just very robust, and people were moving in and it was going to be another banner year. Everything was looking really positive.

And then corona hits and we probably had about a six-week slowdown. In our business, it really probably dropped to a 50 percent level, from the prior 10 weeks or so. But there was still activity, which was interesting, to see that we still had that activity, even if it was 50 percent. And then, the last six weeks or so, we’re starting to come to work again and people are getting out. It’s been incredible.

I believe the next few weeks will be robust.

I think we are more prepared because now we can work remotely a little bit better. But let’s hope we find a solution to coronavirus right now, because it’s not fun. Let’s hope it’s not the new normal. We’ll get past this, but I appreciate being an essential business. I appreciate having the opportunity to sell homes and building new communities.

 How is DFW’s inventory right now — and how do you think it will look over the next year?

Rogers Healy: Surprisingly, inventory, up until about a month ago, was awful.

The last three weeks, especially in the larger home market above $3 million, it’s been gangbusters.

And in terms of a recession, it’s important how you interpret or communicate it. My favorite class in school was recess. Got me a break from the classes that were kind of work. And so I think that we have an opportunity to lead. Our industry said, “Hey, it’s OK to take a little bit of a break, right?” Because work is not going to define you. And we all work so hard.

It’s OK to just take a step back and relax. Because you know, it’s always going to be there, right?

I don’t know anything about the stock market, but I’ve watched it the last three months and it literally makes me nauseous.

One tweet can go and change the world and then the next day, another tweet changes the world the other way. That means I have people that may have to have to sell pretty quickly, right?

And on top of that, the thing that we’ve seen that’s been crazy is secondary homes are flying off the shelves as well. Historically, you don’t see lake houses farms and ranches so in the late spring and the summer. Because people already want them.

And we’ve seen that, and also the short-term rental market has been insane as far as inventories are concerned, too, like Airbnb-type places. I’m talking like 3-to 6-month places, where you don’t have to obviously have an appraisal. You can ask for whatever you want, and we’ve seen those things go crazy as well, because people want to get the heck out of town.

So inventory is starting to get a little bit healthier. But again, North Texas is the unicorn of real estate, versus some cities like New York, where you can’t even show properties at this time. And DFW has a shortage?

I don’t think we really had a recession. I think we’re at a time out.

Who knows what, the immediate future holds, but it’s a good time still to be in real estate, you know, four months into a pandemic. And that’s absolutely crazy.

Source – Dallas Business Journal – June 26, 2020 – https://www.bizjournals.com/dallas/news/2020/06/26/residential-real-estate-north-texas.html?iana=hpmvp_dal_news_headline

 

 

April 2020 Stats Are In!

The April 2020 DFW area real estate statistics are in and we’ve got the numbers! Take a look at our stats infographics, separated by county, with MLS area stats on each county report as well! These infographics and video are perfect for social sharing so feel free to post them!

To see past month’s reports, please visit our resources section here.

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

Top COVID-19 Contract Questions and Answers

Title companies are, by definition, an “Essential Business.” We are open for business, processing and conducting closings. At Republic Title, we are offering many low-contact and no-contact closing options to help our customers continue to close real estate transactions, while also supporting the health of our customers, our employees and the communities in which we operate, including Remote Online Notarization, drive-up signings and regular mail and expedited delivery services. We have taken a number of other steps as well, including:

  • Conducting most closings and/or meetings by appointment only
  • Asking that non-essential parties refrain from attending closings and/or meetings
  • Making hand sanitizer available in our branch offices
  • Wiping down our closing room tables and chairs after each closing
  • Providing new pens for each signing and encouraging clients to keep the pens once the closing is completed
  • Providing separate closing rooms, if available
  • Promoting best practices for personal hygiene and workplace cleanliness to employees
  • Restricting non-essential travel as well as employee attendance at industry conferences and events
  • Directing any employee with symptoms of illness to stay home.

Question: Is there a termination provision in the TREC 1-4 contract that covers the COVID-19 pandemic?

Answer: No. There is not a provision that covers a pandemic. We received a few inquiries asking about paragraph 14 of the TREC 1-4 contract and if that paragraph covers the current pandemic situation, and the answer is no – paragraph 14 contemplates storm or fire related damage to the property, not a pandemic. If a client has any questions as to what constitutes a casualty loss, they should speak to their own attorney.

Question: There is now a COVID-19 Addendum issued by TXR, can you give us the highlights?

Answer:  In short, the COVID-19 Addendum outlines certain contingency plans to either extend the closing date or terminate the contract. If it appears that the closing date is not feasible because of voluntary or mandatory quarantine or there is a closure, the parties can extend the closing date for a period of 30 days.

Question: Can the COVID-19 Addendum be attached to existing contract or does it only apply to new contracts?

Answer: The Covid-19 Addendum can be added to an existing contract and to a new contract. A party, however, cannot unilaterally add the amendment, both parties have to agree and execute the addendum.

Question: Does the 30 day extension for closing in the COVID-19 Addendum relate to other deadlines in the contract?

Answer: No, the other critical dates are still in effect unless amended by the parties. The COVID-19 Addendum only changes the closing date in paragraph 9 of the Contract.

Question: Assuming the parties have a COVID-19 Addendum as part of the contract, what if the contract also contains a third-party financing addendum and the buyer is past the approval period in paragraph 2A and the buyer loses their job – can the buyer still terminate and receive the earnest money?

Answer: Yes, if the buyer’s loss of income is due to COVID-19 related issues, then either party may terminate and the earnest money will be refunded to the buyer.

Question: What if the seller or someone in the seller’s family has tested positive for COVID-19, do they need to disclose?

Answer: Yes.  Section 9 of the Seller’s Disclosure Notice asks if the seller is aware of “any condition on the property which materially affects the health or safety of an individual.” Testing positive for COVID-19 is most certainly a condition on the property because of the contagiousness of the virus and the fact that it can live on surfaces in the property which can materially affect the health of an individual.

Question: Can the buyer demand that the seller deep clean and sanitize the house?

Answer: TREC 1-4 contract paragraph 7 d2 states, “Buyer accepts the Property As Is provided Seller, at Seller’s expense, shall complete the following specific repairs and treatments: __________.” This provides a buyer the opportunity to make a demand on the seller to deep clean and sanitize the house.

 

This video is intended for educational and informational purposes only. Nothing contained in this video should be considered as the rendering of legal advice for specific cases, and viewers are responsible for obtaining such advice from their own legal counsel.

March 2020 Stats Are In!

The March 2020 DFW area real estate statistics are in and we’ve got the numbers! Take a look at our stats infographics, separated by county, with MLS area stats on each county report as well! These infographics and video are perfect for social sharing so feel free to post them!

To see past month’s reports, please visit our resources section here.

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

February 2020 Stats Are in!

The February 2020 DFW area real estate statistics are in and we’ve got the numbers! Take a look at our stats infographics, separated by county, with MLS area stats on each county report as well! These infographics and video are perfect for social sharing so feel free to post them!

To see past month’s reports, please visit our resources section here.

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

January 2020 Stats Are In!

The January 2020 DFW are real estate statistics are in and we’ve got the numbers! Take a look at our stats infographics, separated by county, with MLS area stats on each county report as well! These infographics and video are perfect for social sharing so feel free to post them!

To see past month’s reports, please visit our resources section here.

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

What is Survey Deletion Coverage?

Survey Deletion Coverage is often also referred to as “Survey Deletion”, “Survey Amendment”, and “Survey Coverage.”  When survey deletion coverage is given in the title policy it offers Buyers protection for errors or omissions that may have been made by the surveyor and accepted by the title company by changing the language in the “standard exception” of the title policy to read “Shortages in Area” only.  The “standard survey exception” in a title commitment or policy (before being amended) reads:

“Any discrepancies, conflicts, or shortage in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements.”

 Upon receipt of an acceptable survey, the title company may amend this exception to read “Shortages in area” only.   Things that a title company will look at to determine if a survey will be acceptable include, but are not limited to, the following:  that items noted on the survey are listed in the title commitment, verify the legal description, check platted building lines and platted easements, and other matters such as the seal and signature of the engineer, date of the survey, and north directional arrow. 

Survey Deletion is addressed in paragraph 6. A. (8) of the TREC One to Four Family Residential Contract, where the parties select between the options of amending or not amending the standard exception in the title policy and who will be responsible for the payment of the premium.

There are other issues that may show up in the review of a survey, such as a building or driveway or fence over a building line, or into a platted easement.  When this happens, the title company may still accept the survey and amend the standard exception to read “Shortages in Area” only, but will generally add a special exception on Schedule B of the title commitment and owner’s title policy for any of these issues that were shown on the survey.              

The cost of survey deletion coverage on residential transactions is 5% of the Owners Title Policy Premium, and is 15% of the Owner Title Policy Premium in a commercial transaction.

For more information on Survey Deletion Coverage, download our Survey Deletion Coverage Q&A flyer 

December Stats Are In!

The December 2019 DFW are real estate statistics are in and we’ve got the numbers! Take a look at our stats infographics, separated by county, with MLS area stats on each county report as well! These infographics and video are perfect for social sharing so feel free to post them!

To see past month’s reports, please visit our resources section here.

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