Photo courtesy Charleston's TheDigitel via Creative Commons

Photo courtesy Charleston’s TheDigitel via Creative Commons

DFW rents were 6.2 higher last year, averaging $919 per month, but demand still soared, with North Texas leading the nation in apartment rentals, and vacancies at a 13-year low, according to new real estate research from Zillow and MPF Research.

The increased rent translated to an extra $600 million paid to landlords last year, Zillow reported. For North Texans, that meant a median increase of $35 a month, higher than the nationwide rate of $26.

Rising rents are nothing new, said Zillow Chief Economist Stan Humphries.

“Over the past 14 years, rents have grown at twice the pace of income due to weak income growth, burgeoning rental demand, and insufficient growth in the supply of rental housing,” he said. “This has created real opportunities for rental housing owners and investors, but has also been a bitter pill to swallow for tenants, particularly those on an entry-level salary and those would-be buyers struggling to save for a down payment on a home of their own.”

For 2015, expect more of the same.


logo-realtorThis is something that you may not think is a big deal, unless you are voraciously house hunting and use Trulia and Zillow a lot. The board of directors of the National Association of Realtors voted in Chicago today to give Move Inc., the company that operates, more freedom and flexibility to compete with Zillow and Trulia. The NAR actually owns Yippee, now gets to publish new home listings and rentals. Actually, after today they can “publish listings from entities that are not even Realtor owned and controlled” like FSBO’s! Who’d have thunk it!

For consumers, this means more great resources when you are looking for homes. One thing did not get, however, is an in-house economist. Trulia has Jed Kolko and Zillow has Stan Humphries who, if you have ever met him, totally blows the stereotype of what a nerdy economist looks like: Stan is adorable, as is Jed.Stan Humphriesjed Kolko

Inman News’ Andrea Brambila quoted Move Chief Strategy Officer Errol Samuelson as saying this will give consumers “the most accurate source of information, but also the most comprehensive. Whether its for sale or for rent, (to give) an entire view of the market.”

In real estate, accurate sales data and information is considered gold. That data is gathered from MLS associations and brokerages across the country, who then feed it to, Trulia or Zillow. It’s one-stop shopping for consumers as each site tries to outdo the other in providing more and more information to buyers. Initially, these sites — in real estate they are called “third-party sites” — were seen as great ways to make listings available to more eyeballs. They promised to scratch the back of the brokers or associations who handed the info over. But now, some brokerages think all these companies

“sucked us in with all the free stuff — I’ll be the first to say we were supportive. We gave our listings to Trulia and,” says Bob Peltier, president and CEO of Edina Realty Home Services, Minneapolis, Minnesota. “Now they say you have to buy enhanced listings or ad space or you are not going to get leads back. That’s a poor business model I’m not willing to support.”

In late 2011, Edina pulled all their listings from third-party sites, and the world did not end.  

“If we give (third-party websites) our listings, they come up higher in search results,” Peltier said. “Then they turn around and want to sell ads to our agents.”

Edina is huge in Minneapolis-St.Paul: 2,100 Realtors working out of 60 offices in Minnesota, North Dakota and western Wisconsin, Edina Realty is one of the nation’s largest brokerages, handling 25,000 transactions and $5.3 billion in sales in 2010. Hanging onto their own listings, they found consumers just clicked over to their sites and scrolled away. Like I said, the world did not end. Peltier said he did what was best for his company and is not trying to start a revolution.

“I have to say it, but (paying for advertising on third-party websites) is no different than buying ads in the newspaper,” Peltier said. “People did it because it was expected, and it was mostly fulfilling the seller’s wishes. But at the end of the day, you’re really got minimal return on that investment.”

Bottom line: there’s a race to create the best possible real estate search experience possible for consumers, and after today that race got more intense.

In a perverse turn of fate, people who can’t afford to sell their homes may be boosting the prices of existing homes on the market by limiting inventory. In fact if you are having a tough time getting a Realtor to return your phone call, shame on you: use email or text. They are pretty busy writing contracts right now. Two examples to report: see this cute house at 4048 Courtshire Drive, 75229 over near Marsh/Forest?  It’s under contract. This is a report not from the agent, but a buyer — someone out there looking for a home:

“I know offers were made above asking price on 4048 Courtshire. An open house was held after the property was under contract and swarms of people still came. It’s a great house with a great story for the state of the market. You should get the full story from the listing agent!”

Then tonight agent Joe Atkins writes to tell me about how homes are selling north of 635, where we always think it is so dead, and so boring because no one is ever killed up there.  Joe is describing a listing in PLANO:

“I just listed this property on Friday afternoon and by Sat at 7pm I had 15 showings and 4 offers. I had to call the showing service and block showings while waiting to get the executed contract back because so many people were trying to show the house. I even had agents that wanted to send in offers without showing the house. The real kicker is, this is not a foreclosure and it was not priced below the comps. The market is back and booming in Central Plano.”

Wow, the market’s back, right? Not so fast.

I’m pretty bullish on real estate, and I still think this is a great time to buy. It may even be cheaper than renting if you can get financing or pay cash: DFW apartment occupancy is at 94.1%, and between April and June, renters leased more than five times the number of units that were completed in the quarter, or 1,563 units, said Greg Willett, vp of MPF Research. In all, more than 8000 apartments were leased in the area. Rents are going up, 1 percent in the second quarter on new leases, and 4.3 percent from this time a year ago,  according again to MPF Research. Of course, hotter the area, the higher the rent increases: in Grapevine and north Fort Worth, rents have risen as much as 6 percent from a year ago. Rents are up as much as 8 percent in Uptown and Oak Lawn. People are moving here, they rent to scope out the market. People are shedding homes they cannot afford, they rent. People going into foreclosure, they rent. You need decent credit to rent and maybe a couple months’ rent as a security deposit, but it’s a whole lot cheaper than buying.

One of my most trusted resources I read in the biz, Jonathan Miller,  says this: low housing inventory is NOT a sign that the market’s back, it’s a sign that some people, the upside downers, maybe CAN’T list their home. When you have negative equity, you don’t have enough equity to buy the next home, even if it is a cheaper home. Hell, you may not even have enough cash to pay a mover. What do you do? You stay put if you can squeak by, make the monthly payments. You do not pass go, you are stuckola. You pray one of you doesn’t get transferred.

I can see this scene clearly across the country. Here in Dallas, maybe not so much. Remember how our state laws protect us from borrowing too much home equity. Still, there are folks who could be top heavy in their homes, have invested way more than they think they will get out of a sale. If they break even, maybe, but if they need to take cash to closing, they would rather wait out the market, wouldn’t you?

Course, sometimes I get all doom and gloomy and I wonder what it is we are waiting for. Will it really ever get any better? Maybe this is as good as it gets. Sometimes I worry this robust market is a decoy, a way to make us feel all peppy and ebullient before the election. Just call me Debbie Downer.

Here’s what another respected buddy, Zillow’s Stan Humphries, says:

What markets like Miami and Phoenix may now be showing us is that negative equity has another very powerful effect on the supply side beyond increasing the flow of foreclosed homes onto the market: all the households that we predicted would be trapped in their homes and unable to buy new ones are similarly unable to sell their current homes, severely decreasing the overall supply of homes on the market. Of course, we knew that trapped homeowners represented both a loss of supply and demand; we just tended to focus on the demand side of the equation more than the supply side. From an economic perspective, this wasn’t crazy since we expected that any increase in demand could easily be satisfied by “sidelined sellers” – people who tried or wanted to sell their homes during the recession but were unable to – being enticed back into the market by rising home values.

Well, it turns out that many of those sidelined sellers may no longer be able to sell their homes because they are underwater on their mortgages now. And negative equity may well be so constraining the supply side of the housing market that it’s creating acute inventory shortages that are bidding up prices.

Interestingly, in Phoenix, Stan says prices have appreciated more at lower price tiers than higher price tiers. Why? Less inventory.

This is why Stan told us at NAREE to expect more of a stair-step recovery scenario, rather than a flat, drawn out bottom.

Still, the Debbie Downer in me says this: we have rents going up. We have home prices going up at the lower price tiers, all of this making it harder for new buyers, kids in their twenties, anyone who doesn’t have a chunk of dough from family or savings, basically anyone who is not a member of the lucky sperm club to buy or even have a nice apartment. Guess they’ll have to cram in and share, or stay home with mom and dad if they are still in their homes! First time home-buyers, so glad you got that little gift from Washington a few years back. Because if rent prices continue to go up, the government is going to have to step in with “Rent Medicaid”.

Heaven help us.

Steve Brown moderated the big numbers guys: Stan, Lawrence and David

I have just returned from the “Mile-High City” where they have altitude, medicinal marijuana and a pretty decent real estate market. I was at the annual National Association of Real Estate Editors conference where, for four days, we nutcakes who obsess about real estate lived and breathed it 24/7, consuming information. And alcohol. The main take-away: enjoy that drink. Significant declines in the number of homes for sale in many U.S. markets, and fewer foreclosures (or foreclosures on hold) are boosting the country’s battered housing market. I spoke at length to two of my favorite economists, Stan Humphries of Zillow, and Mark Fleming from CoreLogic, who gave me this zippy summary up in the hospitality suite of the Brown Palace Hotel:

“We are all mules in the barn. But the U.S. is the best-looking mule in the barn.”

In other words, the whole world is a mess. Forget Greece, said one expert, we need to watch Spain and Italy, who have much larger economies. Ripples overseas could smack out this seemingly recovering market. But don’t despair too much because the Europeans and South Americans and Chinese are coming over here and buying our real estate. If you live in Florida or Vegas, in fact, and you rent don’t be surprised to find out you have a foreign landlord.

This will come as no shocker: Lawrence Yun, chief economist of the National Association of Realtors, told us inventories are falling — now down to 2005 levels nationwide, and home listings in certain neighborhoods across the country are starting to be in short supply, as we well know. There are about half as many homes on the market today as there were in 2007, or 1.8 million homes currently listed for sale on In 2007, there were a whopping 3.1 million. Our North Texas inventory is down about 40% and oh how we feel it.

Then we’ve got fewer foreclosures — Yun said the number of potentially distressed inventory that will come on the market has been thinned out. Hope he’s right: Yun is so positive that light beams radiate from his face. Others say we may get a reality check in fall, when more distressed properties appear, or if Europe becomes FUBARed.  Currently, previously foreclosed homes and short sales accounted for about a third of U.S. home purchases in 2011. Yun predicts they will be a 25 percent share this year, but only 15 percent in 2013.

Nationally, about one-third of homes are underwater. Not so in North Texas. Zillow says that about 21% of the home re-sales here are from buying foreclosures. Snap them up: the National Association of Realtors is forecasting a 3 to 5 percent home price increase nationally for 2012. But it could be higher, the universally sunshine-y Yun said. He predicts a 10 percent price appreciation. The median price of North Texas homes is already up by almost that amount — 9 percent higher in May than a year earlier, according to the latest statistics.

With sales and homebuilding picking up, David Crowe, top economist for the National Association of Home Builders, predicts that Texas housing markets will be more than 70 percent recovered from the crash by the end of next year.

There is so little inventory:  Nationally, builders are constructing only about a third as many houses as they did before the recession thanks to tighter credit. Single-family home starts are likely to rev up to about a “modest” 19 percent across the country this year.

Here in D-FW, only about 3,000 finished new homes are sitting empty.

Recovery mode, yes, but do not think we are going to shoot this recovery straight up. Stan says the recovery is likely to be in stair-steps rather than a straight line up, “price spikes, followed by plateaus.”

We may even backslide, and And conditions will depend on the area. I sure hope someone over at Case-Shiller is reading this, because these experts made it very clear that more than ever, real estate is a local story you absolutely cannot generalize even within the same dang zipcode.

Humphries said: “Housing markets have become really hyperlocal.”

The biggest dilemma will come from the folks who are underwater, or who owe more than their properties are worth. They have no financial incentive to cure a lousy investment.

“We’ve always expected negative equity to cast a long shadow,” he said.

Ah, but you Texans were smart, Mark Fleming told me: your state saved your butt, actually learned some lessons from the 80’s. He was talking about how we smacked limits on those home equity loans. In fact, I told him, I remember when you couldn’t even get a home equity loan in Texas. He smiled. Yes, he said, turns out maybe 100% home equity loans were not such a good idea. Just ask the folks in Phoenix.

I told him that Danny Faulkner just died, he of the I-30 condo flipping fame game. Maybe we should have told him thank-you.

Mary Ann and Fred Davis bought a home in Naples, Florida for $200,000. 2400 square feet and 40% off what it sold for in 2005. The home is in a gated community and they plan to keep it as a second home/family retreat for years, hence no pie-in-the-sky buy and flip notions. I’ve got more friends snapping up properties in three out of four of the nation’s hardest hit markets: Florida, Phoenix, and Idaho. (Sorry, no one I know cares to buy in Las Vegas.) This home was a short sale purchase. And according to Zillow economist Stan Humphries, this may be a great time to pick up a second home as long as you keep it for many years…