NEW YORK (Forbes, BusinessWeek, Oct. 10, 2008) – The economic downturn is blowing through the country, but some cities are predicted to fare much better than others, and two national magazines say six of those are in Texas. Forbes has compiled its list of “Best and Worst Bang-for-the-Buck Cities,” ranking Austin first, San Antonio second, Houston fourth and Dallas seventh. Meanwhile, BusinessWeek's list of the 20 best places to live during a recession includes Lubbock because of its higher education, agriculture, health care and energy sectors, and Corpus Christi because of its military base, energy industry and agricultural job opportunities.
CENTRAL TEXAS RETAIL STABLE
AUSTIN (Austin American-Statesman, Oct. 17, 2008) – Central Texas, home to the state’s highest urban retail occupancy, has yet to experience a pullback from retailers. In fact, several new or expanded large retail stores have opened recently, including a Walmart Supercenter on US 290, a Target in the Arboretum area, and a Kohl's in Leander. However, because of the slowdown in the national economy, Lance Morris, president of the Weitzman Group's local office, predicts that retail rents and occupancy rates will be flat through 2009. "I think it's going to be a year or two before we hear any new big-box store announcements," he said.
HUD Announces Hope for Homeowners Program for Troubled Homeowners
National Association of Realtors, The Washington Report, October 6, 2008 -- On October 1, 2008, the US Department of Housing and Urban Development (HUD) unveiled the HOPE for Homeowners Program (H4H) for borrowers facing difficulty paying their mortgage. The program allows homeowners of single family, owner-occupied units to refinance into an affordable FHA-insured, 30 year, fixed-rate mortgage. The H4H Program is effective October 1, 2008, through September 30, 2011.
H4H requires that all liens be extinguished for participation in this loan program. The mortgage loan limit is $550,440 and the loan-to-value (LTV) is capped at 90 percent. Lenders will pay an upfront mortgage insurance premium of 3 percent (making the write down effectively 87 percent). The annual premium is 1.5 percent.
At origination of an H4H mortgage, the borrower and HUD will share equity created by the write down. Initial equity is calculated as the difference between the H4H mortgage original balance and the appraised value at the time of the H4H loan origination. A Shared Equity note and mortgage (SEM) for initial equity sharing will be executed. The borrower will also execute a Shared Appreciation note and mortgage (SAM) for future appreciation of the mortgage property. Upon sale or distribution of the property, the shared appreciation is divided between the borrower and FHA on a sliding scale with 100 percent going to HUD in the first year and 50 percent going to HUD after five years. HUD may share its 50 percent interest in future appreciation with a subordinate lien holder(s) who meet specific criteria for the H4H mortgage.
DOTZOUR'S TAKE ON PROPOSED BAILOUT
Real Estate Center, 9-26-08 – As negotiations continue over the proposed $700 billion bailout of the nation's financial system, Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University, offers his perspective:
“It's a sad day in America when the federal government (the American taxpayer) has to bail out homeowners who purchased homes they couldn't possibly afford. It's sad because of the vast majority of Americans who live within their means and pay their mortgages on time are now being asked to pay for other people's mistakes.
“It's a sad day in America when we have to spend billions to bail out financial institutions that made loans to those people, then sold those loans to pension funds and endowment associations that had no idea of the risk they were taking when they bought the ‘complex and sophisticated’ bonds. ‘Complex and sophisticated’ is just a euphemism for ‘I have no earthly idea what I'm buying.’
“Now for the pragmatism. If we don't bail out the banks, the American economy grinds to a halt. Many U.S. businesses are financed with short-term notes that mature in 90 to 180 days. This is called commercial paper. What happens when your 90-day note matures, and nobody will refinance it? Just ask Fannie and Freddie, who had $225 billion in short-term notes mature and nobody would refinance them. Hasta la vista. The commercial paper market is virtually frozen, and many businesses are in the same boat as Frannie was.
“The smartest people working in the global financial system say that this $700 billion is a good first step, that it might help to thaw the frozen credit markets but that the devil is in the details. Some say it might take another $500 billion later.
“The fact is that there is a market for these bad loans. It's about 22 cents on the dollar. The problem is that nobody wants to sell for that price as long as the taxpayers will pay a higher price. So the federal government will buy these assets for a higher price, and it’s possible that they can sell them later and make a profit. It's possible that the net cost to the taxpayer will be very little. The bottom line is that we are in uncharted waters, and this $700 billion plan is the best plan that seems to have some hope of temporarily solving the problem.
“The long-term problem is still on the table, and that is the simple fact that the U.S. government can't keep spending more money than it has. Even governments can go bankrupt. The long-term solution for the U.S. government and every American household is to live within their means.
“Who is going to want to invest in mortgage bonds in the future if the federal government can freeze the interest rates below what was promised? Who is going to want to invest in mortgage bonds if the government can cram down the principal on the bonds you bought? Until the federal government can restore some confidence in the global investment community that if you buy a mortgage bond you have a reasonable certainty of getting your principal and the promised interest, the problems will linger.
“The bailout is inevitable and has to happen. Expect more to come. These are just bandages on a gaping wound. Hopefully lessons will be learned, and we will begin to address the illness and not just put on more bandages.”
MORE JOBS FOR LONE STAR STATE
Real Estate Center, 9-26-08 – The Texas economy continues to create jobs while the U.S. economy is losing them. The state’s nonfarm employment rose 2.3 percent from August 2007 to August 2008, while the nation’s decreased by 0.3 percent.
Texas’ seasonally adjusted unemployment rate rose from 4.3 percent in August 2007 to 5 percent in August 2008. Over the same period, the U.S. rate rose from 4.7 percent to 6.1 percent.
The state’s mining industry, boosted by higher oil prices, ranked first in job creation, followed by professional and business services, construction, the leisure and hospitality industry, and the education and health services industry.
All Texas metros except Lubbock experienced positive employment growth rates from August 2007 to August 2008. McAllen-Edinburg-Mission ranked first in job creation followed by College Station–Bryan, Odessa, El Paso, Laredo and Texarkana. The state’s actual unemployment rate in August 2008 was 5.1 percent.
Petroplexes Midland and Odessa had the first- and second-lowest unemployment rates, followed by Amarillo, Lubbock, Abilene and Victoria.
The Real Estate Center's complete review of the Texas economy is available online.
ROUND ROCK NAMED SEVENTH BEST PLACE
ROUND ROCK (CNNMoney.com; Sept. 2008) – Round Rock ranked seventh on CNNMoney’s list of America’s best small cities in which to live. The city's appeal is credited to affordable housing, its school district and computer company Dell’s decision to establish its headquarters there.
The median home price is $193,931, job growth has risen just over 45 percent between 2000 and 2007, and family purchasing power is at $101,381.
FORECLOSURES & HOMEOWNERS' RIGHTS
Real Estate Center, September, 2008 – Texas is faring much better than the nation when it comes to number of foreclosures. According to RealtyTrac Inc., year-to-date 2008 foreclosures for the United States were up 27 percent as of last month, while Texas had an 18 percent drop.
However, there's no better time than the present to reacquaint yourself with the rights homeowners have when they face foreclosure. All the information you need is in Judon Fambrough's "A Homeowner's Rights Under Foreclosure." The report has been updated and is available on the Real Estate Center's website.
DEVELOPERS BAILING ON DOWNTOWN CONDO MARKET
Austin American Statesman, 8/27/2008, by: Veronica Castelo - [Summary] - A number of developers have stalled or cancelled downtown condo projects due to the banking crisis and fewer banks lending money for the projects. Demand still seems to be high for the downtown condos. About half of the 1000 units currently under construction are already sold. Read more.
AISD BOARD VOTES FOR MERIDIAN SITE FOR NEW SW AUSTIN ELEMENTARY SCHOOL
AUSTIN, Aug., 2008 - On a 7-1-1- vote, Trustees approved the selection of a 14-acre tract of donated land for the site of the new Southwest Austin Elementary School — the seventh campus to be constructed under the District’s 2004 Apple At Work Bond Program. Additional testing will be conducted to ensure the environmental viability of the property. The site is located on Meridian Park Blvd., near the intersection of FM 1826 and Highway 45. The 32-classroom school will relieve Clayton and Mills elementary schools, and is scheduled to open in August 2010.
Of the eight schools included in the 2004 Bond Program, five — Perez, Clayton, Overton, and Blazier elementaries, and Garcia Middle School — have opened. The Southwest Middle School, located at Slaughter Lane and FM 1826, is now under construction and will open in Fall 2009.
FIRST TIME HOME BUYERS SHIFT PRIORITIES
AUSTIN (Austin Business Journal, Aug. 25, 2008) - A growing number of first-time home buyers - 41 percent - say that when it comes to finding a new place to live, proximity is their top priority, according to an online survey of Coldwell Banker brokers nationwide. That was one of the survey's key findings, perhaps influenced by the rising price of commuting that is driving first-time homebuyer trends. And appetites are still large: 71 percent report first-time buyers are looking for larger homes than they were 10 years ago. Read more.
WIND POWER'S BIG BREAK
AUSTIN (Fort Worth Star-Telegram) – The state’s Public Utility Commission yesterday put Texas on course to spend $4.8 billion on power lines needed to carry electricity from wind farms in the Panhandle and High Plains to the state’s urban centers. Getting wind power from turbines to consumers has been problematic because of insufficient transmission lines running from the remote wind farms. The project would allow hundreds and possibly thousands of miles of power lines to be added. However, officials say it would be at least five years before the lines would be ready to handle electricity. The costs would be covered by customers served by ERCOT, the Texas power-grid operator. Customers would pay an estimated $4 monthly fee for several years. Texas leads the nation in wind-energy production, and the utility commission’s move, which still faces one more procedural hurdle, would put the state’s output ahead of the combined production of the other 14 states producing wind energy.
HEADWATERS ACREAGE SOLD
AUSTIN (Austin American-Statesman) – Local developer Dick Rathgeber has sold the majority of the land that was going to be home to his 1,000-lot Headwaters at Barton Creek subdivision. The buyer was Masonwood Communities, also of Austin. Masonwood is buying 1,031 of the original 1,365 acres that Rathgeber purchased in 2004 for Headwaters. Rathgeber sold 34 acres four years ago to former Texas Attorney General John Hill and will donate the remaining 300 acres to the Austin Community Foundation for parkland. Masonwood intends to develop the subdivision under plans the City of Dripping Springs approved under Rathgeber's ownership. According to Masonwood CEO Jim Meredith, the project will take about eight years to develop. He does not expect work to begin for another year or two.
HOTELS UNDERWAY AT DOMAIN
AUSTIN (Austin American-Statesman) – Construction will begin next month on the city’s first Westin hotel in the Domain mixed-use project in north Austin. The eight-story hotel will feature 340 rooms, over 14,000 sf of meeting and banquet space, and a themed restaurant and bar. It is expected to cost between $70 million and $75 million. The developer is White Lodging Services Corp. Just east of Simon Property Group's Domain, Endeavor Real Estate Group is working on a separate project, also called Domain, which will feature three hotels, residential, retail and office space. Work will begin in about a month on one of the three hotels, which will be a six-story Aloft boutique hotel. It will be a joint venture between Open Hospitality Partners and Lodgeworks. Work will begin next year on the second hotel project. Called Twelve Domain, the 145-room hotel will be part of a 28-story condominium tower. Novare Group and Andrews Urban will develop the project together.
NEW LIFE FOR OLD WATER TREATMENT PLANT
AUSTIN (KXAN-TV, globest.com, June 20, 2008) – Trammell Crow Co., USAA Real Estate Co. and Constructive Ventures Inc. will turn the Green Water Treatment Plant in downtown Austin into a $700 million mixed-use development.
The partnership plans to fill the six-acre site with 2.6 million sf of condos, apartments, offices, retail space and public gathering space. The project will also include affordable housing and a 250-unit senior assisted-living facility.
Tentatively called Project Green, it will cover several city blocks, including Shoal Creek, Caesar Chavez, Nueces and 3rd streets, and West Ave.
The city will start the decommission process on the plant next year with hopes of construction beginning in 2010.
EVENTS CENTER LAUNCHES IN CEDAR PARK
CEDAR PARK (Austin Business Journal, June, 2008) – Ground breaks today on the new $55 million Cedar Park Events Center at New Hope Dr. and US 183A. The project includes a 181,000-sf indoor event center and a 16-acre mixed-use development with 91,000 sf of retail and another 91,000 sf of commercial development. The city is funding about $43 million of the costs. The new center will also be the home of the Texas Stars Hockey Club.
Austin Named "Recession proof city" by Forbes
Read more at Forbes.com.
5,500 HOMES FOR LEANDER, LIBERTY HILL
AUSTIN (Austin Business Journal) – Work has begun on the first two sections of a residential development that could bring as many as 5,500 new homes to Leander and Liberty Hill. Gunn & Whittington Development is the developer of the three subdivisions.
Rancho Sienna on Parmer Lane in east Leander is 610 acres. Middlebrook, along Hwy. 29 in Liberty Hill, is 400 acres. Santa Rita, also in Liberty Hill, is 1,200 acres.
Construction on the first 167 lots of Rancho Sienna and the first phase of Middlebrook has begun. Buildout is expected to take five years. Plans for Santa Rita call for buildout completion in nine or ten years.
Middlebrook homes will range from the $140,000s to $220,000s. In the other two subdivisions, prices will be from the $200,000s to $400,000s.
MORE HILL COUNTRY OFFICE SPACE COMING
AUSTIN (Austin American-Statesman) – Trammell Crow Co. is constructing a $47 million office park on 26 acres at US 183 and RM 620. The 272,000-sf Pecan Park, which will lease at $28 per sf, is expected to open by December. Two other projects going up in the city's northwest region are Aspen Properties’ Aspen Lake, an office building with 210,720 sf that will open in May, and Simmons Vedder Partners’ Crossings at Lakeline, with 235,000 sf to be open in June.
BUDA GETTING GREEN FRIENDLY NEIGHBORHOOD
Austin Business Journal, Feb. 2008
Austin's Green Builders Inc., a subsidiary of Wilson Holdings Inc. (AMEX: WIH), is nearing completion of the first phase of building in its Elm Grove subidivision. The development will eventually include 320 homes on 90 acres that will be certified eco-friendly by the National Association of Homebuilders' Green Building Standards. Construction on the first phase is scheduled for completion in March 2008, and homes will be in the $200,000s. "It's an ongoing process to source reasonably priced land in areas that make sense and which will support a green community," says Clark Wilson, CEO and president of Green Builders. "But as the demand continues to drive interest we're committed to building and developing eco-friendly, cost effective communities and homes for everyone. Green living is a necessity." Elm Grove is at the intersection of FM 967 and FM 1626 in Buda, about 15 miles south of Austin. Green Builders acquires, develops, manages and markets residential communities in the Central Texas region.
WILLIAMSON COUNTY UNVEILS NEW HOSPITAL
ROUND ROCK (Austin American-Statesman, Feb. 8, 2008) – Seton Medical Center Williamson celebrated its grand opening yesterday, bringing 181 hospital beds to the city and providing jobs for almost 1,400 people. The $175 million, 365,761-sf Catholic hospital is expected to generate about 12,000 jobs over the next 15 years. An additional building called Good Health Commons will open in April featuring acupuncture, music therapy, massage and a kitchen. Officials expect the new area to develop into a health care and education plaza.
CRESTVIEW CLEANUP
AUSTIN (Austin American-Statesman) – A 73-acre, previously contaminated site has been cleared for a mixed-use development just south of US 183 on the Capital Metro rail line. Phase-one work begins today. The $100 million Crestview Station will include 32,000 sf of retail, 32,000 sf of office space and the 340-unit Midtown Commons at Crestview apartment complex. The developers are Stratus Properties Inc. and Trammell Crow Co. The apartments, developed by High Street Residential, will range from 550 to 900 sf and cost an average of about $1.50 per sf. Additional phases of the project could include up to 900 more residential units. The entire development will take five to seven years to complete.
FOUR SEASONS SETTING UP RESIDENCES
AUSTIN (Austin American-Statesman, January, 2008) – After a seven-year delay, Ardent Residential and Post Properties Inc. has finalized plans for a downtown luxury condominium project.
The Four Seasons Hotel parking lot will be converted into the Four Seasons Residences, a 32-story, 166-unit condo overlooking Lady Bird Lake. Units will range from 880 to 5,550 sf and be priced from $400,000 to $4 million. The $125 million project, designed by Michael Graves & Associates Inc., is expected to open in first quarter 2010.
CENTRAL TEXAS HOME PRICES UP, SALES DOWN
AUSTIN (Austin Board of Realtors, January, 2008) – Sales of existing single-family homes slowed last month even as prices continued rising, according to the latest Multiple Listing Service (MLS) report. In December 2007:
- the number of homes sold was 1,655, a 16 percent drop from December 2006;
- the median price for a home was $191,250, an 8 percent increase over the previous year; and
- the total dollar volume sold was almost $416.5 million, an 11 percent decrease.
A total of 25,151 existing single-family homes were sold in 2007, an 8 percent decrease from 2006. Properties sat on the market an average of 62 days, the lowest time span in five years.
The median price for the year was $185,000, a 6 percent increase over 2006. The total dollar volume sold was more than $6.3 billion, a 2 percent decrease.