Low mortgage rates don’t help underwater homeowners

With mortgage rates at record low levels, millions of Americans have refinanced their homes to save money.

But homeowners who owe more than their house is worth are cut off from the benefit of lower interest rates.

Three-fourths of homeowners who are underwater in their loans are stuck paying higher interest rates, according to a new report from researchers at CoreLogic.

In the Dallas area, almost 12 percent of homeowners, or almost 90,000 borrowers with a loan, now owe more than their houses are worth.

Nationwide, 22.5 percent of home borrowers — almost 12 million people — are stuck with a lower home value than the balance on their mortgages.

“High negative equity is holding back refinancing and sales activity and is a major impediment to the housing market recovery,” CoreLogic chief economist Mark Fleming said in the report released Tuesday.

“The hardest hit markets have improved over the last year, primarily as a result of foreclosures,” Fleming said. “But nationally, the level of mortgage debt remains high relative to home prices.”

Nevada tops the list of upside-down home markets, with 60 percent of the houses worth less than the debt on them. In Arizona, 49 percent of home loans are upside down, and in Florida it’s 45 percent.

In Texas, 10 percent of home loans are underwater and an additional 5.1 percent are near negative equity.

Dallas area negative equity rates have improved throughout 2011 and are down dramatically from 2009, when almost 30 percent of mortgages were underwater.

Mortgage holders who don’t have enough equity in their houses either have to wait for market values to recover or — in some cases — bring cash to the table if they want to sell or refinance

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Dallas-area home prices down 4.7 percent in latest Case-Shiller report

Any chance of a summertime revival in Dallas-area home prices appears to be wilting.

Prices of pre-owned homes were down 4.7 percent from a year earlier in the latest Standard & Poor’s/Case-Shiller Home Price index released Tuesday.

It was the Dallas area’s largest annual decline in the closely watched home price gauge since early 2009.

“The latest S&P Case-Shiller figure looks pretty grim,” said D’Ann Petersen, a business economist with the Federal Reserve Bank of Dallas . “The housing price index for the Dallas-Fort Worth area hasn’t been this low in quite some time.”

Local home prices have been down 11 consecutive months in the Case-Shiller report.

Both home prices and sales have been falling since the federal government discontinued homebuying tax credits in early 2010.

“The homebuyer tax credits likely played a role in the run-up in the Case-Shiller index in 2009 and 2010,” Petersen said. “Without the credits in place, prices may have remained flat.”

Pre-owned house prices are down this year in most Dallas-area neighborhoods. And year-to-date North Texas home sales are 12 percent lower than they were at the same time in 2010.

The latest Case-Shiller report for May had an overall 4.5 percent drop in prices for the 20 U.S. cities the survey tracks.

In comparing month-to-month changes, the Case-Shiller index showed a 0.9 percent rise for Dallas from April to May, but the one-month increase probably doesn’t mean home values are rising, researchers said.

“This is a seasonal period of stronger demand for houses, so monthly price increases are to be expected,” Standard & Poor’s David Blitzer said Tuesday in the report. “However, 19 of 20 cities saw prices drop over the last 12 months.

“The concern is that much of the monthly gains are only seasonal.”

Washington, D.C., was the lone city that Case-Shiller surveys to see a rise in prices from last year. Its increase was 1.3 percent.

The biggest price declines in May were in Minneapolis (11.7 percent), Tampa, Fla., (9.5 percent) and Phoenix (9.5 percent).

Dallas-area home prices are down about 10 percent in the Case-Shiller index from where they were at the top of the local home market in mid-2007.

And nationwide prices are down more than a third.

Case-Shiller researchers compare sales prices of specific single-family homes over time. They look at only pre-owned properties — no new construction.

The large number of previously foreclosed homes being resold at a discount has helped pull down home prices in many U.S. markets.

In the Dallas area, more than a third of homes sold are distressed properties, according to recent reports.

“Housing price gains will likely remain elusive until excess inventory is eliminated,” Petersen said.

There are some signs that the supply of homes on the market in North Texas is tightening.

At midyear, the number of pre-owned single-family homes listed for sale with real estate agents was down 9 percent from June 2010, according to the Real Estate Center at Texas A&M University.

But there was still a 7.5-month supply of homes for sale in the multiple listing services.

“Fewer listings are coming to the market,” said Ted Wilson, a housing analyst with Dallas-based Residential Strategies Inc. “It makes sense that fewer households put their house on the market if prices are weak and there is no pressure for them to sell.

“If inventory continues to fall and demand for housing strengthens slightly in the second half 2011, I imagine that the inventory will drop under a six-month supply and that prices will begin to firm again.”

But don’t expect a substantial improvement in the North Texas home market anytime soon, said Dr. James Gaines of the Real Estate Center at Texas A&M.

“The weak general economic recovery and tight credit market are hindering a more robust housing recovery, which is probably at least a year to two years away,” Gaines said.

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Dallas-area pre-owned-home sales fall 12%

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There was no sign of a turnaround in the Dallas-area home market during the first half of 2011.

Home sales were down in all but five of the 45 local housing markets that The Dallas Morning News tracks each quarter.

And the few areas that had gains in sales — affluent neighborhoods in the Park Cities, North Dallas and Oak Lawn — eked out only small increases.

Total pre-owned single-family home sales fell 12 percent at midyear from June 2010 in the Dallas area, according to statistics from the Real Estate Center at Texas A&M University and North Texas Real Estate Information Systems.

Sales were off by much higher rates in neighborhoods in southern Dallas County and other suburban areas. The biggest drops were in Euless, 35 percent, and Cedar Hill, 30 percent.

Those areas and other moderately priced neighborhoods enjoyed a boost early last year, when federal homebuying tax credits were available.

The expiration of the credits and tougher borrowing standards have hurt sales this year in all but the most affluent neighborhoods.

Hopes and loans

However, higher pending home sales numbers during the last couple of months could mean that the biggest monthly declines are over.

“I’m actually optimistic that we’ll see some increases in sales volume vs. 2010 levels now that we’re past the months affected by the tax credit last year,” said James Gaines, an economist at the Real Estate Center. “If we do, then annual sales should be at least equal to or maybe even slightly greater than last year’s, but probably less than 2009.

“The key ingredient appears to be credit tightness — mortgage lenders,” he said. “By all accounts I’m hearing from sales agents, lenders are still balking at making home loans, or at least making them easy.”

Regardless of the reason, pre-owned home sales in the Dallas area have fallen 36 percent since mid-2006.

Real estate agents are hoping — just as they were a year ago — that the worst of the declines are over. Jim Fite, president of Dallas’ Century 21 Judge Fite Co., said his pending sales for June were up 26 percent over 2010 — “a bright ray of sunshine and a great statistic to see.”

“Also, mortgage rates continue to be low, housing values continue to be a great value and rents are creeping up, too,” Fite said.

More shoppers

Despite the torrid weather, agents say, they are seeing more potential buyers than earlier in the year.

“Business has picked up, which is a little unusual for late July; the market usually starts slowing down by mid-summer,” said Lydia Player of Virginia Cook Realtors. “For the first time in a long time, I’m seeing buyers disappointed when they lose out on a house they wanted.”

The number of Dallas-area single-family homes listed for sale with real estate agents was down about 9 percent at midyear from June 2010.

“We may see a drop in available homes for sale this fall, and folks who need to buy won’t be able to be as picky as they have in the past couple of years.”

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8 Common Seller Problems (and How to Resolve Them)

Do you ever clash with sellers on price, staging, or marketing? Has someone ever asked you to lower your commission? Has a seller’s personality ever rubbed you the wrong way?

If you work in real estate—and you aren’t exclusively a buyer’s agent—then the answer to those questions is almost certainly yes. But unless you’re working with someone who’s incredibly dense and obstinate, these problems don’t have to slow down the selling process.

The Problems
Note that the problems below don’t apply just to real estate professionals. In fact, they’re even bigger issues for sellers. These cost them time, money, and aggravation, and disrupt their lives far more than their agents’.

1. Sellers can be uncooperative on price.

2. Sellers frequently believe that the way they live in the house is the way they can sell the house.

3. Sellers are often unprepared for low appraisals.

4. Most sellers aren’t negotiation experts. They may bring expectations and anxiety that make everyone’s experience more difficult.

5. Sellers can be uncooperative on commission and might even request a reduction.

6. Sellers regularly have unrealistic demands concerning showings, advertising, marketing, and communication.

7. Agents and sellers may have personality conflicts.

8. Sellers might not be aware of all the closing costs.

Solving these problems gets sellers’ homes sold faster, for more money, and with less stress.

The Universal Solution in Two Parts
Before we get into the solution, it’s important to point out that owners don’t fully understand the entire process of selling a home. These problems would occur far less or not at all if agents could give them a crash course on selling, in which the practitioners covered these issues in a frank way. If that happened, I believe that sellers would be more cooperative.

The universal solution in two parts is first to ask the seller specific questions over the phone and at the beginning of the listing presentation as the agent is establishing rapport. These include:

▪ “Have you done much research to determine the asking price or how to sell a house?”

▪ (If yes) “We’ll talk more when we get together, but what are some of the more important things you discovered?”

▪ “Why are you thinking of selling?”

▪ “Where are you going?”

▪ “Is there an ideal time frame to have the move complete?”

▪ “The tax records indicate that you bought it x years ago, is that correct?”

▪ “Have you refinanced?”

Similar to how a doctor asks patients about their health history, this process gives the sellers confidence in the thoughtfulness, thoroughness, and ability of practitioners.

The second part of the universal solution is for real estate pros to build a listing presentation that addresses each of these problems before they arise. Details on how to do that are below:

1. If they’re uncooperative on price, prepare a very thorough comparative market analysis. Show sellers all the research that you used to select the properties you chose for the final CMA. Offer your pricing recommendation, but let sellers choose — and “own” — the list price.

2. Sellers believe the way they live in their house is the way they can sell it. Ask sellers if they are planning to do any work to prepare it for the sale. If they are, use your judgment to determine whether they will follow through or not. Share examples and anecdotes of how house cleaning, reorganizing, renovations, and so forth have helped homes sell faster and for more money.

3. Describe the entire pending process, from offer acceptance to closing. As you go through this, cover other stumbling blocks and how you work to prevent or address them.

4. Go over the entire negotiating process, from interested buyers to accepted offer. Also, explain pitfalls and emotional turbulence and describe how you will be their advocate.

5. If they’re uncooperative on commission, sometimes you will simply have to walk away. When possible, build so much value into your marketing plan that sellers are reluctant to even ask you to adjust your commission.

6. Show proof that what you do works. Continuously check for agreement. If and when they challenge you, make a note and return to it after they are impressed with your entire effort.

7. When it comes to personality conflicts, make sure you’re self-aware. Determine your personality style, and your strengths and weaknesses. Learn to recognize others’ personality types, and figure out which will naturally conflict with yours. Learn strategies for adapting.

8. Get sellers’ mortgage balances. Find out what else they plan to pay off with the proceeds. Then complete a detailed net sheet. Use a conservative sale price. Inflate the numbers a bit, so you can assure them it will likely be more in their pocket.

All of these bases can be covered either in conversations with owners over the phone before making an appointment or during the listing presentation. Top practitioners have spent years interacting, building, rehearsing, presenting, adjusting, and improving. Solving these problems consistently comes out of that effort

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The 5 Most Common Complaints of Short Sale and REO Buyers (and How to Avoid Them)

Roughly forty percent of the homes for sale on today’s market are short sales and foreclosures! Distressed properties are well known for their value (a reputation which is sometimes accurate, and sometimes not), but they also have a reputation for causing buyers to become distressed, too!

Transactional snafus, last-minute surprises and long, drawn-out escrows that never close seem to be par for the course. Instead of avoiding these properties altogether, get educated about the most common dramas that go down in these deals, and how you can avoid falling victim.

1. Run-on (and on, and on) escrows. When you’re buying a home (or selling one, for that matter), time is absolutely of the essence. And buyers reasonably expect that the big time suck in real estate is in the house hunting process itself; seems like once you find a home you want to buy and the seller agrees to your price and terms, things should move pretty quickly, right?

Not so much, when it comes to some distressed property sales. I’ve heard tell of the occasional, swiftly-moving escrow on an REO (real estate owned – by the bank). But for the most part, these transactions take anywhere from a few days to a few weeks longer than “regular” sales, because of the extra signatures, supervisor-level approvals and even investor involvement required to seal the deal. Banks don’t have the same sense of urgency individual home sellers do, and it’s not uncommon for the people who need to sign on the dotted line to be on vacation or scattered across the country, adding days’ or weeks’ worth of time to the escrow.

And short sales are also an entirely different animal when it comes to escrow timelines. While a standard sale from an individual seller to an individual buyer might take 45 days from contract to closing, a short sale can take anywhere from 45 days to 6 or 8 months (!) to get the deal closed, after the seller has accepted the contract.

Avoid the drama by: expecting your escrow to run long, and being pleasantly surprised if it doesn’t. Expectation management is everything. Make sure you take these extended timelines into account when you’re working with your mortgage broker on the issue of when to lock your interest rate, and how long your rate locks will last. You might even need to plan on and/or set aside an allowance for the cost of extending your low interest rate, if rates are rising rapidly during the time you’re waiting for the deal to be done.

2. Bank won’t take lowball offer. If I had a dollar for every time I’ve received a question from an outraged reader to the effect that a buyer has had their short sale or REO offer rejected on grounds that it was too low, even though the bank has no other offers, I could buy a foreclosure myself (admittedly, it’d be one of those $150 foreclosures in some blighted town with tax liens and no plumbing, but still).

Banks owe their shareholders and investors a duty to get as much as they can for these properties. Just because you see it’s on the market and listed as a short sale or a foreclosure doesn’t mean they’re going to give it to you for a fraction of its worth. The bank’s goal is to get a purchase price as close as possible to the home’s fair market value, as determined by the recent sales prices of similar, nearby homes, with some adjustments made for the property’s condition. Fact is, many banks would rather see the listing agent reduce the price by a moderate amount, and wait to see what offers come in, than to accept an offer 30 percent below the asking price just because there are no other offers on the table.

Avoid the drama by: working with your agent to make a realistic offer, based on recent comparable sales in the neighborhood, not just on what you think you can get away with. You can waste a lot of time, spin a lot of wheels and lose out on a lot of properties making lowball offer after lowball offer on distressed homes. Sit down with your broker or agent, review the ‘comps’ and make a smart offer that reflects a good value for you, is within your budget and is not bizarrely out of the realm of the fair market value of the property.

3. Last minute postponements/cancellations. These transactions have an uncanny way of being delayed at the last minute – or never going through at all, through no fault of the wanna-be buyer. You signed docs yesterday, put your dog in the crate this morning and just hopped in the moving truck, only to get a text from your broker that the deal didn’t close because the escrow company which was selected by the bank flubbed the checkboxes on a single sheet of paper (it happens). Or, you’ve been in contract (with the seller) on a short sale for four months, and the bank refuses the sale entirely because the seller refuses to kick even $1 of their own cash into the deal, despite having a flush savings account.

Avoid the drama by: staying as flexible as possible with your moving plans as long as possible. Best practice is to plan on some overlap between the time you can be in your last place and your scheduled move-in date. Also, if you’re in contract on a short sale, you should take the point of view that you don’t have a firm deal until you get the bank’s approval of the transaction. So don’t even think about starting to make moving plans or paying for home inspections and appraisals until you know the bank has greenlit the deal and that the purchase price and terms they’ve approved work for both you and the seller.

4. The bank’s black box. Make an offer on a normal home and you’re likely to know what the outcome will be within a few hours or a few days, at the outside. If things take longer because the seller is out of town or some such, the listing agent tells you that, and you at least know what’s going on.

Make an offer on a bank-owned property or a short sale? It’s a crap shoot – could be days, but could also, easily, be weeks or months before you know what’s going on. And no amount of calling, pleading, prodding or nudging is likely to get you much information on how your offer or the seller’s short sale application is being handled or what (if any) progress is being made. And that “black box” into which your offer disappears at the benk level is very frustrating.

Avoid the drama by: continuing your house hunt until you have an answer back. Maniacally pestering the listing agent for answers or harrassing your buyer’s broker into spending hours on hold with the bank is highly unlikely to get you any insight. (With that said, it does make sense for your agent to check in regularly – sometimes even daily – with a short sale or REO listing agent to stay updated on any developments with the property and to make sure your offer/transaction stays in the front of their mind.)

Most of the angst in these situations arises when a buyer feels they passed on properties that would have really worked for them when they pinned their hopes on a distressed home. You can only control your efforts and activities, not the bank’s. So, consult with your own broker or agent about staying proactive in viewing and even pursuing other properties until you have a firm “yes” from the bank on your short sale or REO offer. Until that time, and usually for a short time after you get the bank’s approval, you have the right to back out of the transaction if you need to (make sure your broker briefs you on precisely when your right to rescind your offer or exercise contingencies – i.e., bail – will expire).

5. Double standards. In a “regular” equity sale with no bank involvement, both buyer and seller are obligated to meet various timelines. Seller has to provide disclosures by X date, open the property to inspections – with utilities on – by Y, and close and move out by Z. REO and short sale buyers, on the other hand, are often dismayed to find that even though the bank might take weeks or months to sign or handle its deliverables, the bank will insist that the buyer show up, sign or send a check quick-like.

Avoid the drama by: chalking it up to the (admittedly irritating) way things are – the price you pay to buy from the bank. Realize that working with the bank on the bank’s terms is unavoidable when you buy a distressed property. Then, go into the deal with realistic expectations – including the expectation that the bank will drag its feet, despite expecting you to keep every deadline – and you’ll be less frustrated, and less likely to make poor decisions out of frustration.

Also, make sure you do respond in a timely manner to the bank’s requests and your obligations under the contract. I’ve seen banks capitalize on buyer delays in returning signatures and removing contingencies to accept higher offers they received in the interim. Don’t lose your home on a technicality because you assume that the bank’s lackadaisacal timelines apply to you as well.

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Home foreclosure filings fall for 6th straight month

North Texas home foreclosure postings are down for the sixth consecutive month.

Just over 4,000 Dallas-Fort Worth area homes are set for sale by lenders in next month’s foreclosure auctions. That’s a 14 percent decline in filings from a year ago, Foreclosure Listing Service said Thursday.

“Year-to-date home postings have reached their lowest level in three years,” George Roddy, president of the Addison-based foreclosure tracking firm, said in the report. “I believe the catalyst behind this slowdown is simply the fact that lenders are taking more time processing distressed properties scheduled for foreclosure and that they are trying to be more careful with paperwork.”

So far in 2011, home foreclosure filings in the D-FW area are running 11 percent behind last year, when a record number of homes were threatened.

August will be the fourth month in a row that the foreclosures in the area have been fewer than 4,500 filings, Roddy said.

Still, 37,606 foreclosure postings have been recorded this year in the four-county area, Foreclosure Listing Service reports.

“Overall, I believe that posting levels will remain high for some time to come,” Roddy said. “At least posting levels have backed off the record highs set for this foreclosure cycle, but it is my belief that this foreclosure rodeo is far from being over.”

For August 2011, the largest decline in filings is in Dallas County, where they are 24 percent below year-ago totals.

Usually about 40 percent of the homes scheduled for foreclosure each month are actually sold at auction. In the other cases, the lender delays the sale or the borrower reaches a new debt agreement.

Last year, more than 64,000 D-FW homes made it onto the foreclosure lists — a volume that broke records set during the 1980s Texas real estate crash.

While subprime mortgage problems have eased and the North Texas economy is creating thousands of jobs, Roddy and other analysts worry that home losses will continue.

“I remain very guarded and will have to refrain from celebrating any time soon,” Roddy said

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Forecast calls for slight D-FW home price gains in late 2011

While Dallas-Fort Worth home prices have drifted lower in recent months, a new forecast holds hope for better days ahead.

The D-FW area is one of just a handful of markets expected to see a modest increase in home prices in the second half of 2011.

The forecast by researchers at Clear Capital calls for a D-FW gain between July and December of less than one-half of 1 percent, which amounts to basically a flat market.

But it’s an indication that home price declines here are coming to an end — providing, of course, that the forecast pans out.

“At the midpoint of the year, it’s promising to see the overall market shake off the string of declines observed since late last year, especially in light of significant challenges for the industry,” Alex Villacorta, Clear Capital’s director of research and analytics, said in the report released Friday morning.

“While most individual markets are also projected to post losses for the year, it is clear prices have begun to level off and are not exhibiting as much volatility as we’ve seen since the downturn began.”

Clear Capital estimates that U.S. home prices have fallen just over 3 percent during the first half of 2011. And the California-based research firm expects an additional 2.4 percent nationwide decline in the second half of the year.

Home prices in the D-FW area have fallen about 5.1 percent so far this year, the research firm says.

But North Texas is one of the few U.S. metro areas that Clear Capital thinks will turn the corner in the next six months.

“Five markets [Washington, D.C.; New York; Orlando, Fla.; Dallas; and San Francisco] are likely to turn modest gains,” the new forecast says. “Expect the Honolulu and Dallas markets to post some of the strongest improvements over the first half of the year, consistent with the above-average health these markets have experienced through most of the housing downturn.”

At the other end of the housing spectrum, the Norfolk, Va., area, Cleveland and Chicago are expected to have the worst home price declines in the second half of the year, with losses of more than 5 percent.

D-FW home prices are down about 10 percent from mid-2007. Still, that’s about a third of the overall U.S. decline in home values since the house market shakeout began.

After an uptick early last year when buyers were using federal tax credits, home sales and prices have sagged in North Texas since last summer.

Large numbers of previously foreclosed homes that have come up for resale in the D-FW area have pulled down median sales prices.

Nationwide, more than a third of recent home sales have been distressed properties.

Home price forecast

Expected home price changes for the second half of 2011

Increases

Washington, D.C., area
2.8%

New York metro
2.6%

Orlando
0.7%

Dallas-Fort Worth
0.3%

San Francisco
0.2%

Worst declines

Norfolk, Va., area
-8.6%

Cleveland area
-8.5%

Minneapolis-St. Paul
-7.1%

Chicago
-5.3%

Fresno, Calif.
-5.0%

SOURCE: Clear Capital

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Pre-owned home sale slide ends in June with flat market

North Texas pre-owned home sales were flat in June compared with a year ago.

It’s the first time since May 2010 that home sales weren’t down from the previous year.

Real estate agents sold 6,929 pre-owned single-family homes through their Multiple Listing Service last month, the Real Estate Center at Texas A&M University and the North Texas Real Estate Information Systems said Friday.

June’s leveling of sales follows months of double-digit decreases from the previous year, when homebuying tax credits increased residential purchases.

Since the tax credits ran out in the spring of 2010, both home purchases and prices have been markedly lower.

June’s pre-owned home performance — while still not an increase — may signal a change in market trends.

“It appears that the housing market is trying to turn the corner,” said Ted Wilson, a principal with Dallas housing analyst Residential Strategies Inc. “While those households with weak credit still find it challenging to qualify for a home purchase, we are observing that the growth in jobs is starting to translate in more home purchases.

“We are hopeful that this trend continues through the second half of the year.”

Pending sales for July are up 23 percent from a year earlier, the newest numbers show.

“We’re likely to see a positive year-over-year comparison for the rest of the year — if the market will hold up,” said Dr. James Gaines, an economist with the Real Estate Center.

Home sales in the second half of 2010 were particularly depressed after the tax credits expired, he said.

Median home sales prices in North Texas were up 1 percent in June, according to the Realtors’ MLS data. But those numbers have been skewed by an increase in sales of high-price homes.

Pre-owned home sales in the 29-county North Texas area included in the survey are down 12 percent from the same period of 2010.

And median sales prices so far this year are unchanged, according to the Realtors’ information.

Through the first half of the year, sales of homes priced at $300,000 and up have risen from 2010 levels. Purchases of million-dollar-plus homes are running 7 percent higher than a year ago. Sales are higher in North Dallas and the Park Cities.

But sales of homes that traded for $200,000 and less are down by double-digit percentages.

At the end of June, there was a 7.5-month supply of single-family homes listed for sale with Realtors in North Texas. A six-month supply is considered a balanced market.

There are more than 37,000 houses for sale in the MLS — 9 percent fewer than in June 2010.

But the time it takes to sell a house in North Texas is 16 percent longer than it was a year ago. The average time on the market is 85 days.

David Brown, who heads the Dallas office of housing analyst Metrostudy Inc., is predicting better home sales numbers during the months ahead.

“I have been expecting to see the year-over-year comparison improve in the second half of the year,” Brown said. “Based on the pending sales numbers in May and June, I expect to see an increase in sales in July.”

D-FW area home resales update

Comparisons of June pre-owned home sales and prices in North Texas with year-earlier statistics:

Category
Homes
Change
Condos
Change

Resales
6,929
NC
337
-17%

Median price
$154,600
1%
$124,950
-9%

Avg. days on market
85
16%
101
-1%

Pending sales
5,769
23%
323
32%

Listed for sale
37,418
-9%
3,079
-21%

SOURCES: Real Estate Center at Texas A&M University; North Texas Real Estate Information Systems

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Dallas-area home prices down 4 percent from a year earlier

Dallas-area home prices fell 4 percent from a year earlier in the latest home price measure.

It was the 10th consecutive month that prices were down for Dallas in the Standard & Poor’s/Case-Shiller Home Price Index. And April’s decline was much larger than the 2.5 percent decrease the previous month.

Dallas’ decline matched the nationwide drop in prices, according to Case-Shiller’s monthly survey of home prices in 20 major U.S. markets.

Prices in most markets were up slightly in April from March, including a 0.5 percent gain in Dallas.

“It is much too early to tell if this is a turning point,” Standard & Poor’s David Blitzer said Tuesday in the report. “For a real recovery, we would need to see several months of increasing home prices, large enough to shift the annual momentum to the positive side.”

Only one of the cities that Case-Shiller surveyed — Washington, D.C. — showed a rise in prices from a year earlier.

The greatest price declines were in Minneapolis (11.1 percent) and Portland, Ore. (9.2 percent).

Dallas-area home prices are about 10 percent below where they were at the peak of the market in mid-2007.

Nationwide, prices are down more than a third since 2006, according to Case-Shiller.

Case-Shiller’s index tracks the prices of single-family homes in each metropolitan area. The index survey does not include condominiums and townhouses. It only covers pre-owned properties — no new construction.

The Case-Shiller researchers compare sales of specific single-family homes over time.

Dallas-area home prices have been falling since the housing market turned down four years ago.

Since then, sales of pre-owned homes have dropped more than a third. And new-home sales have decreased more than 60 percent.

The decline in local prices this year hasn’t shown up in overall Realtor statistics because of a shift in what’s selling.

Purchases of higher-priced houses are sharply higher in North Texas this year. At the same time, sales to first-time buyers have slowed because of tougher lending standards and the expiration of last year’s federal tax credits.

That skews the price of houses sold through the multiple listing service, which is flat so far in 2011 compared with the same period last year.

More than a third of the houses now being sold in Dallas-Fort Worth were previously foreclosed. But with the number of foreclosures declining this year, analysts are hoping that inventories will drop.

“The key to getting prices to rebound is tightening housing inventory,” said Ted Wilson of Dallas-based Residential Strategies. “If foreclosures remain muted, that should lower the slight oversupply of existing-home inventory that exists today.

“We remain hopeful that the positive job growth will fuel the demand toward a recovering housing market.”

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Dallas-area home foreclosures see substantial drop for July

The tide of home foreclosures in North Texas appears to have turned with a 28 percent decline in current filings.

The retreat in foreclosure postings for July marks the fifth month in a row that the number of homes threatened with foreclosure has fallen from last year, according to data released Monday by Foreclosure Listing Service. Filings have been down for six of the seven months in 2011.

July’s drop of nearly 30 percent from a year earlier is also the biggest such decrease yet. Even so, 4,078 homes were posted for foreclosure in the four-county area, and analysts continued to temper expectations.

“July marked the third successive month that D-FW metro home postings have fallen below 4,500 per month,” George Roddy, president of the Addison-based foreclosure tracking firm, said in the report. “Prior to that, monthly residential posting levels have been at or above 4,500 for the previous 25 consecutive months.

“Frankly, if this year-over-year improvement continues, reaching six consecutive months of decline, then, we may be able to see the other side of this foreclosure crisis.”

The greatest drop in July foreclosure filings is in Dallas County, where postings are 33 percent below where they were in the same month of 2010. Postings are down 23 percent in Tarrant County.

Through the first seven months of 2011, lenders have scheduled 33,582 homes for foreclosure — 10 percent less than in the same period of 2010.

Usually about 40 percent of the homes scheduled for foreclosure each month are actually sold at auction. In the other cases, the lender delays the sale or the borrower reaches a new debt agreement.

‘Far from being over’

While this year’s decline in home foreclosures in North Texas and elsewhere is considered a good sign for the troubled housing market, many analysts warn more home losses are in the works.

Some lenders may have put off foreclosures to give them time to work with borrowers, make sure paperwork is in order or to process the houses they have already taken back.

“We can’t seem to get our hands around what is driving this decline,” Roddy said. “There hasn’t been any major development in the economy that would change the posting numbers this much.”

He predicts the number of troubled home lending situations will remain high for some time, until the economy improves or bad debt is sorted out.

“They are so paranoid about the lawsuits and bad press the lenders have been getting, they are slowing down the process,” Roddy said. “The problem with that is it just extends out the misery.”

“It is my belief that this foreclosure rodeo is far from being over.”

James Gaines, an economist with the Real Estate Center at Texas A&M University, said it’s almost impossible to tell how much of the decline in foreclosures is due to a real improvement in the market.

“We are pretty sure the large decline is due in part to a number of lenders who are delaying a lot of foreclosure actions,” Gaines said. “We do suspect on the other hand that the problem loans in Texas and the D-FW area in particular ought to be showing some positive signs of easing up.”

The recent gains in D-FW employment and improvements in the overall economy should be helping troubled homeowners hang on to their houses, he said.

12% still under water

Even so, the latest studies show that almost 12 percent of North Texas homeowners with loans owe more than their properties are worth. And consumers with negative home equity are considered most likely to go into foreclosure.

Mortgage companies may also be putting off some foreclosures while they clean up the properties they already have. In recent months, more than a third of the pre-owned homes sold in the Dallas-Fort Worth area have been previously foreclosed on.

“Realtors are telling me that banks are holding back on some of the real estate owned and not throwing it back on the market,” Gaines said.

He predicts another uptick in home loan defaults could show up in the months ahead, when the mortgage companies clear up some of the backlogs.

“For a few months, we could see foreclosures jump up with whatever they are holding back on.”

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