Gary Maler the Director of the Texas A&M real estate center recently talked to a group of real estate agents in Tomball about the state of our economy. Much of the talk was about the state of our national economy but he also went in to specifics for us here in Texas.
Some of the daunting challenges we face.
- Business uncertainties from Washington policies
- The great credit contraction
- Budget cuts for states, cities and school districts.
One of the things that I came away with is that as a state Texas is weathering fairly good. A few years ago I would have told you that we had not been hit as we really did not have a bubble to burst. That is not the case any longer. He explained it about the best that I have heard. Here in Texas we did not experience a home price bubble we experienced a home sales bubble. The majority of our problems stem from the loans that were given since 2003. He explained that prior to that we had 17 homes sold per 1000 houses. During the no income/no assets loans that increased to 30 home sales per 1000 households. As he explained that was unsustainable and it is what we are dealing with now.
He was honest in that it took us sometime to get in this mess and it will take some time to get out of it. He said in all truthfulness this has been going on for a long time going clear back to LBJ’s administration. We have been living beyond our means for a long time. We will have some pain as we reel in from the excesses.
Future home sales are going to be dependent on job growth, mortgage rates/credit terms and home price affordability. Up to this point the American way has been to buy high and hope for higher. That said he said that NOW is probably the opportunity of a lifetime to a buy a house. Who would have thought we would see interest rates of 4.5% or less. He talked about the interest rates of the 1970’s when 12% was considered a good rate.
In the excerpt below he talks about the characteristics of a recession. The graph that shows the difference between unemployment between those who have a college degree and those who do not is an eye opener. As he said if there was ever an advertisement to get a degree this is it. If you have a son or daughter who is deciding whether they want to go to college this is a clip you might want to show them.
In his closing thoughts he said we will get through this. The other thing we have going here in Texas is a huge influx of people moving to our state. There are many places in our state where the market has stayed relatively flat and in my mind with this economy; flat is good.
I often get request asking to be set up for home searches for subdivisions that do not have homeowner’s associations. Since we don’t have zoning in the Houston area when there is not a Home Owners Association there is usually also no deed restrictions. With no deed restrictions you tend to get a little bit of everything. I took some pictures in a subdivision in Spring that has no deed restrictions. I have always called the subdivision the Vegetable Patch as the streets are named such things as Carrot, Turnip and Tomato. The actual name of the subdivision is Farmette Meadows.
I took these pictures on Carrot street and as you drive along the street you might see cars on Cinder blocks, trailers in front of house, businesses etc. If you are going to open a business this is the perfect place for you. If you are looking for a subdivision where you want similar types of property this might not be the best place. 
I lived in 3 states prior to moving here and almost fell off my chair when I was in real estate school and learned that Houston DID NOT HAVE ZONING!! With no zoning you are really dependent upon home owners associations and deed restrictions to maintain your property values. When you don’t have an HOA this is an example of what you get.
unresticted area. When he bought the house a nice house was next door. Shortly after they moved in the nice house next door was sold and the new owner decided to open a junk yard. Like I said earlier if you have a business a subdivision with no zoning might be the place you want to be but if not this is probably not be where you want to be.
This post is about the Texas “option fee clause” in the standard Texas “1 to 4 family residential contract” and what this clause has to do with home inspections. I have lived in four states and each state has handled the home inspection process in a different manner. In Texas all residential contracts have an “option fee” clause. This clause allows buyers and sellers to negotiate a specified time during which the buyer can fully evaluate the house. For this right, they buyer pays the seller a nonrefundable “option fee”. 
all you lose is your option check and any money you may have paid on inspections. 
When people move to the Houston area from other states they are often surprised by our high taxes. Texas is one of five states without an individual or corporate income tax. Most states derive about 40% of their revenue from income taxes, a third from sales tax and the rest from taxes on items such as business licenses and gasoline. Because of this Texas has a fairly high sales tax and significantly higher property taxes.
matter where you live you are going to have these two taxing authorities.
The good news is that you get a LOT of home for your money in Texas; even with the high taxes. We have lived in two other states and for the same money a month we bought a newer home with more square footage. 
One of the most common reasons for a real estate transaction to break down before closing is due to the loan not being approved. The buyer thinks that they are approved but the problem is the lender often issues pre-qualification and pre-approval letters based on limited information. The lender pre-qualifies them on nothing more than what the client tells them their income is. In addition they sometimes don’t run a credit report before issuing a pre-qualification letter. This is changing some with the fallout of the subprime industry this last spring. This makes it even more important that a lender get you totally pre-approved. 
table but those have been few and far between; even if they had a 100% loan. Actually the only two times that I remember that happening it was a VA loan. The money to pay all your fees and closing cost will need to be in the form of “guaranteed funds” such as a Cashier’s Check. Your agent or escrow officer will notify you of the exact amount. You will receive a closing document required by HUD that outlines the settlement cost. The Title Company prepares this document. The HUD statement is a little difficult to read as you read it backwards. You start with page two and then go back to page 1. Page 1 is the page that shows the funds you need to bring for your real estate closing. For additional information on 
The other item you will need to bring is a picture ID such as your driver’s license. A number of years ago I had a client who was moving to another state. He came back to Texas for the closing and to get his furniture. A few days before closing I found out that he had turned in his driver’s license 
to the other state and only had a piece of paper for a drivers license. He did not have another picture ID. Back then I talked the title company in to letting us get a membership at Sam’s Club and using it as a picture ID. As I told you this was quite a few years ago I’m not sure if that would fly today. Long story short I highly recommend not turning in your driver’s license if you are planning on buying a house unless you have another type of picture ID like a passport.
I have lived in states that have closed homes at attorneys offices and in states that close homes at title companies. In Texas we close at Title companies and if you are getting a loan you will probably be required by your lender to have a title policy. If you are paying cash you can choose whether to get a policy or not. In my opinion you are taking a big risk that could come back to bite you later on by not acquiring a title policy but that will be your choice. I have heard nightmare stories about people who have not bought policies and something going way back has come back to bite them.
estate deal.
When we moved to Texas 11 years ago we kept hearing this term MUD district. Coming from another state we thought well it must have something to do with mud. No it actually doesn’t have anything to do with mud it stands for municipal utility district and it may not have anything to do with mud but it has a lot to do with water.
and a few other services within the MUD boundaries. There are over 1500 MUD districts in the state of Texas.
Is there any way around being in a MUD?
