Existing-home sales across the nation were down for the month of March, by 2.6 percent from February, but the real estate market is showing signs of improvement as inventory and home prices stabilize, according to the National Association of Realtors.
Ben Jones, Realtor at the Ben Jones Group of Allie Beth Allman and Associates, specializes in the Park Cities, Preston Hollow, Uptown and East Dallas neighborhoods.
“All of my team-members have a $1 million-plus house either closed or under contract,” said Jones. “We’ve started the year off with a bang!”
Jones said the $1 million to $1.5 million price point is so popular in his market right now that inventory is sparse. On the ultra-high end, he said home prices are still adjusting downward and with respect to distressed sales; many of the foreclosures were in the North Dallas suburbs, not his target market.
Total existing home sales, which includes single-family homes, townhomes, condominiums and co-ops, were 5.2 percent ahead of what they were a year ago in March nationwide. This increase breaks down to 4.26 million units sold in March 2011 compared to 4.6 million for March 2012, according to data from the National Association of Realtors.
Total housing inventory, which economists prefer to decrease in order to stabilize prices, was down by 1.3 percent since February at the end of March for a grand total of 2.37 million existing homes available for sale. This figures is 21.8 percent the record high 4.04 million in July 2007.
“It’s been a very challenging two years,” Jones said.
Jones explained that many banks were not loaning money so it made buying houses more challenging. When lending loosened up a year ago, he said they saw a turn in the market within six months.
Albert Villegas, an MBA who lives in Plano and works in downtown Dallas in management, has had first-hand experience securing a loan for a condo in Uptown to be used as an investment property.
“I think it’s a lot more difficult to buy a condo because I think a lot of lenders are leery,” Villegas said.
Villegas had to fill out a condo questionnaire for the lender to ascertain his intentions and qualifications. Since he intended on renting the condo, he had issues getting a loan.
He went to his credit union first, but was denied because he didn’t meet their criteria. The credit union advised him to try a conventional bank, which is exactly what he did to get approved.
Banks see rental property as risky and want to make sure that only a certain percentage of units at a given property are rented out in order for the buyer to qualify for a conventional loan, Villegas explained. He may have to wait for other units to change from rental to resident status before he can start renting out his unit.
“I’m not looking for a really fast return,” Villegas said. “I know it’s a long term investment so by the time I would be able to sell I think I would be able to either make a gain or keep renting it for ongoing rental income.”
He explained that the prices in Uptown and the low interest rate environment motivated his purchase. Since he is getting such a historically low interest rate, he plans to accelerate his payments to pay off the property early so he can then realize most all of the rental income.
Nationwide existing condominium and co-op sales were down by 3.8 percent in March from February 2011. The median existing condo price was $165,200 in March, which is 7.1 percent above a year ago.
Pricing for median existing single-family homes was up 1.9 percent from March 2011 for an average price tag of $163,600, which should give homeowners confidence in home values.
Foreclosures and short sales made up 29 percent of March sales, 18 percent and 11 percent, respectively. This figure is compared lower than the 34 percent in February and the 40 percent rate in March 2011, showing improvement in the market.
Jones credits the cost of living in Dallas and pro-business climate as favorable economic factors for the real estate market that has kept Dallas “isolated.”