D-FW apartment sector feels economic woes

A new study from M/PF Yieldstar says apartment occupancy in the Dallas-Fort Worth area during the final quarter of 2008 fell enough to negatively counter the area’s significant apartment rental growth the year prior.

M/PF YieldStar, a provider of comprehensive analytics on the multifamily housing sector, said this week the net demand for apartments in the D-FW area hit negative 5,870 units in the period stretching from October to December. Annual apartment demand was similar, down 5,580 units in 2008 as absorption through September had been in positive territory.
The area’s occupancy rate also fell to 91.4 percent in December, M/PF Yieldstar said. Additionally, the area’s occupancy rate fell 1.8 points during the final quarter of 2008 and fell by 2.7 points for the entire year.

“This was one of the worst quarterly demand performances ever recorded in Dallas-Fort Worth,” Greg Willett, vice president of research for M/PF Yieldstar, said. “For move-outs to reach this magnitude, job loss has to be pretty substantial. It looks likely that there will be huge revisions to the current employment statistics that say D-FW is adding jobs at a reasonably healthy pace.”

M/PF YieldStar’s report added that construction on new properties, which added another 4,215 apartments during the fourth quarter, strained the market more by creating a new supply total of 12,148 apartment units.

Monthly rents in the D-FW area hit an average price of $752 per month at the end of 2008, with M/PF YieldStar claiming rents for North Texas apartments fell a slight 0.3 percent in 2008.

KB Home posts third quarter net loss

Homebuilder KB Home recorded a higher net loss in the third quarter, as market volatility led to a decline in home sales when compared to the previous year.

Los Angeles-based KB Home (NYSE:KBH), which has a significant homebuilding presence in Dallas-Fort Worth, recorded a third quarter net loss of $144.7 million, or $1.87 per diluted share, up from $35.6 million, or 46 cents per diluted share for the same period last year.
KB Home’s third quarter financial report included a pre-tax, non-cash charge of $82.2 million for inventory and joint venture impairments, the company said.

A charge of $58.1 million on a valuation allowance against net deferred tax assets also hit in the third quarter.

KB’s revenue for the third quarter was $681.6 million, down significantly from $1.54 billion for the third quarter of last year. The revenue drop is attributed mostly to a decline in housing sales.

Also, I was told Choice laid off 28 employees. Portrait Homes also shut is doors last week.

Residential new home builders are feeling the pain of the market and negative media on real estate.

Brad Holden
Holden New Homes

Homebuilders get creative to woo buyers, Realtors

Southern Land Co. believes its Tucker Hill residential development in McKinney is so unique that eventually it will sell itself. Burdened with the realities of today’s soft housing market, however, company officials are pulling out the stops to increase foot traffic — and sales — in the sagging market.

“The idea is to get people here,” said Jim Cheney, vice president of corporate communications with Tennessee-based Southern Land. The company has used everything from community concerts to plane rides to reel in buyers.

Tucker Hill’s $248 million planned community broke ground in early 2007 on 800 acres zoned for 2,100 homes and amenities such as pools, walking trails, a dog park and other green spaces. Houses will range from $350,000 to more than a $1 million.

So far, there are 30 houses finished in Tucker Hill, with contracts on 10. The homes are close together, with small front yards, large front porches and garages along alleys in the back. It is an example of neo-urbanism, a pedestrian-friendly design style with a diverse range of housing. The 16 planned phases will take more than a decade to finish. Joe Rider, vice president of community development sales and marketing, said 75 to 100 houses will be started in 2009.
To help increase foot traffic through the neighborhood and promote a small-town feel, Tucker Hill gave away trees during a spring market attended by several hundred. And over Labor Day, the community sponsored Arts on the Lawn, which included music acts and entertainment and was attended by 900 people.

“These events allow us to give folks the vision of what the community will be like,” Rider said.
Kathy Self, operations manager for Arlington-based First Texas Homes, which has homes in 51 communities in the Dallas-Fort Worth area, said that regardless of marketing strategies and promotions, buyers and banks are simply too conservative for much success in the current market.

“You can throw a big party out there, it’s not going to get people in,” Self said.

Margaret Pesnell, marketing director of Hillwood Residential, said the focus has shifted away from wooing buyers and more toward impressing Realtors. Hillwood recently flew two groups of Realtors to Costa Rica to promote property there for second homes. The company also has a 15-year-old incentive program in place, “which right now is more important than ever,” Pesnell said. A Realtor who sells two new homes is rewarded with a free trip.

“As important as these Realtors are to us all the time, we need to be in front of them even more,” Pesnell said.

David Brown, director of the Dallas-Fort Worth office of the housing market research firm MetroStudy, said Tucker Hill’s “unique product and design” will set it apart from other subdivisions.

“It’s a new type of concept for the D-FW market,” he said, adding that there are just a few other communities being built in the area with similar concepts. “To capture the buyer, they’re having to raise the bar and give them a reason to come to the community, other than just another house.”

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Today's Texas Real Estate

Todays Texas Real Estate will have it's first airing on channel 21 in the DFW metroplex featuring homes available for sale. The focus is to show the actual home instead of focusing on model homes as Hot On Homes, Channel 8, shows neighborhoods and homes that are examples.

Tune in and see if the hype is all of what it is meant to be. Hotonhomes.com has had a stronghold in the Television market here in DFW, but we will see if TTRE can make an impact which they just might be able to.

Today's Texas Real Estate gives you an exclusive look at the hottest available homes in the Dallas / Ft. Worth area. With the roller coaster trends of the housing market happening all over the country, it can be overwhelming to find the home of your dreams. Today's Texas Real Estate makes it fun and easy to shop for your new home on TV and the web.

Visit www.todaystexasrealestate.com for more details and a replay of the shows.

Also visit www.bimsdfw.com for a list of up to date inventory that builders are attempting to sell quickly in DFW.

Two Dallas cities named fastest growing, while Fort Worth population soars

A new report from the U.S. Census Bureau says two Dallas suburbs, McKinney and Denton, ranked third and 10th, respectively, on the bureau's list of fastest growing cities, while the city of Fort Worth ranked fourth behind Houston for experiencing the largest numeric population increase during the period documented between July 1, 2006, and July 1, 2007.

The data shows Denton's population growing from 110,304 in July 2006 to 115,506 in 2007, while McKinney's population increased from 107,075 in July 2006 to 115,620 in 2007.

Meanwhile, the population of Fort Worth, which experienced a significant numerical increase in population during the past year, had approximately 681,818 residents living in the city in July 1, 2007, compared to 652,365 in July of 2006.

Fort Worth follows Houston, which ranked first in the nation in year-to-year numerical population growth, with a population of 2,208,180 in July of this year, compared to 2,169,248 last year.

Dallas in run-off for MillerCoors HQ

The Dallas area and Chicago appear to be the finalists for the headquarters of the MillerCoors joint venture, with a final decision expected to be announced by the end of the month, according to sources familiar with the search.

Real estate brokers in both cities feel sure that the headquarters is heading their way, said Dale Ray, managing director of the Dallas office of Jones Lang LaSalle, a worldwide real estate services provider.

Ray was in JLL's corporate headquarters in Chicago when reached by the Dallas Business Journal.

"They're hearing here that (MillerCoors) has picked Chicago, and we're hearing it's Dallas," he said. "There's enough discussion about it being down to (Chicago and Dallas) that it seems to have some traction to it."

Ray, who is not directly involved in the search, said MillerCoors has scouted locations in downtown Dallas and the suburbs, including Plano, Frisco and the Las Colinas area of Irving. Ray said he's heard the company is looking for 150,000 to 300,000 square feet.

MillerCoors will decide where to locate by the end of the month, said Julian Green, a spokesman for the company. He would not say whether the search has been narrowed, how much space the company is looking for, or how many jobs the headquarters will involve.

"We are actively engaged in a search for our headquarters, and a decision will be made soon," he said. "What operations will move and what corporate functions will be at the headquarters are decisions that remain to be made."

MillerCoors currently leases 12,357 square feet for a regional office at Hall Office Park in Frisco, said Jean Farris, director of leasing for Hall Financial Group. She declined to say whether MillerCoors had scouted the Frisco park as a possible site for its headquarters.

Farris said MillerCoors is looking for less headquarters space than it originally planned because the joint venture will maintain substantial operations in Milwaukee and Golden, Colo. MillerCoors LLC is the recently formed joint venture of London-based SABMiller, whose U.S. operations are based in Milwaukee, and Golden, Colo., where it has Coors Brewing Co., the Denver subsidiary of Molson Coors Brewing Co.

Farris also said the search has been narrowed to Chicago and the Dallas area.

"It's very sought after," Farris said. "I think any city would want it. It would be great for the Dallas area to win."

The MillerCoors headquarters competition between Chicago and Dallas-Fort Worth is reminiscent of 2001, when the Boeing Co. shortlisted both cities, along with Denver, after deciding to move from Seattle, Ray said. Chicago won that battle, but much has changed since then, he said.

Dallas is proving remarkably resilient during tough economic times, and the city has the advantage in terms of real estate costs, the quality of available labor and quality of life, Ray said. "I believe Dallas has the edge," he said.

Dallas' central business district has changed for the better as well, said Mike Wyatt, executive director of the Dallas office of Cushman & Wakefield of Texas Inc. Boeing in 2001 cited the cultural amenities of Chicago when it chose the Windy City, but downtown Dallas has made great strides to improve the museum, art, dining and entertainment scene downtown, as well as the public transportation system, he said.

"Both cities are strong," Wyatt said. "We're such a pro-business city. I think that may help us this time around."

Report: Dallas-Fort Worth is a good place to build home equity

09:24 AM CDT on Friday, May 9, 2008

By STEVE BROWN / The Dallas Morning News stevebrown@dallasnews.com

Potential Dallas-Fort Worth homebuyers who are nervous about whether it's a good time to purchase a house might find some comfort in a new report.

But analysts caution not to get carried away with the data.

Steve Brown: Housing values in North Texas are slow to rise, slow to fall
Leslie Berkman: Surviving the bubble's burst in Riverside, California
The study by the Center for Economic and Policy Research and National Low Income Housing Coalition projects that D-FW homebuyers could see one of the best increases in equity in the country during the next few years.

The comprehensive report looked at home ownership and rental costs and the prospects for building home equity in 100 metropolitan areas.

In terms of building equity, the D-FW area is among the top five markets expected to do well between now and 2012. A homeowner who buys a house priced at 75 percent of the median for the area could gain more than $80,000 in equity four years from now, the study finds.
"I wouldn't want people to run out and make investment decisions based on this," Dean Baker, one of the authors of the report, said Thursday.

But he said the Texas market is probably in the best shape in the country.
"The fact that Texas didn't take part in the housing bubble is good news," he said. "You are not going to feel the pain other cities are."

Indeed, while home equity is likely to grow during the next few years in Texas cities, homeowners could lose equity in their houses in about a third of the cities in the report.
The biggest declines are forecast in markets that have seen big price increases in recent years, including many California cities.

"People in Texas have benefited from not having that temporary run-up in prices," Mr. Baker said. "That wasn't healthy, and now people are really getting hurt [there]."
Median home sales prices in North Texas have dropped only slightly during recent months, while residential values in many coastal cities have decreased dramatically and are still falling.
Mark Dotzour, chief economist with Texas A&M University's Real Estate Center, said the study's findings confirm the relative strength of the state's housing market.

"There is a lot less downside risk to buying a home in any of these Texas cities and a lot more upside potential," he said. "There has never been a price bubble in Texas."

But he also cautioned against using the projections of any study as the basis for homebuying.
"I hope they are right, but my guess is they might be overstating it a little bit," Dr. Dotzour said.
The new study also found that the D-FW area continues to have some of the lowest average apartment rents for a big-city market. And the monthly cost of homeownership here can still be lower than what's charged for some apartments.

HOME EQUITY FORECAST

Anticipated equity in a home after four years, based on buying a home at 75 percent of area median price and financing at 6 percent with a long-term, fixed-rate mortgage.

BIGGEST EXPECTED GAINS
McAllen, Texas
$90,437
San Antonio
$90,017
New Orleans
$88,898
Houston
$87,837
Dallas-Fort Worth
$83,880

BIGGEST EXPECTED LOSSES
San Jose, Calif.
-$355,346
San Francisco
-$253,875
Los Angeles
$222,719
Oxnard, Calif.
$203,481
Bridgeport, Conn.
$183,685

SOURCE: Center for Economic and Policy Research and National Low Income Housing Coalition

Finally, a positive outlook on real estate here in DFW. Hooray for Steve Brown!

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