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Home Real Estate Market Remains Stable in a Down Economy
by Dr. Oneida Cramer
Home/real estate pricing remains relatively stable, despite a downturn in the economy and a four-month drop in sales of pre-owned homes in North Texas compared to last year. Local real estate experts Gary Morris of Morris Financial Services, Mary Frances Burleson, president of Ebby Halliday, and Dave Perry-Miller, an agent with Adleta & Poston, offered reasons for the financial phenomenon.
?We don?t look at it (the purchase of a home) as an investment,? Morris said. ?But it is a safe place to be, because you have occupancy and you?re looking for what the cost is versus rent ? it?s cheaper. People do tend, particularly in Texas, to put money in their homes because if you anticipate that you?re going to have a financial problem your homestead is protected by bankruptcy laws. In the ?80s, that?s why a lot of developers and people puts lots of money in their homesteads because they know that it?s safe. You still have to pay mortgage if you have a mortgage. But a lot of people escalate the pay out of their mortgage and do that sort of thing because that money in their home is basically safe from creditors.?
?A lot of people buy houses because it has that great big shade tree in the back yard,? Burleson said. ?It?s the right color, design and layout ? not just stock market, not just price.?
Buying a house is multifaceted and very emotional, all of which fuel the home market and help stabilize it during economical down times.
?Economic downturn has a different definition depending on what industry you?re in,? Burleson said. ?If you?re in a high-tech industry or technology-telecommunications, it?s a downturn. If you?re in a house building industry and talk to all the builders, it?s not a downturn. We?re running just about dead even with the time last year. Our average sale price is down just two percent. But I know that waves depending on the time of the month.
?If you look at the closes through July, the average sale price through the year July 2000 was $165,048. In July 2001 it was $172,631, and in July of this year, it was $176,291. Obviously, some of the houses are staying on the market a little bit longer. Last year, our days on the market were 63; right now, it?s 70. But it?s just like any other market ? if the house is in good condition, it has a desirable location, and it?s priced right, there is a good chance that it?s going to sell.?
Outside economic forces
?I think people are disabused of a stock market being such a volatile investment,? Perry-Miller said. ?People could actually use this investment. Interestingly enough, there are many instances where 10 years ago, someone has bought a house for $1 million and it might be worth say $1.8 or $2 million now, but unless you?re going to sell it, it really doesn?t make much difference.?
Yet, rarely do home prices decline markedly in cities like Dallas, according to Morris. More often, these situations arise in small towns, for instance, where a large company, which employees the bulk of the work force, decides to move away forcing homeowners to move out of the area. In urban settings, it takes a long-term economic downturn before most housing costs decline.
?This recessionary period is very, very light,? Morris said. ?They pegged it to have gotten started in March 2001, and they haven?t officially called it to an end.?
Dr. Oneida Cramer
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