The Bains

The American financial system has weathered financial panics for 200 years & it can WEATHER
THIS ONE AS WELL, according to Dr. Mark dotzour, chief economist for the Real Estate Center
at Texas A&M U. The U. S. is in unchartered waters, but investors should not panic if a
major bank or investment firm rolls over. Dr. Dotzour said his theme since last July has been
‘expect the unexpected & expect the unprecedented. The govt & press have consistently
underestimated the severity of the situation for the past year. Now the govt is making continguent plans. “The financial turmoil is ongoing & our efforts today are concentrated on
helping the financial system return to more normal functioning”, according to Reserve Chair
Ben Bernanke.
From the Greater Tyler Assoc. of Realtors: average months of inventory since 2004 - 7-8 mos,
average months of inventory 2008 - almost 10 mos.

As Americans feel the pinch from the rising cost of gas & groceries, inflation is fast becoming a
global problem, says Dr. Mark Dotzour, chief economists with the Real Estate Center at TX
A&M University. The cheap U. S dollar is causing inflation problems for us, but worse in other
countries, such as 30% in the Ukraine, 23% in Argentina, 25+% in Vietnam.
Wholesale prices bolted ahead with energy prices up 4.9%, gasoline 9.3% & food 0.8%.
Everytime the Feds cut rates, the value of the dollar declines. This is causing us to experience much higher inflation, because everything we buy from overseas now costs more
because our dollar is worth less. When the U. S. government barge passes through the economy, individuals & businesses must negotiate the BIG WAKE THAT FOLLOWS.
In the McAllen & El Paso area prices SHOULD INCREASE according to Money magazine.

as low taxes, affordable land & a large labor force in TEXAS are bringing folks here. Builders
are cutting their inventory, according to Brian Binash, president of the Houston Builders Assoc.
Some areas will have a shortage of homes in the summer. This is one of the corrections we need to see. New home starts at lowest levels in Texas in 5 years. Lenders flooded the market with loans of borrowers having poor credit & this is correcting itself also. All of this has supply exceeding demand, but turning around in TEXAS. Prices got soft, but are beginning to firm up. TEXAS IS THE PLACE TO BUY NOW!

Construction of new homes posted the biggest increase in more than 2 years, thanks to a
jump in apartment connstruction, the Commerce Dept. in Washington reported last week.
The single-family sector dropped y 1.7% to an annual rate of 692,000 units, but apartment
building jumped by 36% to a seasonally adjusted annual rate of 340,000 units.
Building permits also showed a gain.
In TEXAS the MEDIUM PRICE for a home in MARCH 2008 was $147,100, but in MARCH 2007 it
was $144,700 or a 1.6% INCREASE IN PRICE THIS YEAR from last year at the same time.

Texas in general is faring better than the rest of the country, but that could change. People
are still wealthy; this country is strong & so far Texas has been immune to what’s going on at a national level, but must be careful. We’re isolated from the national problems, but not
immune according to economist Dr. Mark Dotzour, Texas A&M U Real Estate Center.

Building seems to be off a bit, which is good to help get rid of inventory. Dr. Dotzour said we
needed to Trans-Texas corridor to help handle the 13 million more folks in Texas by 2030.
He also commented that using corn for ethanol is “absolutely WRECKING our economy”. 1/3 of
the corn crop is going to the gas tank & what has happened? Corn goes up. Wheat goes up.
Rice goes up. Oil goes up. The value of the dollar does nothing & gas is $3.50 per gallon.

The National Association of Realtors urged Congress to made the proposed FHA & conforming loan limit increases a permanent part of the 2008 Housing Stimulus bill.
H.R.5958, also known as the Homeowner Opportunity Act, was introduced this week. The bill,
which would make permanent the increase to the FHA & conforming loan limits for high-cost
areas, will be consider an amendment to the large housing stimulus bill.
“By making the loan limit increased to FHA, Fannie Mae & Freddie Mac permanent the mortgage
market, will achieve an immediate increase in liquidity”, said NAR President Dick Gaylord. “This
increased liquidity should help drive down mortgage costs & creat stability in the mortgage
market”.
Gaylord added the amendment can help working families achieve the dream of homeownership
by offering a safe & affordable alternative to risky subprime loans.
quote from RECON, Texas Real Estate Center, A&M U.

Today, investor-owned one-to-four family rental properties account for almost 20% OF ALL
FORECLOSURES. Moreover many of the high-risk home purchase & home refinance loans now
in default are concentrated in low-income & minority communities, so the fallout from foreclosures is hitting the same neighborhoods where many of the nation’s most economically
vulnerable renters live. Some renters on foreclosed properties are hit with sudden EVICTION.

Policy makers need to focus more attention on those rental households severely harmed by the current mortgage market turmoil. The demand for low-rental housing is increasing at the
same time the supply of low-cost rent is declining. Policies that honor the role of rental housing should be addressed as well as homeownership.

The median price of homes sold in TX rose 5.1% in 2005 & 4.6% in 2007 & estimated to be 3%
in 2007, according to the Real Estate Center at Texas A&M University.
House values are determined by net rents. Stock price-to-earnings ratios can be helpful when
studying home price-to-rent ratios. Monitoring these ratios can yeild a “normal” price-to-rent
ratio for an area, which in turn can suggest whether a price bubble may occur.
The ratios of prices in metro areas to the avery price for the United States again indicate that
the risk of a home price bubble for Texas in current economic conditions is LOW.

As America celebrates the 40th anniversary of the Fair Housing Act, REALTORS continue to be
outspoken advocates, working with home buyers & sellers to ensure they receive equal access
to affordable housing & ownership.
The Fair Housing Act protects the basic right of all Americans to pursue the dream of home-
ownership free from discrimination based on race, color, religion, sex, disability, familial status & national origin, & REALTORS have a strong committment to partner with diverse real estate
partners, education & grant & awards programs.
Pushing for flexible FHA, the National Association of Realtors is working with Congress to make
permanent the new FHA conforming loan limits, mandated by the stimulus package, so that
Americans can access affordable financing in all areas of the country. REALTORS also continue
to push for a stronger, more flexdible FHA program, to give more first-time buyers access to
affordable & safe financing options.

best location for investors are DALLAS & HOUSTON, according to HomeVestors of America,
the company famous for the “We Buy Ugly Houses” billboards. The list is based on number of
homes bought in each market.

The Dallas-Fort Worth-Arlington metro grew by 162,250 residents between July 1, 2006 &
July 1, 2007, the biggest population gain the country. Two other Texas metro areas were in
the top 10. This is from the U. S. Census Bureau.

With last week’s blog, this is one of the areas that the market is correcting itself - folks moving away from pricier areas to less pricey, creating a population change.