Dallas-Fort Worth real estate execs don't expect quick market turnaround

Real Estate Market Reference Center
source: www.dallasnews.com

Thursday, January 29, 2009

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

Don't expect any quick deals in Dallas-Fort Worth's stalled real estate market.

Oh, investors are out there, but they are waiting until the right time to strike.

"There has been a huge amount of money lost by getting in too early," Herbert Weitzman, who recently formed an acquisition partnership with Dallas investor Craig Hall, told real estate execs.

Weitzman - who's also CEO of Dallas-based retail broker Weitzman Group - was on a panel of industry veterans who spoke late Wednesday at a meeting of the Society of Industrial and Office Realtors.

"Things are not going to get better very soon," Weitzman warned. "The deals that are going to happen are going to be later in the year.

"There is going to be a huge amount of retail REO [foreclosed property] coming on the market later this year."

Property sales in North Texas have slowed to a trickle because of the lack of credit and worries about the economy.

"We are all hoping there is a lot of pent-up capital on the sidelines that wants to get back into real estate," said Jack Fraker, a top investment broker with CB Richard Ellis.

Fraker said his property sales were off by 65 percent or more in 2008.

At the same time, property values have fallen.

"There is still a disconnect between the sellers and the buyers," he said. "Hopefully that will change later this year.

"Most of the institutional investors have tried to avoid writing down their real estate values," Fraker said. "They can't hide from that for long."

The rents that investors can get from Dallas office buildings are already falling, said CB Richard Ellis' Phil Puckett.

"I see some landlords trying to hang onto what was," Puckett said.

While overall office vacancies in North Texas are at about 20 percent, they won't stay there, he said.

"It's going to go up," Puckett said. "The question is how much space are we going to get back from company closings."

Industrial property brokers are counting on a supply of well-located buildings and competitive pricing to lure tenants from other areas of the country.

"Our mantra this year is Dallas is 'on sale,'" said Tom Pearson with Colliers International. "Companies are going to continue to focus on lower costs."

In 2008, Dallas-Fort Worth led the country both in industrial leasing and new space put on the market, Pearson said.

There will be almost no more warehouse construction in 2008, he said.

"Hopefully that will give us some time to absorb all this new space coming on the market."

The Day the New York Real Estate Market Lost Its Nerve

source: blogs.wsj.com

January 28, 2009, 10:58 am

Matthew Haines is the founder of PropertyShark.com. He is a guest contributor to the Developments blog with posts on the New York City market. Read his full bio.

Last quarter, sometime around September or October, the residential real estate market in New York City came to a screeching halt. Real estate brokers report that almost from one day to the next buyers simply disappeared from the market. In October and November the number of contracts signed dropped to perhaps as low as 20% of the normal volume. And brokers report that contracts that were signed had prices between 15 and 25% lower than they would have expected for the same apartments six months before.

Suddenly New York has experienced what the rest of the country started 12 to 18 months ago. While prices fell around the country for all of 2008, prices for closed sales in New York City continued to rise even through the end of Q4. (Keep in mind that Q4 closings represent contracts signed in Q2 or Q3.) It’s rare that a fad, fashion or trend starts in a place like Phoenix, sweeps the rest of the country, and only arrives in New York when the rest of the country might well be at the end of it.

Some people point to the collapse of Lehman Brothers on Monday, Sept. 15 as the day when buyers simply disappeared. But we at PropertyShark think it was the downward plunge of the stock market that began at the end of September and continued for the next two weeks.

Normally traffic on our Web site, which features a database of properties in New York City, is predictable. Traffic is strong Monday to Wednesday. Thursday is usually a little lower, and Friday is off 20-25%. Absent external influences, traffic, measured internally in terms of unique logged-on users, is remarkably consistent from week to week. The exceptions are usually easily explained. Traffic drops on holidays. President Barack Obama’s inauguration dropped traffic by a good 20%. There are also seasonal variations. In general February to May has the highest traffic.

The stock market took its first sharp downward turn on Monday, Sept. 29, when the Dow opened at about 11,100 and closed at 10,365. Over the next two weeks it went down, down, down and briefly went below 7,800 on Friday, October 10th.

The first three weeks on the traffic graph (above left) show a normal pattern. From Monday to Thursday traffic is above the reference threshold of 1.0 every day. But beginning Sept 29th, the day the stock market took its first big drop downward, traffic on PropertyShark drops off. In the next three weeks traffic is substantially lower and reaches the reference threshold just three times. From our perspective, Sept.29th is the day when New Yorkers lost their nerve, and it was the collapse of the stock market that did it.

Though January got off to a slow start, as it usually does, this week traffic is back to normal, less than 2% lower than it was in September, before the stock market crash. From our experience at PropertyShark, we see this as a sign that the real estate market will start moving again, even if prices are lower.

Mel Foster celebrates stable real estate market in 2008

real estate market
By Jennifer DeWitt | Wednesday, January 28, 2009

Amid weak economic conditions nationwide, Mel Foster Co. weathered 2008 with a nearly 16 percent decline in home sales and an increase in commercial real estate sales.

Bonnie Sparks-Gray, the president of Mel Foster Co.’s real estatebrokerage division, described 2008 as “a stable business year” for the Quad-City real estate company. “We’ve grown to realize that housing is local, and the Midwest has maintained a positive market for real estatesales,” she said, adding that the real estate problems plaguing several major metropolitan markets and the coasts did not materialize here.

In reporting year-end sales figures, she said total sales volume reached $682.22 million, which was about 14 percent lower than the prior year. In 2007, the company had total sales volume of $800.046 million.

Residential home sales alone accounted for $589.06 million in sales — down nearly $111 million from $700.42 million in 2007.

“This is close to a 16 percent reduction,” she said of the home sales performance. “But when we talk to brokers around the country, we’re hearing how they are 40-, 50- or 60-percent down.”

Sparks-Gray said the Quad-City market got off to a slow start in 2008 with the bad weather last January and February. “We never were able to make that up in production last year, and as we got toward holiday time, we started hearing about the national economy and that added caution.”

Still, she is proud that Mel Foster maintained a 43 percent market share in its eastern Iowa and western Illinois market. That compares to a 45.5 percent market share in 2007.

“I really look for this year to be more solid by midyear. By late spring or summer, people won’t be nearly as cautious as long as we see a slowdown in the layoffs,” she said of the recent spate of Quad-City job losses.

The company will celebrate last year’s sales accomplishments today as about 400 Mel Foster agents and employees gather for the company’s annual awards ceremony at the Golden Leaf Banquet Center, Davenport.

Even with sales down, Sparks-Gray said there is plenty to celebrate including the annual increase in home values versus the drastic price reductions seen elsewhere in the country. “I credit the product knowledge of our agents and their ability to communicate with our clients so that properties are priced accurately in the market,” she said.

Mel Foster’s average home sale price increased from $133,577 in 2007 to $134,245 in 2008. In addition, the average home was on the market 62 days — the same as in 2007.

Commercial sales increased in 2008 to close at $74.56 million, producing the fourth best year for commercial sales in the company’s history. That compared to $73.33 million in 2007

Other sales activity, including referrals and auctions, added another $18.59 million to the $682.22 million sales volume.

While the number of new construction homes was down for the year, Sparks-Gray said the company controlled more than 51 percent of the sales market — up from nearly 48 percent in 2007. The company closed $105 million in new construction sales in 2008, down from $115.6 million the year before.

The Mel Foster Insurance Division also posted a strong year despite a 7 percent decline in written premium. Premiums totaled $42.56 million. The agency, which contracts with more than 20 major insurance companies, employs 43 agents who sell commercial property, casualty agents, employee benefit, life and personal insurance products.

In the real estate division, Sparks-Gray said the year saw a decline in the number of agents in the business. The company now has 368 agents, or 30 fewer than a year ago. Attributing some of the decline to retirements, she said the current market is causing only the serious agents to stay. “Our agents must be as sophisticated and savvy as our consumers — it’s an expectation.”

She added that the company will be recruiting heavily to return to 2007 staffing levels and may find new prospects among those recently laid off. “They’re looking for work, and in the real estate business an agent can be as successful as they want to be,” she said.