Allman-Ac Vol. IX, April 2008

April 2008

Dallas Housing: Bright Spot
Dallas is getting more good marks for its home market while the national housing sector is still losing ground. A new report shows that the Dallas area has basically flat home prices and one of the shortest times to sell a house in the country.

Altos Research and Real IQ Market Analysis released the information in their latest housing market update. Dallas had the second-fastest home selling time among the 22 markets the researchers surveyed – 79 days. Only Denver had a shorter average home sales time. Nationally, it takes more than 120 days to sell a house.

In the last three months, overall listing prices fell 1.6 percent in the national survey. But in the Dallas area, list prices rose 0.7 percent. Dallas was one of only six markets in Altos’ comparison that had flat or higher home list prices. Asking prices were down in 6 markets. Dallas Morning News March 2008

DFW Ranked first for total job gains in ‘07
Preliminary 2007 data from the US Bureau of Labor Statistics shows Dallas/Fort Worth ranked first among all US metros for total job gains last year. DFW added 81,900 jobs last year bringing the region’s total employment count just under 3 million at 2,942,700. Texas’ second largest metro, Houston, ranked third in job gains adding some 74,000. The greater New York region, with a total job count exceeding 8.5 million, wedged between the two Texas metros for second position at 78,800 jobs added.

Texas metros also stand out in job gains as measured by percent or rates of change last year. Among the largest 50 metros, all with at least 500,000 jobs, Austin’s growth rate of 4 percent was bested only by Salt Lake City at 4.5 percent. Houston and Dallas ranked fifth and sixth and were the only very large metros (over 2 million job base) to make the top ten in growth rates.

Texas added 230,000 jobs compared to 186,000 for California, 119,000 in Florida and 86,000 in New York. If DFW were a state, it would have beaten North Carolina for fifth position in total jobs added last year. Dallas Chamber of Commerce, March 2008

Dallas: The Place To Be
2006 Year-End Ranking (’07 not yet available)

Top Gross Domestic Product by US Metro Area:
#5 – Dallas/Fort Worth-Arlington, TX
Global Insight, January 2006

Best State for Business:
#1 – Texas
Chief Executive Magazine, January 2006

Top Metros for Business Expansion & Relocation:
#2 – Dallas/Fort Worth-Arlington, TX
Site Selection Magazine, March 2006

Fast Facts:

If DFW were a nation, it would rank 28th in the world in Gross Domestic Product, between Indonesia and Norway.
United States Conference of Mayors & Global Insight

Twenty-two Fortune 500 headquarters called DFW home in 2006.
Fortune Magazine

DFW ranked 22 out of 50 large cities as the best places for entrepreneurs in the Southwest in 2005.
Entrepreneur Magazine

Least Expensive Cities: U.S. Metros with Populations Exceeding 1.5 Million:
#8 – Dallas/Fort Worth-Arlington, TX
Competitive Alternatives Study – KPMG, March 2006

Fortune 500 Headquarters Ranked by Metro Area:
#5 – Dallas/Fort Worth-Arlington, TX
Fortune Magazine, April 2006 & Greater Dallas Chamber

Metros Ranked by Total Employment Growth:
#2 – Dallas/Fort Worth
Bureau of Labor Statistics, 2006

Hot Cities for Future Job Growth (Based on growth rates through 2015)
#8 – Dallas/Fort Worth
Business 2.0 Magazine, May 2006

Top Cargo Airports in North America
#1 – Dallas/Fort Worth, DFW
Air Cargo World Magazine, March 2006

Top 10 DFW Trading Partners
China
South Korea
Japan
Singapore
Malaysia
Taiwan
Germany
Philippines
United Kingdom
Thailand
USA Trade Online, 2005

10 Blooming US Cities for Tech
#5 – Dallas
EWEEK Magazine, June 2006

Greatest Value of Venture Capital Investments by State
#3 – Texas
Cyberstates 2006

Highest Number of High-Tech Establishments by State
#2 – Texas
Cyberstates 2006

Fast Facts
• In a state-by-state analysis, Texas ranks 2nd in total number of high-tech workers
• Twenty-six percent of Texas’s international exports are high-tech
Cyberstates 2006

Greatest Value of High-Tech Exports by State
#2 – Texas
Cyberstates 2006

Greatest Value of Research & Development Expenditures by State
#4 – Texas
Cyberstates 2006

Outlook: Dallas/Fort Worth
As with the U.S. economy, DFW will continue to grow though at a less heady pace.
Limited corrections in local housing markets will continue to help DFW outperform the national economy. Local job growth will equal or top population gains, holding unemployment rates steady above the national rate. Finance, Insurance and Real Estate, which accounts for 1/5 of the DFW’s Gross Product, will also outpace other
sectors.
Greater Dallas Chamber, December 2006

What Works and What Doesn’t in Economic Policy
The Recent Democrat Primary in Texas and Ohio offered a glimpse not just of what’s going on in politics, but what works in economic policy. And, incidentally, why the Texas Housing market is solid.

Texas has gained 36,000 manufacturing jobs since 2004 and has ranked as the nation’s top exporting state for six years in a row. Its $168 billion of exports in 2007 translate into tens of thousands of jobs. Ohio, Indiana and Michigan are losing auto jobs, but many of these “runaway plants” are not fleeing to China, Mexico or India. They’ve moved to more business-friendly U.S. states, including Texas. GM recently announced plans for a new plant to build hybrid cars. Guess where? Near Dallas. Texas is a right to work state and has been adding jobs by the tens of thousands. Nearly 1,000 new plants have been built in Texas since 2005, from the likes of Microsoft, Samsung and Fujitsu. Foreign-owned companies supplied the state with 345,000 jobs.
Wall St. Journal, March 2008

Affordable Homes: Texas
Four Texas cities rank in the nation’s 25 markets for most affordable homes. For Dallas-FortWorth, the estimate total housing payment averaged 34% of household income, far below the 60% for New York and 75% for Los Angeles.

Affordability Ranking Market
2 San Antonio
8 Houston
15 Dallas-Fort Worth
22 Austin
Biz Journals, March 2008

Investor Report: “Risk List”
A new national “risk list” could help guide real estate investors – not only those looking to scoop up distressed property through short sales or pre-foreclosure deals with lenders – but those looking for the safest places to stash their real estate dollars. PMI Group’s quarterly risk list rates the relative riskiness of owning or buying property in dozens of major markets around the country. PMI, which is one of the largest private mortgage insurance companies, uses the ratings in its own risk underwriting on home loans.

The safest markets in the country right now – where there is less than a one percent chance of price declines in the coming 24 months, according to PMI’s risk index?Well, the Lone Star state has more of them than any other: Dallas, Fort Worth, Austin, Houston and San Antonio are all rated in the top ten for “safe bets.”
Realty Times, January 2008

Q4 Home Prices Fall in 76% of U.S. ZIP Codes: Texas Up
Home prices fell during the fourth quarter in 76 percent of the 7,472 ZIP codes tracked by mortgage data aggregator First American CoreLogic. While just over half of ZIP codes nationwide saw prices decline for the year, trends varied widely by state.

During the fourth quarter, prices declined in 30 of the top 34 markets tracked by the index, and all but 10 of those markets saw year-over-year price declines, the index showed. The report relies on more than 45 million observations in First American CoreLogic’s property information database.

4 Markets in Texas Showed Increases in Value
Austin-Round Rock, Texas 8.09%
San Antonio, Texas 6.82%
Houston-Sugar Land Baytown, Texas 6.82%
Dallas-Fort Worth-Arlington, Texas 3.21%
First American CoreLogic, February 2008

Housing: Best time to buy in four years
It may be the best time to buy a house in more than four years. The Cleveland-based bank National City Corp. (NCC, Fortune 500), together with financial analysis firm Global Insight, revealed Tuesday that more than 88% of the 330 housing markets surveyed showed price declines and improved affordability during the last three months of 2007.

“Housing valuations are almost back to long-term norms,” said National City’s chief economist, Richard DeKaser. He called current affordability “the best in the past four years. By the end of 2008, housing markets could be broadly under valued.”
Price declines have continued into 2008 and interest rates, although they have inched up lately, have been steady or lower compared to late last year. There have even been wage gains; personal income rose 0.5% in December. Soaring foreclosure rates have added inventory to many housing markets, depressing home prices further. All the best bargains were found in Louisiana and Texas. Dallas was the most undervalued big city by 30%.
CNNMoney.com, March 2008

Move Where? Texas!
Forbes.com has ranked the best cities for employment in 2008, and a whopping 5 out of the top 20 were in Texas. The top ten were ranked according to median income, unemployment, income growth, cost of living and job growth:
3. Austin, Texas
5. Forth Worth, Texas
7. Houston, Texas

Now, if renters want cheap rents, where are the best places to live? Forbes does the math for its top 10, using vacany rates, new-construction projects and job growth.
4. San Antonio, Texas
8. Houston, Texas
9. Dallas, Texas
Forbes.com, February 2008

Washington Report: HUD Proposes Changes to Mortgage Process
Federal department of Housing and Urban Development plans to unveil sweeping proposed changes to the American mortgage application process and real estate settlement system. The rule changes are the end-product of HUD’s five-year effort to streamline mortgage disclosures, promote comparison shopping by loan applicants, and to stamp out eleventh-hour surprises at closings. Among the key changes in the 250-page HUD proposal:

Good Faith Estimate
Transformation of the GFE into a consumer education and shopping tool. The GFE will now explain in detail to an applicant how a particular loan works, how high monthly payments could rise, disclose any potential fees such as prepayment penalties, and provide information about escrow items. New, strict limits on how much settlement charges can depart from the Good Faith Estimates stage – within three days of the loan application – to the HUD-1 closing stage. Total settlement charges could not be more than 10 percent above the initial estimates, absent tightly-defined “unforeseen circumstances” limited to acts of God, war and disasters, among others.

The Good Faith Estimate and the HUD-1 forms are aligned with each for easy comparison, with similar categories and graphic displays of loan origination charges and settlement cost items on both. All fees paid to mortgage brokers by a lender in connection with the interest rate charged to the consumer must now be disclosed and listed on the Good Faith Estimate as a “credit to the borrower.” All settlement agents will now be required to “read aloud” a new “closing script” to mortgage borrowers. The script walks consumers through the various charges on the revised HUD-1, and whether and why they differ from earlier estimates. Finally, the script requires the settlement agent to explain the loan terms and mechanics as stated in the mortgage note itself. The proposals will have a 60 day period for industry and consumer comment, after which HUD is expected to issue them in final form with a period of months set aside to allow lenders, title companies and attorneys to gear up for the new forms and procedures.
Dept. of Housing and Urban Development, March 2008

Fed to Take Mortgages as Collateral
The Federal Reserve delivered a shot in the arm to stressed financial markets by offering to take a big chunk of now difficult-to-trade securities temporarily out of circulation. The offer amounts to a surgical strike at one of the most worrisome new developments in the global credit crunch: A wave of investor selling of mortgage-linked securities. The heavy selling is driving up mortgage interest rates, dealing a fresh blow to the housing market, and threatening the nation’s economy by making credit harder to come by. The Fed will auction off Treasury securities on a weekly basis, and the dealers who buy them will have 28 days to settle up.

The Fed announced that it was increasing the amount of those 28-day term auctions from $60 billion a month to $100 billion a month for as long as needed, and is also initiating $100 billion in 28-day term repurchase agreements with mortgage-backed securities accepted as collateral. The Feds’ open market committee has cut the target for the federal funds overnight rate five times since September, from 5.25 percent to 3 percent. Treasury Secretary Henry Paulson noted in a speech this month that the Fed’s short-term interest-rate cuts have also brought down the London Interbank Offered Rate, or LIBOR, which many adjustable-rate mortgages are indexed to.
Inman News, March 2008

Sales Steady, Then Recovery
The volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery during the second half of the year as the mortgage situation improves in high-cost areas, according to the latest forecast by the National Association of Realtors.

Lawrence Yun, NAR chief economist, said many buyers have been waiting for higher mortgage loan limits. “The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgages in high-cost regions,” he said. “Therefore, a notable rise in home sales can be anticipated in the second half of the year.”

The 30-year fixed-rate mortgage, which has moved erratically in recent weeks, is expected to hover around 5.8% most of the year, and then rise to an average of 6.3% in 2009. Growth in the U.S. gross domestic product (GDP) should be 1.5% this year and 2.4% in 2009. The unemployment rate is projected to average 5.4% in 2008 and 5.5%next year. Inflation, as measured by the Consumer Price Index, will probably be 3.2% this year and 1.5% in 2009. Inflation-adjusted disposable personal income is expected to grow 1.4% in 2008 and 3.1% next year.
National Association of Realtors, March 2008

U.S. Foreclosures Hit New Records: Texas O.K.
Loans entered the foreclosure process at a record rate during the fourth quarter, and things are likely to get worse before they get better, the chief economist for the Mortgage Bankers Association said. Texas actually declined 1%.

Since the fourth quarter of 2006, the foreclosure start rate for prime ARMs increased from 0.41 percent to 1.06 percent, while the rate for subprime ARMs increased from 2.7 percent to 5.29 percent. Subprime ARMs represented just 7 percent of loans outstanding, but accounted for 42 percent of foreclosure starts
during the fourth quarter. Prime ARMs represented 15 percent of outstanding loans, and 20 percent of the foreclosures started. While millions of ARM borrowers still face interest-rate resets, Duncan said the impact of those payment adjustments will be less than feared because cuts in sort-term interest rates made by the Federal Reserve have also brought down the six-month LIBOR rate, the index used for many subprime ARM loans, by 2.5 percent since last September.

“The reduction in LIBOR will mean that the resets of those loans will bring them very close to current contract rates,” Duncan said. The problem of payment shock “will be much less than thought, although it won’t be ameliorated.”

California and Florida continue to represent a disproportionate share of the foreclosure starts in the country. Those two states represent 21% of all loans outstanding, but accounted for 30% of foreclosure starts in the US. More importantly, they accounted for 39% of all prime ARMs outstanding, but 47% of prime ARM foreclosure starts. Similarly, they represented 29% of all subprime ARMs, but 36%of subprime ARM foreclosure starts. The rate of foreclosure starts in Florida more than tripled between the fourth quarter of 2006 and the fourth quarter of 2007,
while the rate in California more than doubled.
Mortgage Bankers Association, March 2008

NAHB Survey Finds Condo Decline
A recent report from the National Association of Home Builders says about two-thirds of builders reported that they lowered condo prices in the 4th quarter of 2007 to strengthen sales, with an average price reduction of 11 percent. When asked about other marketing strategies, about 70 percent of respondents reported that they included optional items at no costs, paid closing costs or fees, or absorbed financial points for buyers as incentives. “It is going to take time for the extra inventory to be absorbed,” said David Seiders, NAHB chief economist, in a
statement.

About 28 percent of survey respondents reported a higher or somewhat higher cancellation rate for sales in the fourth quarter compared to the same quarter in 2006. The average sales cancellation rate was 19 percent in the fourth quarter, and the median cancellation rate was 12 percent.

In a separate builder confidence report, NAHB announced that the confidence index for the single-family housing market bumped up from 18 in December to 19 in January.
National Association of Home Builder, March 2008

Prepaying Second Home Loan Pays Off:
Rate of return often greater than on savings accounts, stocks
Consumers are looking at all sorts of ways to reduce their debt, save interest dollars and pave a faster path to real equity.

According to Jack Guttentag, professor of finance emeritus at theWharton School of the University of Pennsylvania, consumers should view the yield of principal prepayments on their mortgage as equal to the interest rate on their loan – as long as there is no prepayment penalty included in the loan. Hence, if you are paying 6 percent on your loan, prepaying your mortgage would make more sense than plunking any extra cash into a savings account paying 2-3 percent interest. Guttentag also states that if the yield on mortgage repayment is being compared to the yield on other taxable investments, it doesn’t matter whether yield is measured before tax or after tax (tax-exempt bonds could be an exception).

If the primary residence is owned free and clear, paying off a second home would be a forced savings account, and be judged in a similar way to Guttentag’s guidelines of weighing the yield of a potential investment against the interest rate of your loan.

Average consumers should never invest money they can’t afford to lose. But stashing extra cash into the mortgage of a second home is a secure investment, especially if it will show long-term appreciation. In fact, if you make an extra payment on your principal every month, you can reduce the loan term of a 30-year loan by approximately 12 years. Conversely, by prepaying the loan, you also lose a piece of your mortgage-interest deduction. Your actual savings is computed with your marginal tax rate and your mortgage interest rate.
Inman News, March 2008

Perfect Financial Storm but No Recession
Fear of imminent economic recession may be a self-fulfilling prophecy, according to the latest Anderson Forecast report by University of California, Los Angeles forecasters.

While the report by Edward Leamer, director for the forecast, clings to earlier predictions that the U.S. economy will avoid a recession in the short term, it also details the dangers that are stressing consumers and challenging the economy. Leamer referred to the “financial shadow” that can sometimes loom disproportionately large in consumers’ minds and negatively impact spending. This shadow, he stated in his report, has the potential to cause “recession depression,” or fears of a recession.
And if that fear is great enough, and consumers “spend time in their beds instead of in the malls,” then it could become “recession reality,” he said in the report.

Despite the hard-hit housing market, with falling home prices, rising foreclosures, a subprime mortgage market meltdown and a credit crunch, Leamer’s forecast for avoiding an economic recession is based upon a disconnect between housing and the overall labor market and a disconnect between the manufacturing and construction
employment cycles.

“Never before have we had this kind of collapse in housing that was not accompanied by recession.” Even so, Leamer maintains in his report that this time around is different. If this is a recession, Leamer said he would expect to see another 1.5 million workers unemployed by the end of the year, with more job cuts to come. “It’s not a surprise to see that jobelessness did rise at the close of 2007, with the loss in construction industry jobs, though manufacturing jobs have not rebounded much from their losses in the 2001 recession. And absent a peak and a subsequent steep drop in manufacturing jobs, “we are going to have sluggish growth but not a recession,” Leamer stated. Industrial production, likewise, has not dived.

He concluded, “The data don’t yet add up to a recession, and there is nothing here to challenge the basic story of sluggishness that we have had for two years. Don’t worry be happy. You have to avoid recession depression.”
Anderson Forecast, March 2008

Know the Neighborhood
In this battered housing market, choosing the right neighborhood is more important than ever. Some six million Americans are expected to buy a house this year. Whether first-time home buyers or a midcareer worker relocating, they are all contemplating what may be the most significant purchase of their lives at a time when no one is certain how much lower prices might go.

If you are relocating for your job, you likely can’t pick which region you move to. But you can pick where you live within that region, and that could have a big effect on whether or not your home turns out to be a winning investment. Even in hard-hit cities, certain neighborhoods are holding up better than others. One factor is well-known to home buyers: schools. Even if you don’t have children, houses in high-ranked school districts generally retain their value better. But don’t overlook perhaps the most important variable of all: supply and demand.

Though buyers generally get more house for their dollar in more-remote communities, many buyers today are forsaking size for the convenience of being close to the city, often in areas that are redeveloping.
Wall St. Journal, March 2008

Slowdown
After years of meteroric rises, prices in much of Europe are beginning to follow America’s slide. Ireland, a recent star performer, saw the biggest drop in 2007, with property on average worth 7% less than the year before, according to a report by the Royal Institution of Chartered Surveyors, a trade body.

Other Changes:
Britain – even
Germany – down 6.9%
Spain – down 6%
Italy – even
France – down 3%
Economist.com, March 2008

Numbers: Look Again
When the NAR released home sales numbers for January, it was reported as another bad month – the lowest level in a decade. Look closer. Resales of single family detached houses were actually UP by .5 percent. Condo and coop sales dropped by 6.5 percent, dragging the total down. So the real news is mixed.

Total resales were essentially flat – o.k., but they’re not dropping off the bottom of the charts. Construction starts for new homes actually rose by .8 percent. The NAHB poll of builder confidence rose slightly with stronger traffic through model homes.

Even the Conference Board, a research group representing a broad spectrum of U.S. Industries said things are looking up for housing. Chief Economist Gail Fosler said: …the housing correction is about over…affordability is improving, and with recent interest rate cuts as house prices decline, it should improve further…rising affordability plus demographic trends bode well for the overall outlook.”

And remember what Fed Chairman Ben Bernanke said after the latest rate cut: The Federal Reserve is not going to let the economy go down the drain because of some dumb subprime loan investments made by large banks during the boom.
NAR Survey, February 2008

First-Time Home Buyers’ Financing Challenges
Falling prices in many parts of the country have improved affordability for those interested in becoming homeowners for the first time, but financing the purchase has become a bigger challenge. Lenders, in general, are requiring larger down payments and higher credit scores, criteria that can trip up first-time buyers.

It is typically first-time buyers who have the toughest time scraping together a down payment. According to the National Association of Realtors, 45% of first-time home buyers opted for 100% financing in July 2006 to June 2007. The median percentage that first-time buyers financed was 98%. Borrowers today are going to have to verify their income and verify their financial assets to lenders, said Frank
Nothaft, chief economist for Freddie Mac, the government-sponsored mortgage agency. A FICO credit score of 660 to 680 is now the minimum most lenders will consider to prove your credit-worthiness, he said.

Those first-time buyers with strong credit histories and a sizable down payment are the best positioned to buy right now. While long-term rates have been somewhat volatile over the past several weeks, the most recent Freddie Mac and Mortgage Bankers Association predictions anticipate the benchmark 30-year fixed-rate mortgage will average less than 6% during the remainder of the year. That’s far below the 8.05% annual average for 2000, according to Freddie Mac statistics.

Hope isn’t all lost for those who don’t have the capital to make a substantial down payment. For one, some prospective home buyers might consider a mortgage backed by the Federal Housing Administration. FHA loans require a 3% down payment, which can be a gift from friends or family. To be eligible, the home price has to be under a certain loan limit, and that varies by location.
The Wall St. Journal, March 2008

State Standards May Have a Say
Fannie Mae and Freddie Mac – the huge companies that buy most conforming loans from local lenders have agreed to tougher standards for appraisers. Under the deal worked out with NewYork state attorney generalAndrew Cuomo, the big loan buyers agreed to create a “New Home Valuation Protection Code” which has three baseline requirements:
Mortgage brokers will be prohibited from selecting appraisers; Lenders will be prohibited from using “in-house” staff appraisers to conduct initial appraisal, and
Lenders will be prohibited from using appraisal management companies that they own or control.

The benefits are huge, effectively removing potential points of conflict, opportunities where appraisers can be pressured to over-value properties. As a borrower you want a conservative appraisal to prevent overpaying for a property. As a lender you also want conservative appraisals to avoid loans which are too risky.

Fannie Mae and Freddie Mac are government-sponsored enterprises – GSEs – former federal agencies that are now private companies overseen by the Office of Federal Housing Enterprise Oversight (OFHEO).

Since the National Bank Act was enacted in 1864, the federal government has exclusively regulated national banks, credit unions and savings and loan associations. Cuomo, a former HUD Secretary under President Clinton, has effectively found a way for states to impact federally-regulated lenders.
Realty Times, March 2008

Mortgage Fraud Up in 2007
The number of suspicious activity reports related to mortgage fraud increased 31 percent in 2007 compared to the year before, with 60 percent involving false claims on loan applications such as employment history and claimed income. That’s according to an annual report on mortgage fraud by the Mortgage Asset Research Institute (MARI), which said Florida and Nevada led the nation in the rate of suspected mortgage fraud cases, followed by Michigan, California, Utah, Georgia, Virginia, Illinois, New York and Minnesota.

MARI’s report, which relies on statistics from the FBI and the Financial Crimes Enforcement Network (FinCEN), does not capture all cases of suspected mortgage fraud, because only federally insured financial institutions are required to submit suspicious activity reports to regulators. Although fraud perpetrated on or by independent mortgage banking companies is not reflected in the statistics, the
numbers are considered a useful indicator of trends and for devising strategies for combating mortgage fraud.

At the moment, declining real estate markets in states like Florida, Nevada and California have left many borrowers unable to sell or refinance their properties, and misrepresentations are unmasked when they become delinquent on their loans.

Loan servicers are discovering a “substantial percentage” of prime and noncomforming delinquencies are for loans where the applicants said they planned to occupy a home, but which in fact were used as rental properties from the outset, MARI said.

While the most common type of fraud involved misrepresentations about employment history and claimed income, problems with undisclosed or incorrect debts, liens or judgments increased 50 percent between 2006 and 2007, MARI said.

While many lenders have already instituted stricter requirements for low- or no-documentation loans – or done away with them altogether – MARI recommends that they go to greater lengths to know all the parties involved in the transaction – whether they be loan applicants, loan originators or their own employees.
Mortgage Asset Research Institute, March 2008

Internet Usage: Ageless
Content providers are overlooking the needs of many of today’s Internet users, according to a new BurstMedia study. The online survey, conducted in February 2008 of more than 13,000 Web users 18 years or older, found a majority of Internet users 45 years and older believe that online content, as well as website design and online advertising is skewed toward younger Web users.

Starting with the “Young Boomer” segment (45-54 years) there is a precipitous decline in the number of respondents who say Internet content is focused toward people their age. In fact, within this age segment only one in three believe
online content is focused on people their own age. Only one in five respondents 55 years and older say Internet content is primarily focused on people their own age. Additionally, three-quarters of respondents 45 years and older believe online advertising is not targeted towards them, and focuses on younger audiences.

The Burst survey revealed that website usability is an issue for older Web users. For sites drawing an audience 45 and older, simple navigation and design is critical for retaining those consumers. The one truth across all ages is that the Internet has become an integral part of their everyday life. Two-thirds of respondents said that their daily routine would be disrupted if they could not access the Internet for a week, with 43% saying that they would be significantly impacted.

Overall, three out of five respondents are visiting more websites in a typical week than they were one year ago. An expanded catalog of sites visited is not only a phenomenon of the young; in fact, 63% of respondents 55 years and older say they are visiting more sites today in a typical week of Web surfing than they were one year ago.
Burst Media, March 2008

Housing: Time to Make Your Move
Here are three ways to play today’s housing market:
Trading Up – If you’re hankering after a larger home or a house in a better neighborhood, this could be your chance to trade up on the cheap.

Your new home will probably mean not only a bigger mortgage, but also higher ongoing costs, including homeowner’s insurance, property taxes and maintenance expenses. These ongoing costs will offset a large chunk of any future home-price appreciation.
In other words, trading up to a larger home or a better neighborhood is really about wanting to consume more real estate. Still, like any thrifty shopper, you want to buy when there’s a sale – and that is what today’s market offers.
Doubling Down – Instead of trading up, you might be eyeing a vacation home. Maybe you’re two or three years from retirement and are toying with buying a second home that could become your sole residence once you quit the
work force. Does it make sense to purchase now, given the decline in home prices?
Buying today is no doubt appealing, because it’ll give you a chance to vacation in your future home. But whether it turns out to be a wise financial move depends on what happens to property prices.

The bottom line: If you think you’ll get a lot of use from a second home, go ahead and buy.

Helping Hand – While buying more real estate for your own use may or may not be a great investment, you could help your adult children make good money – by transforming them from renters to homeowners.

To that end, you might give your kids an advance on their eventual inheritance, so they have enough money to make a down payment. Yes, that means they will start to incur the housing costs I mentioned above, including property taxes and maintenance expenses. But your children will also replace their monthly rent check with a monthly
mortgage check, and that will allow them to start building home equity.
Wall St. Journal, March 2008

Ignore the Headlines!
Famed money manager Peter Lynch is perhaps best known for his timeless wisdom: Ignore the headlines. That’s no easy thing. How do you tune out all the chatter and ink on recession, housing, subprime woes, the credit crunch, rogue traders, insolvent insurers, $100 oil and nukes in Iran? There has rarely been a moment in history when you couldn’t scare yourself into doing nothing.

A top reason to not buy stocks, in Lynch’s view, is if you don’t already own a home –in which case, that should be your first investment, since an owner-occupied home is nearly always profitable. When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run.

Let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious – before an inevitable rise in interest rates wipes out your advantage.

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today’s rate of 5.5%. Monthly principal and interest come to $994.31. Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise just half a point, to 6%, your monthly payment would be $994.94 and you’d be saving nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year
living someplace you’d rather not be.
Time Magazine, February 2008

The Stars at Night Are in Your Living Room
High-rise urban living in Texas?

Texas now is home to three of the nation’s 10 most populous cities (Houston, Dallas, San Antonio). Its population continues to grow at phenomenal rates: It added 4 million people in the 1990s and more than 2.5 million so far this decade to top 23.5 million, second only to California.

As people pour in, the state is starting to rein in its historical outward spread and venturing into un-Texan territory: high-density development, downtown living, mass transit and neighborhoods built not just for cars, but for walkers and all things urban.

“The competitive advantage of the six or 10 ‘real’ cities in the country is that they offered unrivaled urban living,” says Robert Lang, director of the Metropolitan Institute at Virginia Tech. “What you have now is a much larger number of places where you can live an urban lifestyle.

“If all you have is a dead downtown and strip malls, you’re toast. There’s a big part of the workforce that just won’t tolerate that anymore.” Texas is rapidly learning that lesson. Its cities are growing up – literally. High-rises, multilevel apartment and condominium buildings are rising in downtowns, on old industrial sites and in abandoned neighborhoods.

The success of light rail in Dallas in particular has spawned developments mixing condos, offices and shops around transit stops in the city and suburbs such as Plano.
When Anthony Flit of the Lincoln Institute of Land Policy in Cambridge, Mass., traveled across the country to research his book, This Land: The Battle Over Sprawl and the Future of America, “I went looking for sprawl and urbanism,” he says. He found both in Texas.

Meet the new urban Texas:

Austin has doubled its population every 20 years (709,893 in 2006) since it was founded in 1839. Much of that time, Texas’ capital city has grown away from downtown. Now, the focus is on increasing the population density downtown by building upward.

“At least four towers are going up right now,” says Fritz Steiner, dean of the architecture school at the University of Texas-Austin. “Its pretty dramatic. All around the edges of downtown or central area, one sees, if not high-rises, other apartments and condominium projects.”

The old municipal airport close to downtown is being developed into shops, parks, bike trails, offices, a medical center and residences, including some units for low-income families.

In Fort Worth, where the billionaire Bass family has spurred development of the arts and loft projects downtown, Trinity River View is a proposed 800-acre complex of schools, parks, housing and shops that could add 25,000 residents.

In Houston, there are plans for Discovery Green, a 12-acre park next to the downtown convention center. A 37-story condo tower will rise beside it. Warehouses and factories are being converted to housing. A light-rail line from downtown is sparking development.

San Antonio’s signature River Walk will add another 1 ½ miles to link major museums by the end of next year, a plan that’s drawing interest from residential developers.

Dallas did not experience the dizzying real estate boom that other parts of the USA saw earlier this decade. That has spared it the freefalls in prices and sales that have staggered other areas.

Last year, the city adopted its first growth plan that details a long-term vision. The theme of Forward Dallas! is clear: density, density, density. Dense development is clustering along the 45-mile Dallas Area Rapid Transit light-rail line that connects Dallas and Plano to the north and Garland to the northeast. Construction is underway to almost double the system. By 2013, Dallas/Fort Worth International Airport and Love Field, the major airports serving the city, will be linked to
rail.

A 2005 study by professors at the University of North Texas in Denton estimated that more than $3.3 billion had been invested or planned near light-rail stations since 1999.
USAToday.com, January 2008

Texas: The Real State for Real Estate
Texas home prices held up quite well in 2007, despite the weakening housing landscape. U.S. median existing-home prices fell 6.5 percent from December 2006 to December 2007, but Texas metros saw mostly stable home prices, with an overall increase of 1 percent.
Dallas Federal Reserve, March 2008 Bank of Dallas

Consumers’ Choice Award 2008
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