Condo, townhome sales slow as low-end units disappear

BY LESLIE WIMMER

March 03, 2008

Condominium and town home sales in downtown Fort Worth have cooled off as lower-priced units have been sold and higher-priced units have been slow to sell.

Sales slowed in the fourth quarter of 2007 compared to high sales in the fourth quarter of 2006, according to figures from Downtown Fort Worth Inc.

The slow down can be attributed to fast sales of lower-priced units in 2006 and slower sales of higher-priced units in 2007, said Jim Johnson, director of development for Downtown Fort Worth Inc.

“The condominium and town home sales in downtown tend to vary by the available inventory, by what’s for sale, and what we’ve seen in the fourth quarter of 2007 compared to the fourth quarter of 2006 is a definite slow down,” Johnson said. “Based on 2006, we were having [Texas & Pacific] lofts selling fast, and in 2007 the average price point was going up quite a bit. This is not necessarily reflective of prices overall going up, it’s reflective of what’s for sale and what’s being sold.”

In the fourth quarter of 2005, six condominiums and townhomes were sold downtown, according to Downtown Fort Worth Inc. In the same quarter of 2006, 39 units were sold and in the same quarter of 2007, 18 units were sold.

Despite the slow down, the Fort Worth downtown residential market is healthy overall and downtown continues to be a popular place to live, Johnson said, but Fort Worth is not immune to the slow housing sales being experienced in the rest of the country, he said.

Living within walking distance of Sundance Square, not having a long commute and not having to take care of a yard are a few of the reasons downtown living has grown in popularity, area developers and sales managers said.

Pecan Place, located at 704 E. First St., had its first homeowner move in June of 2006. The neighborhood has nine condominiums, which are sold out, and about 30 townhomes, which are 70 percent sold out, said Cindy Robinson, Pecan Place sales manager.

The units range in price from $300,000 to $500,000 and are between 1,800 and 2,700 square feet each, according to Pecan Place officials.

“A common theme [in residents] is the love of the downtown lifestyle,” Robinson said. “People can walk to the movie theater, walk to the Bass Hall, walk to outstanding restaurants and the Jubilee Theater. It’s clean, it’s safe and they don’t have to drive.”

Texas & Pacific Lofts at 221 W. Lancaster Ave. has 228 total units in both of its buildings and is about halfway sold out, Sales Manager Mary Margaret Davis said. Half of the development’s 92 mid rises and 12 of the 136 high rises are vacant, she said.

The units range from 566 to 1,400 square feet, and cost begins at $160,000 and goes into $300,000, she said.

“Since the Lancaster Avenue redesign is coming to completion and with us being at the Trinity Railway Express train station, we’re getting a lot of people who are interested in the future of using public transportation,” Davis said.

Davis also said that Fort Worth is behind where it should be on the number of condos downtown, but that the city is growing and downtown residential development is just getting started.

The Palisades at 700 E. Bluff St. between Pecan and Elm streets, began moving in tenants in early 2007. The development has sold 10 of its 40 units, and has a long reservation list, said Jo Ann Royer, vice president of urban sales for Williams Trew Real Estate Services, which represents The Palisades.

The Palisades units are each three stories with a fourth floor roof deck, have two-car garages, are sized between 1,875 and 3,000 square feet and cost anywhere from $309,900 to $549,900, Royer said.

One Montgomery Plaza on W. Seventh St. opened its 240 residential units in March of 2007. The units are 65 percent sold out and sales have remained brisk, said Waldemar Maya, partner with the Marquis Group and developer for One Montgomery Plaza.

“If you go back to the ’60s, ’70s and ’80s, you have the sprawl that went out to the suburbs because land was cheap, and now as we continue to grow, now you’ve got people who are 45 minutes to an hour out, and with gas prices at $3 a gallon, it’s a whole different story,” Maya said

Montgomery Plaza’s units are sized between 800 and 5,000 square feet, and cost between $260,000 and $1,600,000 each.

Sales managers and developers for these residences agree that no specific age group or demographic is more likely to move downtown.

“It seems like the age group is from 18 to 80 and up, it’s such a diverse group of people and it’s not just first timers and it’s not just empty nesters or baby boomers, it’s a wonderful combination of lifestyles and age groups,” Davis said.

"Serve with Integrity"

Friday was the George Washington’s Birthday that many of us grew up celebrating, and last Monday was the new federal holiday honoring George and our other Presidents. That got me thinking about George, and the first thing that came to mind was the old cherry tree legend – the one about “I cannot tell a lie.” Of course there’s “Honest Abe” also.

What a legacy to be remembered as being honest, as someone who told the truth. I don’t think we’re talking about tactless truth where you tell people that their shirt is ugly or that they should get a haircut or that their joke wasn’t funny. I think we’re talking about an admirable character trait that serves a person in life as well as beyond that.

Look at how many years have passed since Washington or Lincoln served in the Presidency, yet honesty is still ascribed to both. It is not limited to them. It’s just that when we think of them we also think of their character.

The trait of being honest is part of a larger set of character traits called integrity. This is what you stand for. It’s also what you won’t stand or put up with – how you won’t go against your own core beliefs.

My senior year in high school, I was a member of the Key Club, the high school organization of Kiwanis International. That year, the theme of the annual oratorical contest (which I incidentally won for my district) was “Serve with Integrity.”

At that time, integrity wasn’t a concept that was being taught in school. I’m not sure it is today either. Needless to say, I had to do some research before I could prepare my address.

That was a great experience and one I still remember. I think “Serve with Integrity” is a great life motto.

It means regardless of what we’re doing – building homes, selling them, advertising them, designing them, decorating them, inspecting them, appraising them, lending money on them – that we are known as a person of integrity. That we are not more interested in the sale or the paycheck than we are the customer. That we truly believe in what we are doing and consider it to be an admirable calling. That we approach our work with a wholeness and completeness that allows us to give our all in the pursuit of it. That it requires and receives our honest effort and our honest dealings with our customers. No shortcuts. No hedging.

This is what I mean by “Serve with Integrity” and I think our customers will admire us for it and want to work with us.

The Meaning of Location, Location, Location

I've seen buyers get so excited over the updates in a home that they forget about the first rule of real estate: location, location, location.

Generally, buyers will get the best return for their money if they buy the worst house in the best neighborhood. If a cosmetic fixer needs carpeting or the floors refinished, buyers might receive a discount on price. Plus, then buyers can choose carpeting or floor finishes that match their own tastes and not that of the seller. On the other hand, buyers will most certainly face a harder time selling down the road if they buy the best house in the worst neighborhood.

Yet, many buyers gravitate toward the right homes in the wrong locations. After looking at a few dozen homes, it's easy to get swept up in the excitement of finding that perfect home. That perfect home might have the right configuration and plenty of amenities but if it's in a bad location, you might want to consider passing it by. Regardless of its price . . . read more about Location, Location, Location.

My Real Estate Website Doesn't Produce Leads

This seems to be the number-one concern among real estate agents these days ... a website that doesn't produce any viable real estate leads. Or one that doesn't produce any leads at all.

Sometimes the answer is obvious. Other times, it calls for some speculation. For example, some websites have such obvious problems that you can spot them at a glance. Maybe there are no lead generation systems in place at all, or perhaps the website doesn't function properly.

In other cases, however, the website may appear to be well-designed from a lead generation standpoint, but it still does not produce any real estate leads. This is a tougher scenario to evaluate.

In the latter case, the lack of real estate leads could just be because of the market. After all, if there's not a lot of real estate activity in your area, you can't expect a steady stream of leads to pour through your real estate website. In many cities -- from Nashville to Tucson and elsewhere -- this is what we are seeing right now. And in this case, you simply have to look at your traffic stats. Are you even getting any traffic on a daily basis? If not, you have no hope of producing real estate leads from the website.

If your stats reveal a steady stream of website traffic day in and day out, but you are not getting any leads from the website, then there is something lacking from a lead generation standpoint. In such cases, these are the things I usually troubleshoot first:

Does the website offer any reason why people should contact the agent, or fill out the form, or whatever the conversion goal is? If not, this needs to be addressed first and foremost.

Are the conversion points easy to find, or is the real estate website in such a messy state that visitors can't find their way around? This is a usability issue, and one of the ways you can spot it is through high percentages of people who hit the home page only to leave right away (without clicking further into the website).

These are the things I would start with when troubleshooting a real estate website with good traffic levels but poor lead generation. Often, it's just a matter of cleaning things up and presenting something of value that people would want.

I also see a lot of those "Free Reports" offered on real estate websites, presumably for lead generation purposes. Many of the so-called reports I encounter are poorly positioned in several ways. First of all, they will consist of information the web visitor can easily find elsewhere online. For example, "Top 10 Tips for Buying a Home" is so worn out and overused that it's sad really. Without much effort, I could probably Google that phrase and find it plastered all across the Web.

So who is going to offer their email address in exchange for a generic article they can find on thousands of other websites? Consumers are web-savvy these days, and they know how to ignore useless info and find the good stuff.

So let's say you took the "free report" concept and injected it with steroids and other performance-enhancing substances ... metaphorically speaking of course. Let's say you created an actual e-booklet, in PDF format. And let's say that it was all about the local real estate scene in your area. Suddenly, the booklet becomes something that people cannot find anywhere else, thus the perceived value of the item increases.

Now let's take this further and hire a graphic designer to create a "virtual cover" for the booklet -- one that you can use to promote it on your website. People believe in what they see, so sometimes a little visual entice is all it takes to get people to starting filling out those web forms.

But we're not done yet. Let's create a press release and distribute it online to announce this insightful new guide to the real estate scene in [your town] ... jam-packed with recent sales statistics, development news, residential reports and more. A must-read for anyone planning to buy a home in [your town].

I've shared enough. You get the idea. But suffice to say these are only steps 1 through 7 of about 15 steps I would take ... if I were serious about generating leads through my real estate website. I offer these kinds of ideas and strategies all the time, but very few people implement them. And do you want to know why?

Because nobody ever said lead generation was easy!

Those who put in the extra effort will reap the extra rewards. And those who keep peddling their "Top Ten Tips for Buying a Home" will probably find another line of work at some point.

Finding Your Dream Home

Many people believe that it is impossible to find the home of their dreams unless they have very large amounts of money available to buy the home that they want. This common belief is not necessarily true, if you know the right places to look, you will be able to find your dream home and not spend a fortune on it.

If you want to invest in real estate and stop wasting your money paying rent, it is possible and you can even find a home that will cost about the same as your monthly rent payment. All you have to do is find the right resources and know how they will work together. One place that you can look is at home auctions or in areas where there have been bank foreclosures. Many of these homes will be ones that the previous owners could not pay for and the bank was forced to foreclose on them. Because there is no one paying for the house, the bank is having to pay for it and often times the bank will lower the price of the home so that they will not have to keep paying for it.

If you do not know where to look for bargain homes, you can just browse through locations and do some investigating on your own. Many times, the Internet and local real estate magazines are designed to show you the market and they will also include the lowest priced homes in their listings. If you search local resources, you will be able to compare the homes that are available and you will also be able to see the homes that are lower priced because of things such as foreclosures.

When it is time to look for the home of your dreams, you do not even have to set a foot outside. You can instead search what is available using the Internet and real estate magazines and find a home that will fit both your individual style and your budget.

Mortgage Meltdown Has More to do with Fraud than Anything Else

Recently, I was discussing the mortgage meltdown with a reporter who made the mistake of asking me who or what I believed was primarily responsible for the mortgage meltdown and housing crash of 2007. My reply consisted of a single word: “fraud.” My conservative estimates target fraud as being responsible for at least 80% of the problem, and most of this fraud was perpetrated by industry insiders (both in the Real Estate and mortgage loan industries) on the consumers.

Of course, there is plenty of blame to go around. If consumers were not so greedy, using their homes like ATM machines whenever they needed an equity fix, perhaps the problem would not be so widespread and so deep. If fiscal conservatives were in charge of running the government at federal, state, and local levels, maybe we would not have a culture built around deficit spending. If politicians hadn’t agreed to ship manufacturing jobs overseas and open our markets to free foreign competition, maybe Americans would have more money to make house payments. If we had universal healthcare coverage, people wouldn’t end up in bankruptcy whenever they needed surgery.

I could go on, but from what I have witnessed in the Real Estate and mortgage loan industry comprises a concerted effort on the part of industry professionals and insiders to fleece the consumer. Cash back at closing schemes caused a huge part of the problem. When homeowners purchased their homes, many of them would borrow in excess of the property’s true market value–sometimes hundreds of thousands or even millions of dollars more than the home was worth. They were then stuffing the proceeds in their pockets as if they had earned it.

Some might say that in this case, consumers are clearly at fault. After all, they were the ones who benefited most from the scam. However, in a huge majority of cases, professionals were advising these homeowners, telling them that this was a perfectly acceptable practice, that “everyone was doing it,” and that you were almost stupid for not doing it. The professionals would even conspire to defraud the banks, lining up appraisers who were known to appraise houses at whatever target value the buyer, seller, and agent decided. In return, the appraiser won more business, and the loan officer and real estate agent “earned” higher commissions. Everybody wins!

Another tactic that mortgage lenders used to suck in clueless buyers consisted of selling consumers on adjustable rate mortgages (ARMs) that had teaser rates. When housing prices were spiraling into the stratosphere, fewer and fewer people were able to afford to take out a conventional mortgage to purchase a home. They simply didn’t have the income and savings required to obtain loan approval at the current interest rates. Instead of denying these high-risk lenders loans, the industry simply lowered the initial interest rate, so more people could qualify. Loan officers downplayed the fact that the interest rates would probably rise significantly months or years down the road. They told the buyers that they could simply refinance if the rate was too high. Unfortunately, when credit tightened, homeowners could no longer refinance with a conventional mortgage. Foreclosure became imminent.

During the big party when housing prices were on the rise and interest rates were dropping, mortgage brokers and the loan officers who worked for them, turned away few if any applicants. If you didn’t make enough money, they would encourage you to fudge the numbers on your loan application. To boost your credit score, you could simply piggyback on someone else’s credit card (this little loophole has been fixed). In some cases, the loan officer would simply have the applicant sign a blank loan application, so the loan officer could fill in the required information later–information that would be sure to win the applicant loan approval.

And this is just the day-to-day fraud. Professional con artists are also responsible for boldfaced scams that have ripped off homeowners and lenders alike. Armed with the Internet, technology, and know-how, these fraudsters could produce forged paperwork to score millions of dollars in mortgage loans for homes they never even bought.

What we are seeing now is fraud fallout. The system has been bruised and battered for too long. The very professionals who rely on the industry to feed them and their families have caused the problem, and many of them are now nowhere to be found. They scammed the system and left hard-working Americans to pick up the tab.