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Tuesday, May 25, 2004

Fort Worth, Texas Home Sales Soften, But Values Brighten

by Blanche Evans

Rising interest rates have slowed housing sales slightly in Fort Worth, Texas, but local Realtors say this is the place to put your money for a terrific place to live.

"Ft. Worth is the cultural and commercial hub of Tarrant County," says Realtor Gladys Vance. "Given the name of "The City Where The West Begins" by the famed Will Rogers, it embraces its cowboy heritage while moving forward into the 21st century with a revitalized downtown and cultural attractions."

Explains Vance, "Downtown's famous Sundance Square offers a unique combination of historic buildings, restaurants, theaters and sidewalk cafes. With a population of about 500,000 friendly people, it ranks among the top cities in the nation to live and work according to Fortune and Money magazines.Thriving Industries such as Lockheed Martin Aircraft, Bell Helicopter, American Airlines and Radio Shack are an indication of the caliber of corporations that help Ft. Worth grow. Cultural attractions include The Kimbell Art Museum, The Ft. Worth Museum of Modern Art, The Bass Performance Hall, The Ft. Worth Symphony, The Van Cliburn International Piano Competition and the Ft. Worth/Dallas Ballet just to name a few. The FT. Worth Stockyards National Historic District on the North side of the city offers a variety of attractions such as Billy Bob's Texas, billed as the largest honky tonk in the world, The White Elephant Saloon and more than 70 shops, restaurants, galleries and saloons. In January of each year, the world famous Stock Show and Rodeo is presented at the Will Rogers memorial Center."

"Fort Worth is a beautiful city with an emphasis on culture and sophistication," agrees Realtor Susan Pace. "It's an absolutely great city in which to live. Every possible option imaginable is available to the lucky buyers who choose Fort Worth. Also sellers have a strong market in which to market their properties due to the popularity of the area. A world-famous zoo, world-famous cultural events, and a western flair for the city offer a colorful array of experiences to the citizens. Fort Worth is the home of TCU and other great educational institutions and is highly regarded as a business destination for the quality of life offered. Downtown Fort Worth is noted for it wonderful restaurants, shopping, and theatres, and the entire area features other great shops and eateries through out the metroplex."

Says Realtor William Taylor, "Mortgage rates rose in May to low sixes, and we can anticipate good rates until August when the experts say they will jump one to two points. ARMs are at an all time low. COFI index loans are the best of all ARMs now with no hits up to one million."

Published: May 25, 2004

Blanche Evans is the publisher of Agent News and the associate editor of Realty Times, the Internet's largest independent real estate news service. She is the author of two best-selling real estate books: The Hottest e-Careers In Real Estate, Real Estate Education Company, an Internet marketing primer for real estate professionals, and homesurfing.net: The Insider's Guide To Buying And Selling Your Home Using The Internet, Dearborn, a consumer homebuying and selling guide. In 2000, she was recognized by the editors of REALTOR(r) Magazines as one of the "25 Most Influential People In Real Estate," and in 2003 when the "Most Influential" list was updated, she was recognized as one of nine "Notables." She is also a frequent contributor to "Your Money" on CNN fn.

Copyright © 2004 Realty Times. All Rights Reserved.

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Consider Affordability When Changing Provinces

by PJ Wade

Although real estate and construction can drive the Canadian economy, a good real estate market and vibrant home building climate do not automatically ensure the strong provincial economy necessary to support individual job, career and business activity. When considering a move to another province, prudent real estate buyers should evaluate economic patterns for the region rather than merely considering the current real estate snapshot of the selected community.

Affordability of housing may be an excellent reason to select an area, but long-term affordability is vital to successful real estate ownership. Provincial economies rise and fall along with changing patterns of affordablity so selecting an ideal relocation site for improving employment, starting a business venture or embarking on retirement can be a challenge.

This year offers different challenges across Canada as economic patterns continue to change. British Columbia remains the least affordable region to own a home with an affordability index of 41.9 per cent while Alberta is currently considered the most affordable province in which to live. According to RBC Economics' latest Housing Affordability Index, which measures the proportion of pre-tax household income needed to service the costs of owning a benchmark detached bungalow, affordability has improved in Alberta this year, moving to 25.8 per cent from 27.2 in the previous quarter. This translates into an estimated monthly payment of C$1,174 for principal, interest, tax and utilities, compared to a national average of 31.4 per cent or C$1,254 per month for the first quarter of 2004.

According to a recent provincial economic forecast, Alberta's economy remains healthy despite downward pressures on the agriculture and cattle industries. Real GDP is expected to grow by 3.3 per cent this year and 3.2 per cent in 2005. Soaring oil and gas prices combined with a depreciating Canadian dollar are giving the economy a boost.

"Alberta's economy remains strong with solid employment gains, strong consumer and retail sectors, healthy income growth, the lowest unemployment rate and the highest saving rate of all provinces," said Derek Holt, assistant chief economist, RBC Financial Group. "However, the lack of rain in some of Alberta's crop growing regions and uncertainty surrounding mad cow disease and the related export restrictions to the U.S. present significant challenges."

While Alberta combines affordability with a strong economy, there are significant regional variations across Canada. Last year's growth leaders -- Saskatchewan and Newfoundland and Labrador -- will likely experience the greatest economic slowdown of all provinces this year. Saskatchewan faces the biggest economic slowdown of all provinces due to a renewed threat of drought-like conditions, fiscal restraints and ongoing net outward migration, cancelling out gains from potash production and the energy sector.

Manitoba is expected to experience the largest increase at 4.1 per cent, up substantially from 1.4 per cent last year, due to crop conditions, net migration, and fewer constraints on demand for hydroelectricity. Although limited inventory caused sharp increases in 2003 home prices, housing affordability has improved to 29.8 percent this year due to lower borrowing rates and improving income growth. As the year progresses, an increased supply of new and resale homes is expected to ease market conditions and help moderate price growth.

British Columbia, where ownership affordability is the lowest, has previously been at the back of the pack, but forecasts project it will be third only to Manitoba and Alberta as a growth leader this year. BC's economy is improving due to fiscal prudence over the past three years that has given BC the second lowest provincial debt-to-GDP ratio after Alberta. In addition, net migration inflows are on the rise and the province's energy sector is a significant source of growth.

When evaluating a new province and its real estate market, explore employment growth, unemployment rates, retail sales, housing starts, international exports, manufacturing output and the consumer price index. A lot for you to take on but government agencies like Statistics Canada and Canada Mortgage and Housing Corporation and private companies like RBC Financial Group and real estate brokerages regularly provide ongoing financial forecasts for provinces, regions and cities across Canada.

The more you know about the economic environment you are buying into, the more able you'll be to improve your economic future in the process.

Published: May 25, 2004

PJ Wade, The Improvement Coach, is a business strategist and an internationally recognized authority on retirement and the Maturing Marketplace (= baby boomers and seniors). PJ's firm, The Catalyst, provides strategic communication and educational services to the financial, healthcare and housing sectors - and the clients they serve.Author of 6 books and over 850 published articles, PJ's current books are Have Your Home and Money Too, "the owner's manual for your home," (Wiley, ISBN 0-471-64400-5) and Caring for Your Aging Parents (Coles, ISBN 0-7740-0613-7). PJ is a widely-known and often-quoted financial commentator and a popular strategic speaker. For more, visit http://www.thecatalyst.com.

Copyright © 2004 Realty Times. All Rights Reserved.

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Where Is Homestore's Future?

by Peter G. Miller

More than two years have passed since Mike Long and others replaced the original leadership at Homestore, the company that operates Realtor.com under a license from the National Association of Realtors.

Since "new management" joined the company, it's fair to say that Homestore has earned a number of victories: The huge dispute with AOL was resolved with Homestore still having access to AOL subscribers, no accounting oddities have been reported by the SEC, a settlement with the California State Teachers' Retirement System has been completed, and the stock is once again listed on NASDAQ. Moreover the company exists, a suprise to some given the scope of its past problems.

The achievements above are significant and should be recognized; in one sense they are: Homestore shares trade above $4 as this is written -- 13 times higher than in October 2002 when share values dipped to 29 cents. Alternatively, share values are far below the $20 IPO price and nowhere near the $122 seen in January, 2000.

And yet, how do we rate successful companies? We surely look at profits and promise, and in terms of Homestore what can be seen is murky at best.

In the last quarter, which ended March 31st, the company reported a net loss of $5.1 million -- far better than the three previous quarters when losses were roughly $12 million (December 31st), $30.5 million (September 30th) and $91.5 million (June 30th) -- but still a loss.

The lack of profits cannot continue interminably for Homestore or for any other company, a fact which brings us to the magic question: What steps can Homestore take to solidify its operations, to make a profit?

Business Week, in its issue of May 17th, quotes several positive remarks from securities analysts. One reason: a predicted shift of ad dollars from newspapers to the Internet. (See: "Homestore: The Hottest Thing In Real Estate")

Alternatively, there is the view that Homestore might find greater success by evolving into a smaller company with fewer products and services, and also fewer employees and costs. This is an awful choice for the people who have stayed with the company, but is it unrealistic?

Another idea is that Homestore could develop new products and services that would attract more brokers and agents and thus produce new and additional revenues.

The buzz at the just-concluded NAR mid-year meeting in Washington was that perhaps Homestore should be allowed to develop referral income from its listings, as other online firms are trying to do but something now prohibited under Homestore's operating agreement with NAR.

As Homestore explained in a 2000 Securities and Exchange Commission filing, "we may be restricted in our ability to create additional web sites or pursue other lines of business that engage in displaying real property advertisements in electronic form by the terms of our agreements with the NAR."

The result is that Homestore is stuck with headaches and limitations which date back to its inception, limitation accepted in exchange for the right to operate Realtor.com. One result is that Homestore cannot now compete for the referral revenues going to other companies and at the same time it cannot perpetually sustain losses.

What's missing here is something new and different, something that would both raise dollars for Homestore and yet position the company as the broker's advocate.

It's difficult to see any circumstances under which referral fee restrictions will be abandoned -- unless Homestore trades something of significant value to the brokerage community.

It turns out the Homestore may have something to put on the table: Lower referral fees. If price competition is good for brokers, why not for online referral companies? If one company can provide actionable leads at a substantially lower cost, would it not attract more business and revenue? Would not all online lead services lower prices to compete?

If brokers are going to pay referral fees instead of investing in their own websites, their own local marketing and their own names, if brokers are going to pay referral fees at all, then like much else on the web referral costs should fall with enhanced competition.

In effect, it may make sense for Homestore to seek an end to referral-fee restrictions in exchange for an agreement to provide discounted referral services. Discounting works for Wal-Mart and it could also work for Homestore. NAR, for its part, could extend referral-fee restrictions on a quarterly basis to assure that prices do not rise over time.

Published: May 25, 2004

Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Mr. Miller welcomes your questions, comments, and news releases via e-mail at peter@ourbroker.com.

Copyright © 2004 Realty Times. All Rights Reserved.

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