Is Your Home Worth What You Paid For It?

There were a million real estate horror stories in the Metro-plex in the 1980s. These are two of them.

Mike Grossman bought a house in Dallas’ Bluffview area for $48,000 in 1973. A year-and-a-half later he sold it for $70,000 the first week it was on the market. In 1984 a woman bought the house for $385,000. Over the next four years she put about $60,000 of improvements into it. In 1988 she put the house on the market for more than $450,000, then cut the selling price several times. The house sold in 1990 for about $290,000.

On the same street a builder bought a house in early 1985 for $250.000. He tore it down and built a grand two-story house, which he listed at $875,000 just before the recession hit the Dallas area. A year later he dropped the price to $575,000. The house was eventually foreclosed on and sold for $255,000.

If these are the kind of tales that have had you cowering in your house, wondering if you’d ever get back what you paid for it, you can come out now.

The seven-year slide of residential real estate prices has bottomed out, mortgage rates are attractive and there are signs of an upswing in the Dallas home market-if only a slight one.

So what’s a homeowner to do? Sell? Trade up? Stay put?

A lot depends on where you live. In some parts of the Metroplex, existing-home prices are rising. In others, particularly those with new homes, sales are booming. For many neighborhoods, a rebound will have to wait for the Dallas economy to improve.

What you really need to know is: How did my neighborhood hold up?



Looking at the Big Picture

First you have to consider what’s going on nationally. Compared to the rest of the U.S., the Dallas real estate market is in good shape. “We’ve gone through all the foreclosures and bank consolidations that other parts of the country are just now going through,” says Jim Moncrief, with M/P1-” Research. Inc. “We’re out of that cycle. Dallas is on the way to recovery.”

He’s not the only optimist. “We’re on the verge of an upsurge in (he Dallas housing market. We’re poised to take off once the national economy starts heating up.” agrees Paul Waddell, executive director of the Bruton Center for Development Studies ai the University of Texas at Dallas.

Some of the good news is showing up in the middle pricelevels, M of the third quarter of ’92. homes in (lie $120.000 to $250.000 range sold best, with sales increasing 13 to 34 percent from the third quarter of s9″i, according, to a study ! M/PF Research, which prepares a quarterly analysis of the Dallas real estate market using data from the Multiple Listing Services- (MLS). Sales of homes priced $80.000 to under $120.000 increased 3 percent while those priced under $80.000 fell 6 percent from a year earlier. High-priced homes, from $350,000 to $500.000. fell JO percent for the period.

The hottest areas-those where existing-home sales’ are brisk- include Pre&bo? Hollow. Lake Highlands. Park Cities. East Dallas. Piano. Garland. Lewisville, Coppell. Northeast Tarrant County, Ellis County, Sunnyvale Rockwall County ami along me “Preston Corridor” from Dallas up through Piano as far as Frisco. This is according to M/P1; and residential real estate agents.



Hot Neighborhoods Inside the Loop

Dallas actually has two real estate markets: one inside the LB J loop, the other outside the loop. Inside LBJ are most of the older, established neighborhoods, with a sprinkling of new-home development. Outside LBJ is where most of the big population growth is taking place and where the majority of new homes are springing up.

While most real estate studies do indicate how broad areas are performing, they don’t tell you about the hot pockets scattered throughout the city. The following are some of the neighborhoods inside the LBJ loop that a cross section of real estate agents consider to be hot pockets.

●In Oak Cliff: Kessler and Stevens Park, Kessler Plaza, Winnetka Heights, Kidd Springs, Kings Highway and Kiest Park.

●In South Oak Cliff: Glen Oaks, Wynne-wood Hills and Glen Hills, also known as the Red Bird area.

●In South Dallas: The South Boulevard-Park Row area.

●In Southeast Dallas: Buckner Terrace, Edgewood and Prairie Creek.

●In East Dallas: Forest Hills, Casa Linda Estates, Lakewood and Hollywood Heights.

●In Northeast Dallas: Merriman Park. White Rock Creek, Oak Highlands, Town Creek and Pebble Creek.

●In Northwest Dallas: Bluff view. Green-way Parks, Sparkman Club, Withers and Preston Hollow.

CASA LINDA IS A GOOD EXAMPLE OF a comeback neighborhood. In East Dallas near White Rock Lake and bounded by Garland Road, Peavy, Alta Mira and the railroad tracks, Casa Linda has many gingerbread-style homes with Austin stone, hardwood floors and large, tree-filled lots. The asphalt streets, absence of curbs and the light traffic lend a quiet, country feel. But many of the two- and three-bedroom homes, built in the 1940s, need updating.

That is changing. Younger families are moving in and fixing up or adding onto the existing homes. Casa Linda Shopping Center, which sits in the middle of the neighborhood, changed hands in 1989 and recently was updated.

“It has always been stable, but it became a sleepy area, kind of going down,” says Jeff Coats, a sales agent with Re/Max. “Now that more young professionals are moving in, there’s a revival in the area.”

Whether they are undergoing a revival or have maintained a solid standing, one thing the “best” Dallas neighborhoods have in common is a sense of identity. It may be a church or a great school that defines a neighborhood, such as the areas around Turner Elementary in southwest Oak Cliff, Kramer Elementary in northwest Dallas, Greiner Arts Academy in Oak Cliff or Lakewood Elementary. A neighborhood club, as in the Sparkman Club Estates, can unify an area and create a cohesive feeling where neighbors feed your dog when you’re out of town and bring over a casserole when a new family moves onto the block.

It may be the historic nature of the area that breeds a protective feeling among the residents and spawns neighborhood projects and activities. You see this in areas like the South Boulevard-Park Row historic district in South Dallas, Swiss Avenue, Munger Place, Winnetka Heights, the Kings Highway neighborhood in North Oak Cliff, and in Hollywood Heights.

Efforts to preserve the authentic architecture of die prewar Tudor cottages of Hollywood Heights have brought this East Dallas neighborhood together. The Hollywood Heights/Santa Monica Neighborhood Association pushed the city to designate the area a Conservation District, which means any renovation or new home must be in keeping with the style of the older homes.

“The neighbors sense a bond because of the architectural uniqueness of the area,” says Pat Spillman Jr., president of the neighborhood association. “We are a very activist association representing about 700 homes. We have senior citizens, young professionals, and we’re a racially mixed neighborhood. Politicians and city board members come out to talk to us. We have block parties, an alley brigade that cleans up trash in the alleys, planting projects, a monthly newsletter.”

“There is a lot of good karma in Hollywood Heights. It is a real live neighborhood,” says Clarke Gillespie, a real estate agent with Henry S. Miller and a resident. “You can walk out in your front yard and see 10 or 15 people out talking. It is neat.” Home prices, which range from $70,000 to $170,000, are lower than they were in the mid ’80s, but are inching back up.



Outside the Loop

While the real estate market in Dallas proper is moving at a steady trot, outside the LBJ loop sales are galloping. The most active area for single-family home sales is in the crescent stretching from Southwest Dallas County, including Duncanville, DeSoto and Cedar Hill, over to south Grand Prairie, Arlington, north Irving, northeast Tarrant County and the mid-cities, up to Flower Mound, Coppell and Carrollton, across Addison and Far North Dallas, Piano, north Garland and Rockwall.

“This has been the fastest growth area over the last decade,” says UTD’s Waddell. Among the reasons families are opting to move to these satellite cities are frustration with DISD schools and an abundance of available land where developers are building reasonably priced new homes.

This crescent is where two-thirds of all the new housing in the Dallas area is going up, according to data from Real Estate DataSource, a Dallas-based research company that tracks local construction trends.

“Even if you look only at Dallas, not the surrounding cities, you can see where most of the building is concentrated,” says Jody Reese, a partner with Real Estate Data-Source. He says that in the city of Dallas 676 homes were built in 1992. Of that total, 542 homes were built north of LBJ.

Reese points to Addison as a remarkable new-home market. In 1990 there were 16 new homes built. In 1991 there were 94 homes built, and 251 homes went up in 1992. Then there’s the Piano boom, leading the Dallas area with 2,008 housing starts last year. But the new-home market is putting a damper on the existing-home market in Piano, where sales are down 13 percent from a year ago.

In the Dallas area as a whole, builders received 12.987 permits for single-family homes for the year ending in October 1992, a 32 percent increase from 1991. New-home sales were up more than 30 percent in 1992 and projections for ’93 are a healthy 10 to 12 percent over *92.

“I haven’t seen a new-home market this rational in the last 20 years,’1 says Bob Gass, president of Real Estate DataSource. “This isn’t a boom market, but the good news is most builders are selling houses before they build them, and they’re selling a lot.”

During the speculative, risky home building market of the mid ’80s. housing starts were high. In 1985 there were 30,000 starts. Then, from ’85 to ’90 the number of stalls dropped to 10,000 per year,

“Most builders here have been bludgeoned in recent years. Going from 30,000 units to 10,000 units in four to five years has taken the industry to its knees,” says Gass. “Now the situation is returning to normal, mainly because the builders and lenders have learned from past mistakes.”



Where Are We Now?

Home prices depend on the neighborhood and the condition of the home, but analysts say Dallas residential real estate has leveled off to a fair market value. Prices continued to slide in about half of the residential areas in and around Dallas through the third quarter of 1992. But if you look at the overall picture, there was a 4 percent increase in median home sale prices between October 1991 and October 1992, according to MLS reports.

As home values improve, home selling activity is stirring. Through mid-November of ’92 almost J 7.000 existing homes were sold in the greater Dallas area. That’s a 3 percent jump in sales over 1991.

Home prices are among the lowest Dal- i las has seen in almost 20 years, and reduced interest rates are making mortgage costs ; attractive. So real estate agents and new ; home builders are expecting once-hesitant renters, home buyers and sellers to get back in the market this spring.

Add another word to the old real estate advice of “location, location, location”- timing.

“Timing is more important now. And right now, what we’ve got is a financial solar eclipse in the real estate market. It only happens once every so many years that the low home prices and the low interest rates run parallel,” said Antonio Matar-ranz, owner of Avangard Real Estate Services in Dallas.

A recent study of the Dallas County Central Appraisal District, prepared by UTD’s Bruton Center, concludes that the Dallas housing market has begun a modest recovery. “At its lowest point in late 1990, the market had lost almost 20 percent of its value in nominal terms, and almost 30 percent in inflation-adjusted dollars. By the third quarter of 1991. however, almost 5 percent of that loss had been regained;’ the study stated.

“This is a sign of a stable real estate market, which is a sign that the Dallas-area economy is also stabilizing,” says Waddell. But M/PF’s Whitten cautions that may not be enough for people to leap into the real estate market. “The residential real estate market is going to recover only as fast as the Dallas economy, and the Dallas economy mirrors closely the national economy.”

A lot of people held back home buying or selling during the first half of 1992 because of uncertainty about the economy. Home sales dragged as sellers waited for prices to go up. Other potential home buyers were waiting to see the outcome of the presidential election. Homeowners were stampeding to refinance homes. There was concern that the current leveling out and upturn in residential real estate sales and prices might be a hiccup, and the market might be in for yet another slump.

“In the early part of ’92 everybody sat tight, waiting. There was talk interest rates might go even lower. Tons of people refinanced their homes, opted to remodel or just stay put. The market was not moving,” says Peggy Albers, formerly a Dallas real estate agent, now a marketing representative for Fidelity National Title. “By late July through September buyers started coming back. Our office has seen a big jump in home sales both existing and new.”



It’s Still a Buyer’s Market

The current market continues to favor the buyer. As of November 1992, the existing home inventory in the Dallas area was 14,804. While the market is not as glutted as it was a few years ago, there is still an ample selection, resulting in stiff competition among sellers.

’’The real estate market is a different story than it was 10 years ago. To sell a house in this market you have to price it right and you have to get it in prime condition,” says Martha Morguloff, a longtime Dallas real estate agent with Ebby Halliday. “A bucket of paint is worth $5,000. The house needs to be spotless-lots of light, a trimmed yard with blooming plants-to compete.’”

She cites a home in Prestonwood that listed this summer for $189,900. ’it was priced much higher than the comparable houses in the area. It was updated and the couple put in a pool, but we still thought it wouldn’t sell at that price. It sold for $185,500 in nine days. It was spiffy, polished. That’s the way to sell a house today.”

Dallas-area homes sat on the market for an average of 142 days in 1992, about the same as in ’91, according to MLS reports. But these figures are difficult to track since each time a home seller changes brokers, the number of days on the market returns to zero.

“Half of the homes sell in 30 days and the other half sell in about a year. The rule of thumb is that if the house is priced well and in good condition, it is going to sell faster,” says Dabney Tompkins, a sales associate with Richardson Group Realtors and chairman of the Greater Metro MLS. “A listing well priced is a listing half sold.”

For buyers, one of the most baffling questions is how to determine the stability of a neighborhood.

David Fair, with Commonwealth Title, suggests buyers compare the asking price to the selling price of the homes that have recently sold in the area. “Are the sellers getting their asking price? This is the ultimate test of value.”

“If a bank or a real estate office goes up near a neighborhood, that’s a good sign they’re expecting to do plenty of business in that area,” says Albers.

Missy Vanderbilt, a real estate agent with Re/Max Associates of Dallas, says, “Buyers who want to get into a hot neighborhood but can’t afford the location might look around the fringes of that neighborhood. There is a good chance the values will eventually ripple out to your property.”

She also recommends that buyers, even those without children, consider the quality of the school district. “If an area is known for good schools, this is a great sales point and can help when it comes time to sell a home.”

Bargain Hunting

As for tips on where to look for bargains, most real estate observers say the foreclosure days have pretty much fizzled out. There are still scattered HUD homes available, but if you’re considering one. do it with your eyes open. Some of them are in such disrepair that they are not worth it, but others can be a good deal.

“1 think it is a real negative to have a lot of HUD homes in a neighborhood. Look what happened to the area northwest of Red Bird Mall,” says Tompkins. “The builders who constructed the $85,000 homes in the ’80s financed them with negative amortization loans that gradually drove the loan balance up. This problem was compounded by the decline in housing values in the area. The entire neighborhood went into foreclosure. Now those homes are on the market for $40,000 and $50,000.”

But. Tompkins adds, this area now is a real bargain.

A bargain depends entirely upon a buyer’s circumstances and preferences, but following are a smattering of areas that real estate agents, builders and real estate watchers consider a good deal.

●Southwood Estates, southwest of Kiest and Hampton in Oak Cliff-$50,000 to S90.000; well maintained, quality homes.

●Elmwood, in Oak Cliff, on either side of Edgefield, north of Illinois-$45,000 to $65,000; small, charming older homes.

●The Red Bird Area northwest of Camp Wisdom and west of Westmoreland- $40,000 to $50,000 HUD homes.

●South Boulevard-Park Row Historic District in South Dallas-huge, grand old homes for $70,000 to $90,000.

●Lower Greenville Avenue in East Dallas -$30,000 to $60,000; great re-dos and rentals.

●Pocket between Skillman and Abrams, south of Lovers Lane and north of Saratoga -larger homes around $130,000.

●Area north of Forest, south of Harvest Hill between Preston and the Tollway in North Dallas-Good buy for a middle income area.

●Hillcrest Homes and Spring Valley Park, north of LBJ-$80,000 to $ 150,000.

●Chapel Downs in northwest Dallas near Walnut Hill and Webb Chapel-“a good deal for the money,” in the upper $80s and $90s.

●Piano’s existing homes are priced to move due to the strength of the new-home market.

“But, hey.” says Barbara Smith of Barbara A. Smith Realtors in Oak Cliff. ’The people who find bargains are the ones who get in the car on Saturday and Sunday and just drive around.”