Recon On Vacation
This will be the last edition of RECON this month. Look for your next issue on Oct. 1.

"The sharp changes in the financial markets underscore the stability of residential real estate as a safe choice for consumers," says R. Layne Morrill. "Home ownership should be approached as a long-term investment, providing both equity accumulation and tax benefits over time."

Morrill points out that the recent stock market decline -- triggered mainly by economic woes in Russia and Asia -- has caused investors to put their money into U.S. Treasury bills thereby pushing the bond yields to extremely low levels. Because 30-year mortgage rates generally track the movement of long-term bonds, mortgage rates will likely decline further from already low levels. This will make home financing even more affordable.

"Consumers looking to buy homes are definitely coming out ahead," says Morrill.

He says the true return on a home investment should not be based simply on home appreciation but also on the amount leveraged. Homebuyers typically use their own money to cover only 10 to 20 percent of the purchase price of a home, yet the home appreciation they realize is based on the total value. In addition, homebuyers receive tax benefits for their investments in the form of deductions allowed for mortgage interest and property taxes.

"This leveraging of borrowed funds gives housing a return far in excess of the market's appreciation," says the president of the nation's largest professional association.

The 1998 "State of the Nation's Housing" report from Harvard University's Joint Center for Housing Studies shows a dramatic increase in the rate of return on housing the longer it is held. For instance, the survey shows that the typical homeowner who experiences an annual home appreciation rate of 5 percent and who made a down payment of 10 percent will generally receive a 94 percent return after owning the home only three years.

After owning five years, the rate of return increases to 225 percent and to 623 percent after ten years. For those making a 20 percent down payment and experiencing the same amount of home appreciation, the rate of return is lower but still respectable -- 46 percent after three years, 110 percent after five years and 305 percent after ten years.

In comparing changes in stock prices to changes in housing prices, Morrill says that while the stock market has had wide swings in value in the past 20 years, home values overall have continued to rise steadily.

Between 1976 and 1997, the Standard & Poor's 500 Composite Stock Price Index (S&P 500), a widely accepted measure of U.S. stock market performance, recorded an annual average growth rate of 11.7 percent. Meanwhile, the resale value of homes rose at an annual average rate of 5.7 percent. During four of those years, however, the S&P 500 posted a decrease in overall stock prices while housing prices in general increased consistently. In fact, during that time, the variance in stock returns was more than 13 times the variance in home appreciation at the national level.

"Housing is not a quick-in, quick-out investment," says Morrill. "When purchased for the long term, however, housing is one of the safest investments a consumer can make. In addition to the savings accumulated through a build up of equity and the tax advantages, a home provides shelter. Absolutely no other investment provides that."

Texas had no market in the top 25, but three border communities did make the 25 least affordable metropolitan areas. Laredo was ranked 183, Brownsville-Harlingen-San Benito 184 and McAllen-Edinburg-Mission 187. San Francisco, California, was ranked the nation's least affordable metropolitan area.

The Midwest placed the most markets on the 25 most-affordable list. The South had seven, while the Northeast had four, and the West had just one.

Beaumont-Port Arthur was the highest ranked Texas metropolitan area, coming in at 53rd. El Paso and Fort Worth-Arlington tied for 86th place while Amarillo was rated the 99th most affordable U.S. housing market.

Fewer Texas homes priced less than $80,000 have been sold across Texas in 1998 that at the same time last year. MLS home sales of lower-priced homes totaled 4.8 percent fewer in the first seven months of 1998.

Half the Texas MLS homes sold in July and 47.5 percent sold during the first seven months were priced at $100,000 or more.

Texas Homes Sales Up 19 Percent
COLLEGE STATION, Texas -- Nineteen percent more existing Texas homes have been sold this year than last. Through July, the state's major Multiple Listing Services (MLS) had recorded nearly 99,200 home sales.

Brazoria County had recorded the biggest gain -- a 58 percent increase from 1997. Galveston reported a 42 percent increase. In Paris, home sales were up 31 percent.

Through July, Houston had the most homes sold -- 28,575. Dallas was second with 23,370. Austin's 8,822 sales put it in third place. San Antonio ranked fourth with 7,457 sales. Other MLSs reporting large numbers of sales so far this year include Fort Bend County (3,744), Northeast Tarrant County (3,691) and Fort Worth (3,172).

The smallest existing-home inventory was reported in Irving -- 3.1 months. Garland was a close second with a 3.2-month supply. Plano reported a 3.5-month inventory.

Overall, Texas had a 5.5-month supply of unsold existing homes at the end of July. That was 23 percent fewer than at the end of July last year.

California has the largest Hispanic population -- 9.9 million. Texas is second with 5.7 million. Other states with large Hispanic populations are: New York (2.6 million), Florida (2.1 million) and Illinois (1.2 million).

New Mexico leads all states with the highest percentage (40 percent) of Hispanics in its overall 1997 population. California has 31 percent, Texas 29 percent, Arizona 22 percent and Nevada 15 percent.

Harris County in Texas had the second largest increase in 1990-97. Houston's home county gained 207,261 new Hispanic residents. Only Los Angeles County, California, gained more.

Los Angeles County's total Hispanic population was put at four million. Harris County has the nation's fourth largest total with 852,177.

In its filing, the company alleges that Navajo and the other defendants are conspiring to monopolize the West Texas gasoline market in an attempt to maintain artificially high gas prices there. The lawsuit also accuses Navajo and other defendants of tortious interference with Longhorn's project. Longhorn is converting and extending an existing pipeline from Houston to El Paso to ship refined motor fuel products from the Texas Gulf Coast to West Texas.

Overall, the First American RES report paints a picture of steep home value appreciation rates in the major metropolitan areas of California and New York with the rest of the nation enjoying moderate rates of increase.

So far this decade, a typical U.S. homeowner is likely to have realized a compounded average annual gain of about 2.6 percent in home values, according to First American RES.

The Tenaska Frontier Generation Station is an 830-megawatt natural gas-fired, combined cycle electric generation facility to be constructed near Shiro, Texas, 70 miles northwest of Houston. Tenaska has contracted with Power Team, a division of Philadelphia-based PECO Energy Company to market the plant's entire output in the Electric Reliability Council of Texas and all of the Eastern Interconnect.

The plant is expected to be completed in 2000.

Median Texas Home Price Up 8 Percent
COLLEGE STATION, Texas -- Existing homes sold by Texas Multiple Listing Services (MLS) so far this year have a median sales price of $96,400 -- 8 percent more than last year. Plano continues to have the highest median at $157,400.

Other Texas areas with median home sales prices greater than $100,000 are: Denton ($128,400); Northeast Tarrant County ($123,300); Irving ($121,200); Dallas ($118,000); Austin ($117,400); Montgomery County ($115,200); and Fort Bend County ($113,200).

The Galveston MLS reports the biggest increase in median price -- 19 percent more than last year. Existing Galveston homes are selling for a median of $83,000. McAllen's $76,800 median is 12 percent higher than 1997. Dallas; Lufkin ($72,200); and Odessa-Midland ($73,800) all report medians 10 percent greater than last year.

"There have been substantial changes in the size and composition of households over the past few decades, and income analysts ought to consider the effect of these changes when making statements about growth or lack of growth in median household income," says Jack McNeil, the report's author. "This new research indicates these changes have dampened growth in overall household median income."

Much of the 1969-96 growth in total households is attributed to single-parent and single-person households. These households accounted for 23 percent of all households in 1969 and 36 percent in 1996. Because these households have, on average, relatively low income levels, the net result has been fairly stable overall median income level at a time when most other types of households showed a substantial gain, said McNeil.

For example, the median income of married-couple households with children rose 25 percent from 1969-96. For married households without children, the jump was greater -- 34 percent for households with a householder less than 65 years old and 57 percent with a householder 65 or older.

Other household categories showing a large gain in median income were women less than 65 years old and living alone (35 percent) and men and women 65 or older living alone (63 percent).

Cockroaches move between apartments using construction features such as shared electrical and plumbing connections. Insecticides cause roaches to move out of the treated units into adjacent apartments.

"Residents should insist that the apartment manager and the pest control operator work together and with neighbors to design and conduct an effective control program," says Roger Gold, an entomologist with the Texas Agricultural Extension Service.

Gold urges increasing general sanitation and efforts to keep roaches out. Apartment dwellers can caulk cracks and crevices. Insecticide dust in the wall voids and around plumbing offer more long-term control. Openings where plumbing and electrical connections enter walls can be caulked or plugged with steel wool.

German cockroaches are the most common in Texas apartments, he says. In some areas, they have become resistant to particular insecticides. Gold recommends alternating insecticide products that have different active ingredients. He recommends using a licensed and certified pest control operator whenever possible.

Moving to get a new job remains the most likely reason Americans relocate. Moving to own or to have a larger home remains second.

"You would expect leaving friends and family would deter people from moving," say the Steiners, "but 75 percent in our nation-wide survey said they wanted to escape instead of moving closer."

The survey is conducted online at www.movedoc.com. Independent movers, those who move without the assistance of an employer, evaluate the advantages and disadvantages of the moving process, plus specific reasons they chose their new locations and homes.

Copies of the handbook are $12.95. Call 1-800-444-2524 to order.

Housing Market Sets New Sales Record
WASHINGTON, Aug. 25 -- Sales of existing single-family homes rose once again in July, reaching the highest levels on record, according to the National Association of Realtors (NAR).

The seasonally adjusted annual rate of existing home sales rose 4 percent in July to 4.93 million units, up from 4.74 million units in June. This was 17.9 percent more than the level of July 1997 and surpassed the previous record sales level of 4.89 million units set in March.

"The marketplace is characterized by virtually zero inflation, while employment and economic growth are good," said NAR President R. Layne Morrill. "Mortgage rates are low and consumer confidence is at an all-time high. This adds up to excellent home-buying conditions."

NAR projects a total of 4.7 million existing home sales for 1998. This would be an 11.5 percent increase from the record of 4.22 million sales posted last year.

This year's activity is fueled in part by the increasing number of "non-traditional" households entering the market -- immigrants, singles and older people trading down.

The national median existing home price was $133,900 in July, up 5.8 percent from July 1997 when the median price was $126,500.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.95 percent in July, down from 7 percent in June. A year ago, the fixed-rate mortgage was 7.5 percent.

"Low interest rates and adequate availability of mortgage money continue to boost all sectors of the housing market," said Morrill.

"Preliminary estimates from the U.S. Department of Commerce show Texans' personal income climbed 7.9 percent last year," says Jared Hazleton, research fellow with the Real Estate Center and director of the Center for Business and Economic Analysis at Texas A&M University. "This compares to a growth of 5.7 percent for the United States as a whole."

Nationally, some 68 percent of the 1996-97 personal income change resulted from increases in net earnings by place of residence. In Texas, however, nearly 77 percent of the increase resulted from the rise in net earnings. Dividends, interest and rent were responsible for 17.5 percent of last year's increase in U.S. personal income but only for 12 percent of the Texas increase.

In Texas, 37 percent of the personal income change could be attributed to services, 13 percent to manufacturing and 6.8 percent to finance, insurance and real estate. Texas had nearly 11 percent of the U.S. gain in manufacturing earnings last year.

"Despite its recent stellar performance," says Hazleton, "Texas remains a relatively poor state. Its 1997 per capita personal income totaled $23,656, or 91.2 percent of the national average. However, the 1997 growth was sufficient to enable the state to improve its overall ranking from 31st to 28th."

Texans are permitted to keep more of what they earn that residents in many other states. With a disposable income or after-tax income of $20,868, Texas is at 95 percent of the national average, ranking 23rd among all states.

The U.S. Department of Commerce 1994-96 estimates of personal income show disparities that exist among Texas cities relative to income. Only two Texas metropolitan areas -- Dallas and Houston -- had a per capita income exceeding the 1996 national average. Dallas ranked 29th and Houston 39th among all cities that year.

"Texans may be dismayed to learn that in 1996 the state had five of the nation's poorest metropolitan areas," says Hazleton. "Four cities along the Texas-Mexico border ranked at the bottom of the income distribution. These were McAllen-Edinburg-Mission at 47 percent of the U.S. average, Laredo at 50 percent, Brownsville-Harlingen-San Benito at 51 percent and El Paso at 59 percent."

The October issue of "Tierra Grande" magazine will have details.

"The Dallas economy is strong, although some slowdown in job growth is expected by year's end," says Harold Hunt, assistant research scientist, in an article written for the October issue of "Tierra Grande" magazine. "Total employment has increased by more than 79,000 from one year ago, with the unemployment rate dropping to less than 3 percent for the first time in almost 20 years."

Dallas property values have increased for the sixth straight year, with most taxing jurisdictions expecting 1998 tax roll gains of 10 percent or more. Many office and retail property values are reported to be at or more than their 1984 peaks. Furthermore, a significant amount of the recent tax base increase comes from new construction that adds more than $1 billion to tax rolls.

"A 65 percent increase in suburban Dallas office rents during the last five years has spurred an impressive round of new office construction," says Hunt. "Thirteen million square feet of new office space was under construction in June, according to Jamison Research, up from three million square feet a year ago."

The majority of new construction is occurring in three areas: Far North Dallas, Richardson-Plano and Las Colinas. These also happen to be three of the hottest employment corridors. The Richardson-Plano area continues to benefit from high-tech and telecommunications sector growth. The strength of Las Colinas is in its access to excellent infrastructure as well as the DFW airport. The success of the Legacy Business Park is a major factor that continues to keep Far North Dallas viable.

"With such a rapid increase in construction activity comes concern that too much office space is being produced," says Hunt. "Tenants absorbed 2.6 million square feet in the first six months of 1998, approximately twice last year's level. The overall Dallas vacancy rate at mid-year was approximately 16 percent. Another encouraging sign is that two-thirds of new office space coming on line is already leased."

A complete Dallas market profile is forthcoming in the October issue of "Tierra Grande" magazine.

New Accounting Standard For Certain REITs Unveiled
WASHINGTON, Aug. 19. /PRNewswire -- A new Financial Accounting Standards Board (FASB) ruling first adopted for the second quarter by the REIT industry changes the long-standing practice of reporting income attributable to "percentage" rents evenly throughout the year, the National Association of Real Estate Investment Trusts (NAREIT) announced today.

The new accounting practice mainly affects certain hotel, health care and retail-oriented REITs that customarily lease property using the "percentage" rents approach. For affected companies, this change likely will result in lower quarterly earnings early in the year and higher quarterly earnings later in the year when compared to periods in prior years. However, this change generally should not affect annual earnings reports and does not change the financial condition or earnings capacity of real estate companies that report percentage rents.

A typical homebuyer would save an estimated $122 a year on energy if the 36 states in which they live just upgraded their energy codes to the 1993 Model Energy Code (MEC), states the report "Opportunity Lost: Better Energy Codes for Affordable Housing and a Cleaner Environment."

Of the states that have not yet adopted the 1993 MEC, the report says Texas is one of three states with the greatest potential dollar savings and one of three states with the greatest potential to cut air pollution emissions.

Michael F. Ford, vice chair of NAR's land use, property rights and environmental forum, discussed plans by the Corps of Engineers to replace a portion of the current system of wetlands regulation, known as Nationwide Permit 26 (NWP 26), during testimony today before the Corps. The hearing in Washington is one of several being sponsored nationwide by the Corps to obtain public comment on the changes. The Corps and the U.S. Environmental Protection Agency regulate the nation's wetlands.

The new proposal calls for replacing NWP 26 with several new or modified "activity-based" permits. Currently NWP 26 is set to expire in March 1999. Each of the replacement activity-based permits would be subject to several conditions that must be met for the individual permit to be valid.

NAR supports the proposed activity-based system of NWPs.

"This type of permit rightly places the focus on the activity within a wetland, instead of a wetland itself, thereby allowing for greater flexibility to determine appropriate mitigation alternatives," said Ford.

NAR realizes the vital ecological purposes served by wetlands, including flood control, preventing erosion and providing habitat for wildlife, noted Ford. However, the association is equally concerned with how wetlands policies affect real estate owners. For instance, the Corps is extending the scope of the replacement NWPs to cover all aquatic resources in the United States, creating a much broader regulatory process than simply examining the impact of a particular development activity on a wetland.

Many people dream of living in a tranquil, spacious environment, but enjoy the convenience of being close to the suburbs. The rural housing loans offered through Countrywide are designed for borrowers who enjoy the serenity that country living provides.

One of the greatest barriers to rural homeownership has been saving for the down payment. Countrywide has broken this barrier by eliminating the down payments for rural loans. These products apply to new or existing properties and may also enable borrowers to roll the closing costs into the loan.

"Rural housing loans are unique in that they allow homebuyers with limited cash reserves to purchase an affordable home," said Dottie Sheppick, first vice-president and director of affordable lending. "We can offer affordable solutions for borrowers who dream of living in the country."

Features found in the rural housing loan products include:

• 100 percent financing,
• no down payment,
• no mortgage insurance required,
• low mortgage interest rates,
• gift funds may be applied toward closing costs and
• seller may contribute toward closing costs.

Through July, two areas incorporating counties stretching from Houston to Brownsville reported an active rig count 36 and 40 percent higher than last year. Another region of North Texas along the Red River reported a July rig count 60 percent greater than in 1997.

"The oil and gas industry plays a major role in the Texas economy," says Mark Dotzour, chief economist with the Real Estate Center. "High oil prices and new technological breakthroughs created a period of growth in the industry. According to Baker Hughes, the number of active rigs increased from 239 in January 1996 to a high of nearly 400 in February 1998.

"Since February, falling oil prices have reduced drilling activity substantially with the active rig count standing at 288 in the middle of July -- 18 percent fewer than at the same time a year earlier."

Surging Texas Housing Market Saps Affordability
COLLEGE STATION, TEXAS -- Strongly rising home prices in the second quarter reduced affordability, according to the latest Texas Housing Affordability Index (THAI) released today by the Real Estate Center at Texas A&M University.

The THAI fell to 1.38, down from 1.44 in the first quarter.

"The drop sliced 2 percentage points off the estimate of the proportion of Texas households able to afford the median-priced home," says Jack C. Harris, research economist who monitors housing affordability in the Lone Star State. "Approximately 64 percent of households could buy a median-priced home at current interest rates, assuming they could make a 20 percent down payment."

Texas homes were about as affordable in the second quarter this year as they were at the same time last year. During the second quarter of 1997, the THAI was 1.36 with 64 percent of households able to afford a median-priced home.

However, mortgage interest rates have fallen almost 1 percentage point (7.1 percent for the most recent period) since then. Any savings from lower rates were off-set by higher prices, said Harris.

The median price of $98,200 for the second quarter represents an almost 8 percent increase from the prior year. In contrast, incomes have risen by less than 2 percent.

"The surge in prices has been driven by strong demand," said Harris. "Second quarter sales reported by boards of Realtors in the major metropolitan areas totaled 45,716," said Harris, "a 14 percent jump from the second quarter of 1997."

Markets with particularly high affordability indexes for the second quarter included:

• Palestine with 2.90 (82 percent of households could afford median-priced home)
• Garland with 2.21 (85 percent of households)
• Fort Bend County with 2.06 (80 percent of households)

More than one million senior households are highly likely to seek reverse mortgages in the next five years, or roughly one in four eligible households, says the newsletter, a quarterly publication of the National Reverse Mortgage Lenders Association.

However, Fannie Mae will not touch Texas RAMs under current law. In a recent Real Estate Center survey of Texas banks, no respondent reported having made a RAM -- although a few said they offered them.

"Because REITs must pay dividends equal to or greater than 95 percent of their taxable income to retain tax-exempt status, they have a limited ability to retain funds for growth and must continually raise new funds from investors to grow," notes Wayne E. Etter, a professor with the Real Estate Center and the Department of Finance at Texas A&M University. "If new equity is not obtained, REITs must either use debt to make acquisitions or cease to acquire property.

Investors have supplied REITs with additional equity at a rapid pace because they expect continuing high annual total returns. However, Etter says the annual total return for all equity REITs was negative during the first half of 1998 compared to an average annual total return of 23.6 percent for 1995, 1996 and 1997. Because the annual dividend yield for the first half of 1998 was 6.13 percent, the negative total return indicates that REIT share prices decreased during that time, he says.

Record Year Will Be Bigger Than Projected, Says Nar
WASHINGTON , Aug. 17 -- Sales of existing single-family homes are projected to total an unprecedented 4.64 million units this year, surpassing already high expectations for a strong market, according to the National Association of Realtors (NAR).

As a result, the forecast for resales in 1998 is 10 percent higher than the 1997 total of 4.22 million units.

Dr. Fred Flick, NAR vice president of economic research, said although the market will remain exceptionally strong, home resales likely will level off.

"It appears sales peaked in the second quarter and should gradually ease off of record volumes during the balance of the year," Flick said.

The forecast calls for a 5.4 percent increase in new home sales this year to 852,000 units, also a new record. Housing starts are expected to reach 1.54 million units, up 4.5 percent from 1997. This should be the strongest year for housing construction since 1987 when housing starts hit 1.62 million units.

NAR projects the national median existing home price to rise 5.1 percent in 1998 to $130,400, while the median price of new houses should increase 5.9 percent to $153,400 this year. These projections, which are higher than price increases over the past few years, reflect higher sales volumes in the upper-end of the price range.

"Houston is a strategic market for us because it not only marks our entry into Texas, it provides a platform for our planned expansion into the Southwest," said Andrew C. Florance, president and CEO.

Core Data Service's client base included top Houston commercial real estate firms like CB Commercial, Grubb & Ellis, Moody Rambin, Yancey and Trammel Crow. Nationally, the top 15 commercial real estate firms rely on RIG for their data in markets where they operate. Core Data Services was acquired for $878,000 of RIG's common stock.

Median Home Prices Climb
WASHINGTON -- Metropolitan home prices rose during the second quarter as favorable housing affordability conditions continued, the National Association of Realtors (NAR) said today.

"People are making the commitment to purchase homes for the security that homeownership brings," said NAR President R. Layne Morrill. "Consumers are finding it easier these days to make such a large financial commitment, especially in light of the nation's current economic conditions and the availability of an array of federal and private financing products in today's market."

Morrill noted that federal tax legislation, which took effect January 1, allows first-time buyers to make penalty-free withdrawals from tax-deferred retirement savings for home purchases. This has enticed more buyers into the market and helped boost home prices.

Nationally, the second-quarter median price of a single-family existing home was $131,100. That is a 6 percent increase from the same quarter last year. Medians ranged from $329,400 in San Francisco to $69,100 in Ocala, Florida.

According to the Federal Home Loan Mortgage Corp., the average commitment rate for fixed-rate, 30-year conventional mortgages was 7.21 percent during the second quarter, down just slightly from 7.22 percent a year ago.

The seasonally adjusted annual resale rate for existing single-family homes, townhouses, apartment condominiums and cooperatives nationwide during the second quarter was 5.363 million units, up 16.2 percent from the 4.617 million units sold in the second quarter of 1997.

The strongest year-to-date increase in the resale pace for the second quarter was recorded by the District of Columbia -- 49.3 percent to 20,600 units. Texas was second with a 31.1 percent increase to 373,800 units.

Beginning Aug. 17, selected companies will receive the survey. Answers to the six questions are, by federal law, strictly confidential.

The 12-to-18-month holding period introduced by the 1997 Tax Act is repealed. Gains from selling capital assets held one year or less are still treated as short-term capital gains, generally taxed at ordinary tax rates as they have been for many years.

Capital gains and losses arise from the sale of capital assets such as investment real estate, stocks and bonds. Dealers in the business of selling real estate typically do not benefit from preferential capital gains tax rates because gains from selling inventory (i.e. real estate properties) are taxed as ordinary income.

More on this subject can be found in the next issue of Tierra Grande magazine, quarterly research periodical from the Real Estate Center.

The home landscape requires the largest amount of water in residential areas. In can be conserved if residents support voluntary water plans, such as the one recommended by the city of Amarillo. According to Jim Allison with the Texas Agriculture Extension Service in Potter County, a good management plan involves these steps:

• Do not water during the heat of the day. Water loss is estimated to be as much as 60 percent of the water applied. Automated systems should be adjusted accordingly.
• Water before 10 a.m. and after 9 p.m.
• Do not use sprinklers that spray water high into the air and have a misting spray pattern. n Use sprinklers that have a low-angle pattern and large water droplets.

Statistics show each person uses about 80 gallons of water per day. Toilets account for 45 percent of a home's water useage and bathing another 30 percent. Laundry and washing dishes account for 20 percent while drinking and cooking uses 5 percent.

Because 75 percent of the water is used in the bathroom, Allison suggests limiting showers to five minutes, using water-saving shower heads and turning off water while soaping up, shampooing and brushing teeth. Showers are more efficient than baths.

Open House Not Likely To Produce Buyer
While they are popular with sellers, open houses appear to be losing their appeal among real estate agents. According to a new survey by the Real Estate Center at Texas A&M University, agents know the odds are long that an open house will produce a buyer.

In their 1990 book, "How to List and Sell Real Estate in the '90s," Danielle Kennedy and Warren Jamison estimate the odds are 250 to one that someone attending an open house will buy the home. Agents may still gain from an open house because the event may interest people in other listings or generate new listings from those who must sell before buying. Sellers, however, should not be overly optimistic about results from an open house.

The Real Estate Center survey of Texas Certified Residential Specialist (CRS) showed 97 percent have used public open houses. Only 41 percent of these say the technique helps sell the house. Three out of four (77 percent) agents say most open houses are held merely to appease sellers.

The next issue of Tierra Grande magazine will outline the results of the CRS survey in detail.

"Of the 47 markets we track," says Stephen Rushmore, president and founder of HVS International, "44 showed gains in value." In percentage terms, Long Island, New York, led the list with a 73 percent increase in hotel value.

Los Angeles, San Diego and Fort Lauderdale reported hotel value growth of more than 50 percent. Conversely, hotels in Atlanta, Albuquerque and Salt Lake City lost value, mainly the result of overbuilding.

According to HVS, New York had a 1996-97 gain in value per room of $83,918. San Francisco gained the second most -- $54,926. Houston ranked 23rd with an overall increase of $12,375. Austin added $8,179 in per-room value; San Antonio, $8,109; and Dallas $3,626.

HVS predicts the highest percentage gainers in the next four years will be Los Angeles, Anaheim, Washington, DC, New York City and Long Island.

From 1997-2001, HVS predicts Houston's hotel values will rise 49 percent. However, they see San Antonio's dropping by 6 percent, Austin by 12 percent and Dallas by 47 percent.

The highest per-room hotel values in 1997 were reported in New York City, San Francisco, Oahu and Boston. New York City's value of $275,000 per room was significantly more than any other city. HVS reports the markets where investors can currently get the most for their acquisition dollars are Cincinnati, Detroit and Pittsburgh -- all cities with rooms valued at less than $30,000 each.

To obtain a copy of the 1997 Hotel Valuation Index or for additional information, contact Carolyn Malone at 516-248-8828, extension 240.

The report, The Hispanic Population in the United States: March 1997, includes these highlights:
-- Hispanics represented about 11% of the total U.S. population in 1997.
-- More than half (55.8%) of Hispanics were born in the United States.
-- About 68%t of all Hispanic families were married-couple families.
-- About one-third (35.7%) of all Hispanics were less than 18 years old.
-- Nearly one-fourth (24%) of all Hispanics worked in technical, sales and administrative support positions.

In 1994, approximately 55 million people, or 21 percent of the U.S. population, were poor for at least two consecutive months. In 1993, the figures were 56 million and 22% -- not statistically different from 1994.

"Although the similarity in these estimates of the number of poor and poverty rates may suggest to some that poverty is a chronic condition, the reality is quite different," said Naifeh. "For example, the proportion of people who were poor at some point during one of these calendar years (about 22%) was four times greater than the proportion who were poor every month of both calendar years (about 5 percent). Among those who became poor at some point during the 36 months of interviews, one-half were poor for less than five months."

Homes Selling Faster In North Texas
Existing homes sell faster in Irving and Garland than in any other Texas cities. According to the latest Multiple Listing Service (MLS) data collected on major Texas cities, existing homes in those two North Texas cities are on the market an average of 49 days each. By comparison, the state-wide average is 85 days. Another city in that region -- Plano -- ranks third with an estimated 55 days to sell. Dallas is fourth fastest at 64 days. Median prices for the three cities so far this year are $79,300 in Garland; $120,100 in Irving; and $155,600 in Plano.

Plano had the state's highest median ($155,600) and the highest average ($191,500).

Dallas issued 2,193 dwelling unit building permits in May. Houston issued 1,944. For the year, Houston has issued 9,341 compared to 9,649 for Dallas.

For the year, Houston's issued permits are ahead of last year by 28 percent. Dallas has issued 24 percent more. So far in 1998, Texas total permits issued are 25 percent more than last year.

For one year -- between Sept. 1, 1997, and Aug. 31, 1998 -- a sign two feet by three feet must be placed at each vehicular entry point explaining the significance of the purple paint. The letters in the sign must be block letters at least two inches high.

Because of the required sign at entry points, many Texas landowners have postponed using the purple paint marks until Sept. 1, 1998. At that time, landowners are free to paint without a sign.

Housing Affordability Slips Slightly
WASHINGTON (Aug. 3, 1998) -- Housing affordability conditions slipped during the second quarter but remain near the highest level since the early 1970s, according to the National Association of Realtors.

NAR's composite Housing Affordability Index was 131.1 during the second quarter, 3.8 percentage points off the 134.9 reported in the first quarter. However, the index is 6.1 points higher than the same period last year when it was 125.0.

The index shows half the nation 's households had at least 131.1 percent of the income needed to purchase a median-priced (about $131,100) existing home during the second quarter. In this situation, a family earning the median income of $44,828 could afford a home costing $171,900. This index measures affordability factors for all homebuyers with 100 defined as the point at which a median family has the exact amount of income to purchase a median-priced existing home.

According to the Federal Housing Board, the average effective mortgage interest rate for existing homes was 7.21 percent during the second quarter, down from 7.22 percent in the first quarter and 7.89 percent from the same quarter a year ago. This is a weighted average interest rate between the fixed and adjustable loans, including the cost of points, and represents a bottom-line mortgage cost.

Conditions for entry-level buyers slipped as well. NAR's First-Time Homebuyer Affordability Index declined 2.3 percentage points to 80.5 in the second quarter. This shows a typical first-time buyer household, aged 25 to 44, had 80.5 percent of the income needed to purchase a typical starter home costing $111,400.

The second-quarter 1998 annual sales rate for condominiums and cooperatives reached a pace of 590,000 units, breaking the record set in the first quarter. The second-quarter annual sales rate was 5 percent higher than the previous quarter's pace of 562,000 units and 17.8 percent more than the pace of 501,000 units one year ago.

Sources: Texas State Data Center, Texas Department of Health, U.S. Census Bureau

Housing Affordability Slips Slightly
WASHINGTON (Aug. 3, 1998) -- Housing affordability conditions slipped during the second quarter but remain near the highest level since the early 1970s, according to the National Association of Realtors.

NAR's composite Housing Affordability Index was 131.1 during the second quarter, 3.8 percentage points off the 134.9 reported in the first quarter. However, the index is 6.1 points higher than the same period last year when it was 125.0.

The index shows half the nation 's households had at least 131.1 percent of the income needed to purchase a median-priced (about $131,100) existing home during the second quarter. In this situation, a family earning the median income of $44,828 could afford a home costing $171,900. This index measures affordability factors for all homebuyers with 100 defined as the point at which a median family has the exact amount of income to purchase a median-priced existing home.

According to the Federal Housing Board, the average effective mortgage interest rate for existing homes was 7.21 percent during the second quarter, down from 7.22 percent in the first quarter and 7.89 percent from the same quarter a year ago. This is a weighted average interest rate between the fixed and adjustable loans, including the cost of points, and represents a bottom-line mortgage cost.

Conditions for entry-level buyers slipped as well. NAR's First-Time Homebuyer Affordability Index declined 2.3 percentage points to 80.5 in the second quarter. This shows a typical first-time buyer household, aged 25 to 44, had 80.5 percent of the income needed to purchase a typical starter home costing $111,400.

The second-quarter 1998 annual sales rate for condominiums and cooperatives reached a pace of 590,000 units, breaking the record set in the first quarter. The second-quarter annual sales rate was 5 percent higher than the previous quarter's pace of 562,000 units and 17.8 percent more than the pace of 501,000 units one year ago.

Sources: Texas State Data Center, Texas Department of Health, U.S. Census Bureau

TREC To Examine Internet Advertising
During a meeting of the Texas Real Estate Commission (TREC) held Monday, commissioners decided to take a close look a new methods and recent trends in real estate advertising over the Internet and other electronic means.

Commission Chairman Jay Brummett said, "New technology and expanding markets involving business transactions from state to state raise several issues of concern. Interstate business opportunities, combined with technological tools, necessitates an examination of advertising practices through electronic means to determine if current regulatory standards are being met."

Several commission members agreed that it is important to assure compliance with requirements governing real estate advertising displayed over the Internet, Web sites, e-mail and through cable outlets. Observable or reported violations of advertising standards through alternative methods may include failure to include the name of licensed brokers or broker agencies or may have other content that is misleading to consumers.

Commissioners directed that a notice be published in TREC's Advisor newsletter expressing the intent of TREC to enforce current regulations on advertising regardless of whether it is published electronically, including the Internet, or through more traditional mediums. Also, in an effort to further assess the extent of potential rule violations and the potential for new approaches to enforcement of advertising rules, the Commission will be seeking input from consumers, licensees and the public over the next several weeks. TREC will be soliciting opinions and comments as to how electronic and alternative advertising concerns should be addressed. It is anticipated that a summary of comments along with possible recommendations could be completed for presentation to the Commission in October.

According to the Commerce Department's Census Bureau:

•	Almost a third of America's renters moved that year. Only 8 percent of homeowners moved.
•	Central cities lost three million people. Suburbs gained about 2.8 million.
•	The South was the only region with a significant net change -- gaining 391,000.
•	Moving rates declined with age. 32 percent of 20-to-29-year-olds moved while only 5 percent of those 65 and older moved.
•	More than one million people moved to the United States from other countries, and 92 percent of them settled in metropolitan areas.

TREC Considering Prohibition To Be Read Aloud
The Texas Real Estate Commission (TREC) is considering a new proposal to require real estate education providers to read aloud, at the beginning of each exam preparation course, text of the Commission's rule prohibiting disclosure of license exam questions.

The proposal would remind all involved that it is a serious legal violation for education course providers to solicit or examinees to reveal, specific test related questions, answers or both. Further consideration of the measure and possible final adoption is scheduled for TREC's next regular meeting on Sept. 14.

TREC Budgets More Than $3.6 Million
The Texas Real Estate Commission (TREC) approved a biennium appropriation request for submission to the state legislature. The budget request totals $3,608,262 for fiscal year 2000 and $3,613,379 for fiscal 2001.

TREC Administrator Wayne Thorburn, explained that no increases in license fees collected by the agency to fund its operations are expected under the budget proposal. He also said that the proposal places the highest priority on improving the effectiveness of the agency's enforcement programs. As consumers become more aware of TREC's complaint process, the number of complaints filed has steadily increased. This budget priority is intended to provide swift and accurate complaint resolution.

Inspection Report Being Revised
The Texas Real Estate Commission is in the process of replacing a 14-page standard inspection form in favor of a new simplified five-page report. At its next meeting, discontinuation of the longer form is expected to be authorized.

MCE Grace Period
Final action is expected at the next meeting of the Texas Real Estate Commission on a proposed grace period for completion of mandatory continuing education (MCE) for renewal of real estate licenses. Under the proposal, applicants would be allowed to renew their licenses without first completing the MCE requirement. They would, however, be required to pay an additional $200 fee and complete their course work within 60 days of renewal.

This proposal is regarded as helpful to salespersons and brokers alike. Salespersons would additionally benefit from the grace period because, under the current process, there is a risk of their real estate practice being interrupted if their sponsoring broker's license cannot be renewed because of noncompletion of MCE in a timely manner.

TREC Picks 50th Anniversary Logo
Commissioners of the Texas Real Estate Commission announced Monday the selection of the agency's 50th anniversary commemorative logo design. Rick Valdes, an investigator for the agency's Enforcement Division, submitted the winning design entry. Sixteen logo proposals were presented in a competition among TREC employees.

Existing Home Sales Down in June
Existing single-family home sales dipped slightly in June from the previous month's extraordinary pace but remained strong and healthy, according to the National Association of Realtors (NAR).

The seasonally adjusted annual rate of existing single-family home sales was 4.72 million units in June, down 2.3 percent from the all-time high resale rate of 4.83 million units reported in May. However, the June pace was 14.6 percent more than the 4.12 million units recorded in June 1997. The sales pace of 4.89 million units recorded in March was the highest ever recorded since NAR began tracking existing-home sales in 1968.

NAR President R. Layne Morrill says that the decline was expected and does not reflect any slippage in the market.

"The housing market is nothing short of robust despite the slight dip in sales in June. As with any product, when a healthy market pushes sales to record highs, it is the norm for activity to plateau and settle into a more consistent pace," he says.

Morrill says it is important to consider other factors, such as the high number of refinances the market is seeing and a rise in the number of vacation homes being purchased. Recent reports citing U.S. Census Bureau statistics show sales of vacation homes have increased by more than 200,000 in each of the last two years.

The national median existing-home price for June was $134,600, up 5.8 percent from June 1997 when the price was $127,200.

Freddie Mac reported the national average commitment rate for a 30-year, conventional fixed-rate mortgage was 7.00 percent in June compared to 7.14 percent in May and 7.69 percent in June 1997.

Other highlights of the report:
-- About 109.2 million adults, more than half the adult population (55.9 percent), were married and living with their spouse.
-- Approximately 19.3 million adults, about 10 percent of the adult population, were divorced at the time of the survey.
-- About 85 percent of children with a single parent lived with their mother. Of these, four in ten lived with mothers who had never been maried. Children who lived with a single father were more likely to be living with a divorced father than a never-married father.
-- There were 4.1 million unmarried-couple households, of which more than one in three (35.6 percent) had children less than age 15.
-- Nearly 14 million people between 25 and 34 years old had never been married.

Data are from the March 1997 Current Population Survey.

Homeownership Ties All-Time Record
The U.S. homeownership rate rose to 66 percent in the second quarter -- tying an all-time record rate set in the third quarter of 1997. The number of families owning their own homes rose from 68 million in the first quarter to 68.3 million -- the highest number in American history. The nation's overall homeownership rate -- measuring the percentage of families who own the homes they live in -- was up slightly from 65.9 percent in the first quarter. .

The Department of Housing and Urban Development has initiatives in the 1999 budget that HUD officials believe will boost homeownership even more. These include higher FHA loan limits to enable more families to qualify for FHA-insured mortgages; increased funding for HUD's crackdown on housing discrimination, more Home Program grants and a Home Bank to make thousands of affordable housing units available, the creation of new Homeownership Zones to revitalize inner-city neighborhoods and more funds for homeownership counseling.

Drought Jeopardizes Texas Rural Land Price Recovery
"As the Texas drought drags on, the prospect for economic damage becomes more real," says Dr. Charles E. Gilliland, research economist for the Real Estate Center who monitors land values in the Southwest. "Agricultural economists at Texas A&M University estimate the state faces a $1.8 billion loss from damage to cotton alone. Losses of those proportions threaten to hamper or scuttle the recovery underway in Texas rural land prices."

Gilliland sees two major effects the drought has on land values. First, the prospect of meager or no income for farmers and ranchers who buy the land causes these would-be buyers to "feel" poorer. "Fall looks bleak, and no one knows about winter or spring," says Gilliland. "Each passing day with no rain reinforces these feelings until those who had anticipated purchasing land reconsider. This psychological factor weakens the market and drives prices lower."

The second influence Gilliland sees stems from the damage that income shortfalls inflict on potential land purchasers' net worth. By drawing down reserves and postponing investment, the crop failure may threaten potential buyers' ability to purchase land in the future or even force some owners to sell land. "This kind of damage can exert a longer-lasting and potentially more harmful effect on land values," says Gilliland.

The Real Estate Center economist says attempts to gauge the current damage to land values in monetary terms is premature. Establishing a reliable measure of such damage must wait until the market records prices during the drought. Analysis of 1995-97 land sales data reveals no relationship between land prices and rainfall amounts. The 1997 market posted a recovery from the drought that ran from October 1995 through June 1996. This rebound bolstered land prices in both 1996 and 1997.

If rains come to Texas soon," says Gilliland, "history suggests land markets will strengthen quickly. The final effect of the 1998 drought depends on how much longer it persists. Rains in the fall may enliven land markets for farm and ranch property quickly. Persistent drought, however, into the fall and winter spells trouble."

Rangeland with scenic and recreational amenities does not depend on agricultural income to support prices. Unless the economic damage from the drought affects the state's nonfarm economy, markets for this kind of land should record little negative effect from the drought, says Gilliland.

"There are a limited number of firms that do this type of work. Although the Dec. 22, 1998, deadline allowed ten years to get tanks in compliance, EPA is concerned that owners who continue to wait to upgrade or close their tanks won't be able to schedule the work by the deadline," says EPA Regional Administrator Gregg Cooke.

When state and federal inspectors checked almost 1,000 of the more than 138,000 underground storage tanks being used in five states (including Texas) last year, only 40 percent of the retail and about a third of the nonretail facilities were in compliance.

Officials with the Texas Natural Resource Conservation Commission (TNRCC) estimate there are about 67,400 underground storage tanks in Texas. The agency is currently conducting more than 50 "Don't Wait Until December 1998" workshops statewide to encourage owners of substandard tanks to upgrade now.

Regulations require overfill/spill prevention devices, leak detection systems and corrosion protection. Tanks installed after the regulations were adopted in December 1988 were required to meet the new standards. To give owners of existing tanks time to comply, a ten-year deadline was set.

The regulations apply to buried tanks, mainly those used for gasoline and other petroleum products at service stations and fleet refueling facilities. Some are used to store hazardous chemicals, normally at industrial sites.

The EPA has booklets explaining the requirements. To order, call the EPA Region 6 Public Information Hotline at 1-800-424-9346. Information also is available from TNRCC's underground storage tank program at 512-239-2106.

Texas Homes: Selling Faster as Inventories Fall
Texas homes are selling much faster this year than last. In May 1997, a home sold by a major Multiple Listing Service (MLS) required approximately 113 days to sell. This May, however, the state's estimated days-to-sell was down to 81.

The number of existing homes listed for sale by Texas MLSs dropped from 84,663 in May 1997 to 68,287 one year later. In May 1998, the overall MLS inventory of unsold homes was estimated by the Center at 5.3 months statewide. This compares to 7.4 months in May 1997.

In short, May-to-May MLS changes looked like this:

Days-to-sell: Houses for sale: Median price: Average price: Homes sold: Months of inventory:

down 28 percent down 19 percent up 9 percent up 9 percent up 10 percent down 28 percent

Source: Real Estate Center TRENDS monthly statistical report.

Tax relief, such as exemptions similar to those extended to other agricultural operations, got 98 percent of the urgent-to-high votes from participants. The objective of the state's forest land base received a 96 percent urgent vote.

Participants at the forest summit considered topics such as the long-term timber supply, reforestation of nonagricultural lands, management of Texas national forests, public awareness of forestry, the need for research and technology and environmental enhancement.