HOUSE PASSES PROPERTY TAX CUT

The House approved a new business tax Monday, part of Gov. Rick Perry's plan to cut school property taxes by about one-third. The plan would provide no new money for schools, though.

Lawmakers also overwhelmingly approved a property tax cut that they said would ensure that schools stay open this year, the "Get outta Dodge" plan (if you can call it that, I call it a cop out).

The measures that were approved now go to the Senate, which could take them up later this week.

The passage of the tax proposals, with some money from the state surplus (which is $8 billion), is designed to pay for about $6 billion a year in school property tax cuts, or enough to reduce a school district's tax rate for operations by about one-third.

About 50,000 businesses that have avoided the corporate franchise tax, often because they are organized as limited liability partnerships, would have to pay the new tax.

As previously mentioned, the House members overwhelmingly approved a "get outta Dodge" bill that would temporarily repair the school funding system. The measure, passed by a vote of 139-5, calls for an 11 percent reduction in local school property tax rates this year – about 17 cents per $100 of assessed valuation for districts that are taxing at the current maximum rate, $1.50. This would only go into effect if they cannot reach another deal before the Court mandated date of May 31.

Stay tuned, the House and Senate typically do not agree with each other!!

Wes

PROPERTY TAX RELIEF - Will the sixth time be the charm?

Yesterday as the Texas Legislature opened a special session to fix the unconstitutionality of our property tax system which funds our public schools, more than 2,000 real estate agents lined the South lawn of the Capitol, toting blue signs that said, "We need property tax relief now!" They are right!

Texas lawmakers who only meet once every two years in regular session have been called to Austin for a 30 day special session because theTexas Supreme Court has struck down the way the state funds its schools and gave the Legislature until June 1 to fix the problem. Lawmakers must reduce property taxes and replace the $6 billion that it will cost with some other tax.

Now one would think that this would be an easy task since every single major political post, starting with the Governor, Liutenant Governor, the Senate and the House are all controlled overwhelmingly by one party, the GOP. Yet after five, yes five, tries to revamp the system they have failed miserably each time. Well this time Governor Perry seems to think he can pull together the support to get it done and he is spending $6 million in advertising to convince people. He does have the backing of the powerful Texas Association of Business. It's an unprecedented level of business support, but many lobbyists will still work tirelessly to protect their clients. You see, Texas is a business friendly state and any changes to the endless loopholes that keep the majority of businesses from paying any state taxes will be difficult to close. But its not just the businesses that have to be appeased. "When you're dealing with school finance and taxes, there's not any part of society you're not touching" says former House Speaker Pete Haney.

The tax-swap plan devised by Gov. Rick Perry's commission:

• Restructured business tax - $4 billion
• State budget surplus - $1 billion
• $1-per-pack increase in cigarette tax - $800 million
• Taxing auto sales based on a standardized vehicle value - $75 million
• New auditors in comptroller's office to help collect taxes - $50 - 60 million
• Total - $5.9 billion

The proposed property tax cut - The maximum rate of $1.50 per $100 of property value would be reduced to $1.30. Schools would receive enough state money to lower the rate to $1.

Incidentally Perry's chief opponent in this years election, the State Comptroller, announced Monday that there is actually an $8.2 billion surplus.

Mr. Perry's tax plan – which would lower property taxes, expand the business tax and increase the cigarette tax – was filed in the House as five separate bills. Also Florence Shapiro of Plano, the Senate education chief, filed a school reform bill that would give school employees a $2,000 pay raise and would give money to high schools to boost graduation rates and curb dropout rates. Teachers in this state have not had a raise in six years.

Stay tuned, my guess is that on May 31 we will finally have a plan.

Does Texas expect a bubble burst?

Yesterday as I drove to Arlington, past downtown Dallas where on Sunday 500,000 people flooded the streets rallying for immigration rights, I couldn't help but notice how the skyline is dotted with cranes and partially constructed buildings. The Fort Worth sky looks virtually the same. The construction, migration and overall growth in the Dallas Fort Worth area right now is rivaled only by the early 1980's. Downtown and Uptown Dallas are booming with the addition of the corporate headquarters for 7-11 alongside the development project expanding the Arts District. Hunt Oil is breaking ground on their new offices, the Victory development has a new W Hotel and Condominium project nearing completion which is adjacent to several other buildings that are under construction. In Uptown, the Ritz Carlton Hotel and Condominiums and Azure project are being completed while across Woodall Rogers in downtown there are numerous buildings under renovation for conversion to mixed use including the old Mercantile building which the city gave $70 million in public incentives. Finally just a few miles away is the location for the three Santiago Calatrava bridges which are being built as part of the cities $1.25 billion Trinity River Corridor project.




Fort Worth is not much different, if you somehow missed all the new corporate growth then you can't miss all the bandit signs at intersections pointing to the new housing developments. This does not look much like a place where the bubble is about to burst and most experts agree.

Area avoids bubble trouble

N. Texas house market among least at risk for price drop, analysts say

Wednesday, April 5, 2006

By STEVE BROWN / The Dallas Morning News

While the buzz about a nationwide housing shakeout grows, Dallas and Fort Worth are near the bottom of the list of cities at risk of a price meltdown.
North Texas real estate markets are among the safest in the country, according to the latest analysis released Tuesday by PMI Group, one of the country's biggest mortgage insurers.
At the same time, the chances of a price slide have grown in many coastal markets, PMI analysts found in their first-quarter survey.
"Risk continues to be concentrated on the coasts," said Mark Milner, chief risk officer for California-based PMI Mortgage Insurance Co. "We continue to believe the most likely scenario is a soft landing, because of the continued strength of national and local economies.
"We expect to see the continuation of the slowing trend in many markets," Mr. Milner said.
During the last six months it's been more obvious that the housing market is cooling, he said.
"What we are seeing now is what we are expected to see and, frankly, what we thought we had to see – a gradual slowing of a market that had gotten out of balance," Mr. Milner said.
Among the top-heavy housing markets, seven of the top 10 are in California, and all have more than a 50 percent chance of a significant price decline in the next two years, according to PMI.
But the Dallas-Fort Worth area is rated with cities including Pittsburgh, Columbus, Ohio, and Nashville, Tenn., where a price fall is unlikely.
"Those of us in the San Francisco Bay area wish we were in the same boat Texas is in," Mr. Milner said. "If you look at the Dallas-Fort Worth numbers, what you see is strong labor markets – good job creation and low unemployment – and very strong home affordability.
"The flipside of that is home appreciation has been very slow relative to the rest of the country, but it's been nice and steady," he said.
The home price risk in Dallas is now only about a third of the national average, according to PMI's new estimates.
Local housing experts haven't been swayed by recent worries about nationwide home prices.
"There are a number of reasons why none of the cities in Texas are threatened by the bubble," said James Gaines, an economist with Texas A&M University's Real Estate Center. "Our housing markets are in good shape."
Mary Frances Burleson, president of Ebby Halliday Realtors, said she's not surprised at PMI's findings.
"If there is a bubble, I don't think it's here," Ms. Burleson said.
In cities where home prices are still soaring, it's putting a squeeze on buyers.
"With continued double-digit appreciation in many areas coinciding with rising interest rates, affordability is becoming a challenge for American home buyers," Mr. Milner said. "Overall appreciation remains quite strong by historical standards.
"It still remains in the double digits in many areas, but there is definitely a slowing trend in the past two quarters," he said.
The National Association of Realtors is predicting that home prices will have risen only about 6 percent nationwide last year. That's down from an almost 14 percent jump in fourth quarter 2005.
Home sale prices rose by only 4 percent in North Texas last year.
Pending home sales in February showed about a 5 percent dip from a year earlier, according to the Realtors association


In comparison, D-FW houses undervalued

Friday, February 3, 2006

By STEVE BROWN / The Dallas Morning News

If a new study is correct, North Texas homeowners shouldn't worry about a housing bubble.
Instead of an overheated market, Dallas-Fort Worth housing is among the most underpriced in the country, according to the year-end report by Local Market Monitor LLC.
The Massachusetts-based housing analyst looked at prices in 100 U.S. residential markets before deciding that the D-FW area was among the most undervalued home markets in the country.
Other Texas cities, including Houston, McAllen and El Paso – the most undervalued market on the list – also made the ranking.
"That's a much better position to be in than a lot of the other markets right now that are at the end of a period of expansion," said Ingo Winzer, president of the research firm. "The places that have had the strongest appreciation over the last five years – especially in California and Florida – are very likely to give a bunch of it back."
Local Market Monitor estimates that D-FW home values are 14 percent below the average for the cities it surveys.
Compare that to the most overpriced housing markets, which are mostly in California and Florida. They include Santa Barbara, Calif.; Naples, Fla.; Modesto, Calif.; and San Diego, which are all at least 70 percent overvalued, according to the researchers.
Along with the Texas cities, other places you are likely to find home bargains include Memphis, Tenn.; Little Rock, Ark.; and Fayetteville, N.C.

Watch Video on Texas Housing Price Bubble

Hello and welcome to the Hodge Homes blog. Over the next few months we will explore the Texas real estate market with a particular focus on Dallas Fort Worth.

Due to excellent economic conditions, positive migration, a friendly business environment and numerous other factors, Texas is one of the safest places in the country to invest in residential real estate. In addition, if the Texas legislature does its job over the next month and fixes the school finance debacle, we will become an even more attractive place for real estate investments since our property taxes will drop.

Please feel free to send me your questions and I will attempt to answer them or find you the appropriate resource. Dallas Fort Worth is an excellent place to invest or to live long term, hopefully you will see that too.

The following article will give you an introduction to the area and some of the vital statistics needed to make an informed investment decision.

http://recenter.tamu.edu/mreports/DallasFWArl.pdf


Wes