Marie Walton, ABR, CRS, GRI, SRES

For purposes of this report North Dallas in broken down into two sections.

North Dallas north of Northwest Hwy. and south of LBJ

This area of Dallas contiunes to experience difficutlies. The high end market is very slow. At the end of July there was an 18.7 month supply of homes on the market. This is a very high number.

Sales were off by 31% in July and the average price declined by 16% while the median price declined by 29%. This is just another indicator of the problems effecting the upper end market.

Pending sales declined by 31% which will not help August closed sales.

Sales: 50

Average Sales Price: $842,270

Median Sales Price: $530,000

Pending Sales: 29

New Listings: 110

Active Listings: 683

Months of Inventory: 18.7

North Dallas North of LBJ

Sales in this area of North Dallas were up by 27% and we saw a 1% increase in both the average and median sales prices. Pending sales also showed a sharp increase of 21%. The number of active listings contracted by 13% leaving us with an inventory of 6.5 month.

Sales: 117

Average Slaes Price: $326,127

Median Sales Price: $275,000

Pending Sales: 80

Active Listings: 490

Months of Inventory: 6.5

After a strong month of sales in June, July saw a very small decline of 1% in the number of sales. The average sales price increased by 5% and the median sales price increased by 10%. Days on market decreased to 48 days.

The number of active listings continued its decline shrinking by 30%. The months of inventory is now 3.3 months. This is an extreamly low level and means if you are looking for a house in Richardson you have very few to chose from. The best houses are going quickly!

Sales: 119

Average Sales Price: $178,026

Median Sales Price: 166,250

Days on Market: 46

Active Listings: 254

Months of Inventory: 3.3

Yes! Yes! I know! Sales are terrible and we are over run with foreclosures or at least that what you hear on TV and read in the papers.

Well here is the truth!

June saw a 26% increase in sales in the Richardson market. This increase was accompanied by a 4% increase in the average sales price and an 8% increase in the median sales price. Pending sales increased by 21%. While the number of new listing dropped by 2% and the number of active listings declined by 35%. This decline in the number of active listings along with the sharp increase of sales left the Richardson market with only a 3.2 month supply of homes on the market. This is an extremely low number!

Listing Agents are reporting that they are receiving multiple offers on the best properties as soon as they come on the market and Buyer Agents are saying that their clients are having to make offers over the listing price to get these properties. This is perticulary true in the West Richardson area.

This demand is being fueled by the shortage of quality properties currently on the market.

If you want to buy in the Richardson market, you better have a top agent that can get you in the best properties the day they come on the market and you better be prepared to write a full price offer or higher as soon as you get back to you agent's office if you expect to get the house.

June Sales:

Sales: 121

Average Sales Price: $184,214

Median Sales Price: $169,000

Pending Sales: 97

New Listings: 138

Active Listings: 251

Months of Inventory: 3.2

Today in the Dallas Morning News Business Section there was a story with the headline" Did area's home values really go anywhere at all". The article starts out talking about how home prices did not experience the rapid run up that other areas of the country did and how our local prices have not fallen any near as much. No problem so far.

Then the article continues by directing the reader to "see SECRETE page 6D".

When you turn to page 6d you see another headline that reads "Secrets sale prices keep the housing market in the dark".

The rest of the article is about "Z" sales. These are sales that do not have the sales price reported in the local MLS system. They are called "Z" sales because what shows up is the last listing price with the letter Z at the end of it.

The article states " While some agents and sellers believe they are doing themselves and the housing market a favor by clocking cut-rate sales, in truth they are making matters worse. How can buyers-and more importantly, lenders-have confidence in a market where there is no transparency?"

I find this a little troubling. It seams to imply that there is some conspiracy going on between the agents and sellers to keep buyers and lenders from knowing the truth. In the vast majority of the cases it is the buyer of the property that does not want the sales price disclosed and they write it in the initial offer.

Put yourself in the place of the seller. Your agent brings you a good offer but there is a demand that you do not disclose the sales price. Are you really going to try to take that out of your counter and risk the sale?

Of course your not! In some cases it is the seller that does not want to disclose the sale price and I will talk about that later.

When the property is sold, the agent representing the seller is going to report the sale to MLS as a Z as required to do by the agreement of the principles (the buyer and the seller).

Do agents like to do this? No they don't. They have to use the same sales data as appraisers to help clients properly value their homes for sale but they have no choice.

Now what are the reasons that buyers do not want the sales price disclosed? In a lot of the cases it's because the property is in poor condition and the buyers is intending to remodel the property and re-sell it. The buyer does not want the future purchaser to know what was paid for the property before the rehab so that the buyer can not estimate the amount of profit in the deal. There are some buyers especially in the higher end properties that simply do not want the general public or the Appraisal District to know what was paid.

In the case of a seller not wanting to disclose the sale price it's probably because the seller is a builder and he does not want to affect other new builds that he has for sale. It's a very rare case if the seller just says "I don't want my neighbors to know what I really sold this house for".

I look at a lot of sales every week and I had not noticed this being a big problem so I decided to take a look at some areas to see how many sales were showing up with a Z. Below is what I found:

AREA SALES 1/1/2009 TO 7/3/2009 Z SALES PERCENTAGE

East Dallas 896 26 .029

Lake Highlands 231 9 .039

Richardson 420 14 .033

Plano 1291 31 .024

N. Dallas north of LBJ 428 19 .045

N. Dallas south of LBJ 204 39 .191

Park Cities 216 46 .212

As you can see in most areas the percentage of Z sales is very low and of no real problem.

The percentages in the Park Cities and near North Dallas areas are high enough to be a problem. What do these 2 areas have in common? Well they have a very high concentration of high-end homes and a large supply of new construction. If you dig a little deeper, you find that many of the Z sales are new builds. The problem is the builders!

If you are a buyer, seller, appraiser, or an agent dealing with pre-owned homes this is not a problem.

Many of you have probably never heard of the Home Valuation Code of Conduct (HVCC) but if you are buying or selling a home you may encounter appraisal problems due to this change in appraisal standards.

On Thursday The National Association of Realtors chief Economist Lawrence Yun released the following statement:

"In the past month, we have suddenly been bombarded with many stories of, at the last moment, transactions falling apart because appraisals are coming in unrealistically low. As a result it opens up a new round of negotiations between a buyer and a seller or in many cases the buyer just steps away."

The HVCC went into effect at the beginning of May as a result of a lawsuit by New York State Attorney General Andrew Cuomo against Washington Mutual, Fannie Mae and Freddie Mac agreeing not to buy any loans that did not comply with the code. Since Fannie and Freddie are the largest purchasers of loans, the rest of the lending industry had no choice that to go along.

The HVCC creates a firewall between lenders/brokers and appraisers. This is supposed to keep lenders and brokers from putting pressure on appraisers to meet a certain value. Lenders are no longer able to pick up the phone and call an appraiser that they know does quality work. The appraisal work must be assigned on a rotating basis by someone who is not the loan officer.

Most lenders have turned to appraisal management companies. Appraisers sign up with these companies and give them a list of zip codes the appraiser will accept assignments in. When the appraisal management company gets an order from a lender, they send out a blast e-mail to all the appraisers that have signed up for the zip code of the property. The first appraiser that accepts the assignment gets the job.

There are several problems with this approach. The appraisal fees are now being shared between the appraiser and the appraisal management company. The appraiser is getting about half the fee he uses to get. This means that the appraiser has to do twice as much work to earn the same money and in order to get the jobs, he is forced by the system to sign up for more and more zip codes for the chance of a job.

The National Association of Realtors is reporting that Realtors are telling them horror stories of appraisers not knowing the local market, doing appraisals that use computer models that often incorporate sales that are not comparable, of not knowing that the home had extensive renovations or additions and even reports of appraisers not having access to the local MLS. I have no idea of how these appraisers are getting their sales information.

In order to compete and get jobs in this new environment, appraisers have to cut corners and this does not help either the buyer or the seller. The really good appraiser is not opting into this system.

The HVCC was designed to take fraud out of the appraisal process but it is looking like we have thrown the baby out with the bath water.