Is the real-estate crunch glass half full or half empty?
An area real-estate columnist last week downplayed Dallas-Fort Worth’s 4.1 percent year-over-year fall in housing prices in February, saying it's not that bad.
The Dallas area had the fourth-best of the top 20 markets, behind smaller declines in Seattle and Portland, Ore., plus a slight increase in Charlotte, N.C.
That said, most of the big losers are in the subprime ground zero of California, its spillover effects on Phoenix and Las Vegas, and south Florida.
But, Dallas’ 4.1 percent decline is not that much different than Boston's 4.6 percent, Denver's 5.5, Atlanta's 5.6 or even New York City’s 6.6 percent drop.
In other words, although it's too early to tell, prudence would dictate at least allowing for the possibility the glass might be half empty as well as half full.
Although the Dallas-Fort Worth Metroplex, and southern Dallas County specifically, is not Los Angeles, Las Vegas or Miami, the subprime housing mortgage crunch has Cedar Hill city officials being prudent with financial projections, as that city already works on budget planning for the next fiscal year and beyond.
A new Cedar Hill Fire Station No. 2 has been moved back one year, to fiscal 2011, on the city of Cedar Hill's capital improvement budget. That was the primary point of fallout at an April 29 capital improvements workshop by the Cedar Hill City Council.
Other cities in the area may have slightly better or slightly worse news; so far, DeSoto appears the least affected. However, it seems likely that all area cities will need to re-examine economic ideas for the next year or two.
In Cedar Hill, Finance Director Hardy Browder expects a two-year slowdown in property value growth. Instead of a $200 million increase for fiscal 2009, which the city has shown the past few years, he expects just $125 million.
And, the price crunch is definitely affecting home building. Sims said the city was adding just eight-10 new homes a month. Again, other cities' mileage may vary, but, from what I have seen, you can drive around the southern sector in general and see a lot of flattened plots of earth with not a lot of housing activity right now.
Local closings of Bombay and Linens ’n Things only adds to the downcast financial picture.
Browder said he was predicting a slight decline in individual property values for fiscal 2010 as well as 2009. As for preventing the subprime crisis from recurring in the future, the current Bush Administration proposals would actually further deregulate the financial industry, and Democrats haven't offered anything better.
Well, a Cleveland financial institution, Third Federal Savings and Loan, has a much better, and simple, idea.
Pay loan officers straight salary rather than commission.
Third Federal also bucked the recent tendency to slice and dice mortgages into things like collateralized debt obligations, instead keeping most the loans it originated on its own books.
While it does seem intrusive for the federal government to consider that degree of business regulation, consider that Franklin D. Roosevelt's “intrusive” New Deal financial regulation kept our country from any major economic downturns until a bipartisan Republican-Democratic Congressional consensus started dismantling those protections during the administration of President Bill Clinton.
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