The Bains

(1) decreasing homes prices, (2) higher volume of foreclosed homes available, (3) tougher mortgage
lending standards and (4) reluctant buyers are combining to make Texas homes more affordable than
ANYWHERE in the U.S. This according to Dr. Jim Gaines, economist with the Real Estate Center at
Texas A&M. According to the Texas Housing Affordability Index (THAI) homes have remained affordable everywhere in Texas since the beginning of the last housing cycle (from 2003-2009).
Tyler is right in there with a decided upswing in homes under $145,000.

The folks at FICO (who keep up with your credit scores) have revealed the actual penalities. If your
FICO score if 680, a 30-day delinquency drops it by 60 – 80 points; maxing out a credit card costs
10 – 30 points; a foreclosure costs 85 – 105; and declaring bankruptcy shrinks it by 130 – 150. If
these same missteps are made by the owner of a 780 FICO score with few signs of risky credit behavior in the past, the number of points lost could be about 50% higher in each case. It is suggested you check you FICO scores at the 3 credit recording sites. Go to www.thebains.com
and click on the 4th link down (about mid screen) to ask for the 3 reports. INTERESTING STUFF!

#1 consideration is still schools, along with walkability, compatible age, background & education levels, as well as sex offenders, which can be researched on the Internet. A few other “musts”:
(1) CONSTRUCTION – zoning for vacant land, “planned” roads, city planning & more, (2) SOCIAL
ACTIVITY – too little or too many kids, teens – do folks chat, (3) NIGHT VISITS – frequent parties,
barking dogs, informal drag races, band “rehearsals”, outside lights, (4) NOISES, SMELLS – train
whistles, incessant highway or factory noises, downwind from a land fill, (5) MORE ONLINE RESEARCH
which is readily available. Just walk a neighborhood on the week-end – too many cars could indicate
a declining neighborhood.

Average interest rates on a 30 year fixed rate loan fell this week to 4.97% from 5.05% a week earlier,
according to Freddie Mac. Homebuyers no longer are feeling rushed to apply for the homebuyer tax
credit, which ws extended to April 30, has caused the index to decline 2 of the last 3 months.
The National Association of Realtors index that tracks residential sales agreements fell 7.6% to 90.4% in January. Economists has expected a rise to 97.6%, were disappointed in this reading, the lowest
since Aril 2009. Sales fell in the West by 13% from December to January, 9% in the Northeast & Midwest & 2% in the South. A reading of 100 is dqual to the average level of sales activity in 2001,
when the index was started.

2009 concluded with 2% of TX home loans in foreclosure, compared with 4.58% nationwide. 10.3% of TX home loans were delinquent – up 0.5% from the 3rd quarter – but the number of loans 30-60 days fell 4.43%, according to the Mortgage Bankers Association. A loan is considered delinquent if
one or more PAYMENTS ARE PAST DUE. Nationally, the delinquency rate declined to 9.47% and the rate for loans 30-60 days delinquent fell to 3.36%. This shows a significantly improved housing market, even for 90 days.

in both Tyler & Smith County. January 2010 saw a 7.5% increase in closings & a soaring 17.4% jump in mean prices. Smith County alone had an increase from78 closed in January 2009 to 91 closed
January 2010. Median prices jumped from $117,000 to $138,000 in the past year in Tyler. The $8,000 tax credit helped fuel this as the $6,500 credit + mortgage rates are still at a low of about
5.13% for a 30 year fixed loan. The Tyler market was among the nation’s highest when it came to an
INCREASE in HOME SEARCHES on REALTOR.COM. Tyler had a 74.2% increase in searches from
September 2008, with Austin at 91.4% & New Orleans & Las Vegas at 84.9%. Tyler has an 11 month
supply of homes on the market. Ideal is about 6.5 months.

12% of borrowers who signed up for the government’s mortgage relief plan have been helped by
reducing payments. The Treasury Department said about 116,000 homeowners had completed the
application process as of January 2010, compared with over one million homeowners who began the
process. Over 61,000 homeowners have dropped out of the program either because they failed to make payments OR did not return the necessary paperwork. Nearly 1 of 3 homeowners with a
mortgage owes more to the bank than their property is worth, according to Moody’s Economy.com.
There are calls for a major overhaul of the program, particularly for the govt. to further encourage
banks to cut borrowers’ principle balances on their primary loans.

Texas is looking at up to a $16 billion deficit next year, but a new poll shows Texans have strong
feelings about where budget cuts need to be made – and they start with highways. A Dallas Morning
News phone poll of 1,500 registered votes showed 41% of Texans would make up some of the deficit
by slicing highway spending. “It’s not so much an indicator that people are willing to tolerate the traffic as much as it is recognition about the cost of fixing it. You can throw billions at the problem and not make a dent,” said Dale Craymer, president of the Texas Taxpayer and Research Association,
a nonpartisan research group. FIVE options on where to get money for roads, 21% put toll roads at
the top of the list and coming in second was an increase in the state gas tax, which garnered support
from 16% of those polled. Other suggestions also came in.

More travelers wintering in TX this year than last & staying longer. Half of the “Winter Texans” surveyed plan to spend as much time wintering here as they did last year & 35% plan to stay longer.
According to the survey by TexasCampgrounds.com 39% winter in the Hill Country & 38% camp along
the Gulf Coast. 24% spent the winter in the Rio Grande Valley. 26% stay at the same park the entire
winter & 53% of the Winter Texans also spend time in other states during the season. 40% plan to
winter for 1-2 months, 15% stay 3-4 weeks, 13% stay 3-4 months & 25% planned to stay 6 months or longer.

A perfect example of this Galveston after Hurricane Ike. Galveston had a 160% increase. Its difficult to imagine that there were any sales immediately after the hurricane, but properties do
change hands even in the worst of circumstances. October sales in Galveston from 2004 through 2009 were 93, 68, 88, 85, 25 and 65. The 65 sales in 2009 is not too bad considering the recession
and the rebuilding. Research economist Dr. Jim Gaines at the Real Estate Center at Texas A&M
summed it up with one word: Ike.