Fredericksburg Texas

A relatively recent government edict known as the Home Valuation Code of Conduct (HVCC) has the potential to have a major impact on Fredericksburg, TX real estate. Anecdotal evidence suggests these effects are already being felt as deals are coming apart based on appraisals from “professionals” not familiar with our local market conditions.

The rules, which went into effect May 1 for all conventional, single-family loans destined for sale to Fannie Mae or Freddie Mac, prohibit mortgage brokers and real estate brokers from ordering appraisals and require that lenders erect a firewall between loan production staff and the appraiser. Sounds reasonable.

Problems have arisen, however, as the code is vague and confusing. In fact, the six-page HVCC is so difficult to interpret that Fannie Mae has produced an eight-page document of frequently asked questions. Freddie Mac has published guidance, too—and still many questions remain unanswered.

A very informative analysis of the HVCC has been published in REALTOR Magazine and can be found on line at: http://www.realtor.org/rmonews_and_commentary/Articles/2009/0909_HVCC

The debate concerning affordable housing in Fredericksburg, TX arose again at last night’s city council meeting. Up for presentation was Johnnie Long’s Fredericks Place. Mr. Long (a well-known and reputable Hill Country builder) is in the planning stages of a 19 acre development that will ultimately provide up to 114 homes that are both “affordable” and “green”. (This project is vastly different than the ill-fated project on Highway Street that kicked off this whole debate.)

His goal is to build the development out over a 6-year timeline and to keep the prices of the four models currently envisioned to under $200,000 each. Lot set-backs will be staggered and streets will be “curvy” to provide the over-all feeling of a “non-cookie-cutter” infill development. Mr. Long is committed to “green features” such as added insulation, radiant roof barriers and high-efficiency HVAC systems (among other features).

While this presentation was not a proposal requesting/requiring council action, it was a very insightful peek into how a developer should properly prepare public and private interests for what will soon be submitted for consideration.

Mr. Long wisely provided a study evidencing the positive economic impact his development would have on Fredericksburg, TX. By setting the stage to contrast the positive impact of a long-term real estate development against what he is surely to ask for as concession from the public sector, Mr. Long begins to chip away at the base-less assertions that “give-aways” to developers serve no one but the developer.

This sly shot across the bow of the NIMBY crowd was further reinforced by handing the city a solution on how to accomplish such a feat on a proverbial silver platter. His suggestion that they consider a Neighborhood Empowerment Zone is classic “Negotiations 101” (define the problem them hand them a solution). NEZ’s are authorized under the Texas Local Government Code, Chapter 378.

While Mr. Long has quite a difficult road ahead, he has clearly demonstrated that he’s well-versed in the game. Opponents intending to make the argument that market forces have provided plenty of current housing stock priced under $200K should recall that this wasn’t nearly the case just one year ago. As our market corrects (as they always do), folks should be cognizant of how long it actually takes to put a project on the ground. We’re not arguing over conditions today or even next month. We’re talking about projecting into Fredericksburg’s future and assuming, like most things in life, housing will not be getting any cheaper.