BILL CHERRY'S GREATEST DALLAS PARK CITIES REAL ESTATE BLOG

Gary Shilling is both a prominent economist and financial adviser who has been around for a long time.  And, while he's inclined to more often be a bear than a bull, in the main when he postulates, most listen.

Mr. Shilling is predicting that the U.S. economy has entered a deflationary stage, and that it will continue at a rate of at least 2% for the next ten years or so.

Deflation is sort of a self-fulfilling prophecy.  People think that prices will fall because of low sales, and that they'll be able to buy something they want today, cheaper tomorrow.  Consequently the market reacts to lack of sales by lowering prices, thus lowering profit margins, and lo and behold, the buyer's guess comes true.  He and others made it happen. 

We are definitely seeing strong signs of deflation in home prices.  What few buyers there are, are in no hurry to buy, and when they do find a home they like, they'll end up not putting it under contract because they don't like the color of the kitchen or some other ludicrous reason.

I'm inclined to think Mr. Shilling's concerns are correct, and that by letting the temporary tax incentives sunset at the end of this year will exacerbate the problem.  Extending them for another year is worth the gamble.

BILL CHERRY, REALTORS

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The host this morning on Dallas' News and Talk station, KRLD-AM (1080), Jay McFarland, was talking rather compassionately about the illegal alien problem Americans have been wrestling with.

McFarland made the case that the majority of those who are sneaking into the U.S. aren't criminals in Mexico, their reason for coming here isn't to smuggle drugs into this country or to get a free ride on our health care, schools and the like.  But they are coming here with the hopes that they will have a better opportunity to survive.

He said he knows this first hand since he speaks fluent Spanish and has interviewed many of those who have sneaked across the border.

And he said, what I would have guessed on my own, that they come here willing to make a full contribution to the U.S. workforce in return for being allowed entry.

For many years, I was a real estate consultant for George P. Mitchell.  I've written about him many times because I watched him make a profound contribution to my life and the lives of countless others.  Mr. Mitchell continues today at 92-years old and after the loss of his wife, Cynthia, last year.  Mr. Mitchell and his wife, gave away millions of dollars, and he continues to do so, to make life better for others.

I recall that he told me thirty years ago that the United States' biggest threat was not Russia, China, Iran or other countries and cultures, but was Mexico.  The litany of reasons, which I had never considered before, made my skin crawl.  There was no question he was correct. 

Mr. Mitchell had just endowed a "think tank" to determine a workable plan that, by helping the Mexican people and their government, would significantly reduce these threats and allow us in the U.S. and those in Mexico to become more likely to work together in concert rather than to continue independently.

I've often wondered if Mr. Mitchell's team's research provided answers that the U.S. chose to ignore.

Move the years forward by twenty.  Patty and I were having a new home built in South Shore Harbour, a planned community that is on the mainland near Galveston, but also adjacent to the Manned Spacecraft Center at NASA.  Right away we noticed that the foundation, framing, masonary and roofing crews were all but 100% Mexican laborers.  And it didn't take long to see how hard and diligently they worked, how much pride they took in their workmanship, and how many hours they spent each day -- even weekends -- doing their jobs.

I wondered what their pay scale was.  Were they being paid equal to or better than U.S. workers who provide like labor?  Were their families with them in the U.S., or were they still in Mexico where the fellows roofing our house would send the majority of their pay checks each week?

I've concluded that radio talk show host Jay McFarland is correct.  The U.S. needs to make total protection of its borders a top priority and contemporaneously make its imigration laws, as they pretain to the two countries that share her borders, realistic so that there is no need for violation.

The latest idea being pushed is one that we amend the Constitution so that those born in the U.S. who are the offsprings of illegal aliens, are not U.S. citizens.  That is an outrageous idea.

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From the Real Estate Center at Texas A&M University in College Station, Texas.

TEXAS ONE, RECESSION ZERO

TEXAS (The Atlantic) - Even in the middle of the Great Recession, Texas is faring well compared with the rest of the nation, racking up an ever-growing list of accomplishments.

In addition to ranking fourth in the country with the least amount of state debt, Texas has four cities in the Milken Institute's Top Five Best Performing Cities Index, four among Forbes' list of top ten "Cities Where the Recession is Easing," and four in last year's Top Ten in Homebuilding.

Texas is home to three of the top five most resilient major metro areas for employment, with McAllen first, Austin third, San Antonio fifth and El Paso and Houston not far behind in the top 15.

The Lone Star State also claims 64 Fortune 500 companies - more than any other state - in addition to being dubbed Top State for Business for the second time in three years by CNBC.

The Atlantic says these accomplishments are because Texas' major cities have chosen comparatively stable industries - Houston is the nation's energy hub, Austin leads in education and technology, and San Antonio dominates the health care and education sector in addition to military spending.

"Our research shows that the more tax incentives and less regulation you have, and the less likely businesses are to get sued, the more likely it is they'll want to come and prosper in your state," said Brooke Rollins, president of the Texas Public Policy Foundation.

These factors support Texas' position as a global economic leader, having the 15th largest economy in the world.

In Texas, our MLS published listing documentation specifically shows whether the owner would consider leasing the home as well as selling it, and it also shows the home's current tenancy -- owner, tenant or vacant.

A new quirk seems to have developed in this sparse market.  I don't recall it ever being so prevalent in past downturns.

Co-op agents are setting up appointments and showing homes as though their client is a qualified buyer.  In reality, the client is looking for a home to lease.  The co-op agent doesn't reveal that important piece of information to the listing agent, but instead infers that his client is a qualified buyer.

The appointment is established, the homeowner or tenant straightens up the home for the showing, then leaves for an hour or so so that the agent can show it to his client.  If the client doesn't like the home, the agent just reports that as feedback.  If the client likes the home and would like to lease it, the co-op agent seems to frame it as follows:

"My client really likes the house.  He's expecting a check for the sale of his business in Chicago, or the settlement of his uncle's estate.  He'd like to rent the house and close the purchase when he gets this money."

There is little likelihood that any of this about a purchase is true.  The client wants to lease the house until the owner realizes that the sale isn't going to go through.  Meanwhile, the home has been off of the market for at least a year, and is now being held hostage by a tenant.  You see, the owner finds himself having to make a deal to extend the lease, month to month or until the home sells, because at this point he needs the tenant's rent.

I have had this happen to me several times, twice within the past week.  In both cases, my clients didn't fall for the ruse. It seems highly unethical to me, but so far I've chosen to not file a complaint.

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I have always questioned whether or not the Electoral College has outlived its usefulness.  This is a collection of interesting statistics. 

In an email I received, a law professor pointed out some interesting facts concerning the November 2008 Presidential election:  

Number of States won by:              Obama: 19   McCain: 29 

Square miles of land won by:         Obama: 580,000   McCain: 2,427,000 

Population of counties won by:     Obama: 127 million  McCain: 143 million 

Murder rate per 100,000 residents in counties won by:  Obama: 13.2    McCain: 2.1   

The professor added:

• In aggregate, the map of the territory McCain won was mostly the land owned by the taxpaying citizens of the country.
• Obama territory mostly encompassed those citizens living in low income tenements and living off various forms of government welfare.
• Some forty percent of the nation's population has already reached the "governmental dependency."

BILL CHERRY, REALTORS

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Our 45th Year

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While I haven't personally researched or investigated any of the following for content and accuracy, nevertheless, there will definitely be substantive changes in the tax code.  Here are some of those areas reported to me by a longtime friend:

In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:   First Wave: Expiration of 2001 and 2003 Tax Relief

 
In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:   Personal income tax rates will rise.  The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). 

The lowest rate will rise from 10 to 15 percent.  All the rates in between will also rise.  Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.  The full list of marginal rate hikes is below:  

- The 10% bracket rises to an expanded 15%   - The 25% bracket rises to 28%   - The 28% bracket rises to 31%   - The 33% bracket rises to 36%   - The 35% bracket rises to 39.6%       Higher taxes on marriage and family.  The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income.  The child tax credit will be cut in half from $1000 to $500 per child.  The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.  

The return of the Death Tax. This year, there is no death tax.  For those dying on or after January

1, 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.  
Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011.  The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.  These rates will rise another 3.8 percent in 2013.      

Second Wave: Obamacare  
 
There are over twenty new or higher taxes in Obamacare.  Several will first go into effect on January 1, 2011.  They include:

The "Medicine Cabinet Tax" Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).      

The "Special Needs Kids Tax" This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit).  There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington , D.C. ( National Child Research Center ) can easily exceed $14,000 per year. Under tax rules, FSA dollars can not be used to pay for this type of special needs education.      

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.      

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes   When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise-the AMT won't be held harmless, and many tax relief provisions will have expired. The major items include:  

The AMT  will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center , Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families-rising from 4 million last year to 28.5 million.  These families will have to calculate their tax burdens twice, and pay taxes at the higher level.  The AMT was created in 1969 to ensnare a handful of taxpayers.   Small business expensing will be slashed and 50% expensing will disappear.

Small businesses can normally expense (rather than slowly-deduct, or ("depreciate") equipment purchases up to $250,000. This will be cut all the way down to $25,000.  Larger businesses can expense half of their purchases of equipment.  In January of 2011, all of it will have to be "depreciated."  

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place.  The biggest is the loss of the "research and experimentation tax credit," but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.       Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available.  Tax credits for education will be limited.  Teachers will no longer be able to deduct classroom expenses.  Coverdell Education Savings Accounts will be cut.  Employer-provided educational assistance is curtailed.  The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.  This contribution also counts toward an annual "required minimum distribution."  This ability will no longer be there.   PDF  Version  Read more: http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171##ixzz0sY8waPq1  

Now your insurance is INCOME on your W2's......   One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the people who backed this administration will be astonished!  

Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort.  If you're retired?  So what; your gross will go up by the amount of insurance you get.   You will be required to pay taxes on a large sum of money that you have never seen.  Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year.  For many, it also puts you into a new higher bracket so it's even worse.  

This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases.   Not believing this???  Here is a research of the summaries.....  

On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002  "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."   Joan Pryde is the senior tax editor for the Kiplinger letters. Go to Kiplingers and read about 13 tax changes that could affect you.  Number 3 is what is above.  

GARTH BROOKS, TIM MC GRAW, WILLIE NELSON AND BIG MIKE

I don't know Garth Brooks, Tim McGraw and Big Mike, but I do know Willie Nelson...at least this Willie Nelson

Before he started performing full-time, this Willie Nelson was an insurance company executive who worked for my daddy at American National Insurance Co.'s home office in Galveston

And before that, we went to high school together.

Since he retired from the insurance industry, Roy Hammock has been impersonating country music singer, Willie Nelson, in lounge shows throughout Las Vegas.  And he not only looks like him when he's dolled up like he is here, but he sounds like him when he sings.

Roy as Willie, along with the fellows who impersonate Garth Brooks and Tim McGraw, who are with Roy in this photo, also have others who join them from time to time, like a look alike of Marilyn Monroe.

So how do they do this?  I remember a professional theatrical make-up artist told me one time, "Why do you find this so hard to believe?  Carol Channing, Elvis and Judy Garland didn't look like themselves either until they were made up to look like themselves."

Roy, not as Willie but as himself, has one more interesting accomplishment.  He and former Bill Clinton girlfriend, Gennifer Flowers, are (as we say in the trade) "close friends."

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HENRY WIENCEK AND E. DOUGLAS MC LEOD
Taken in the Foyer of the Moody Mansion

Galveston, Texas started its life as a city with a lot of families who would become rich as a result of the many businesses a very prolific and active seaport would sustain.

One of those families, the family of Colonel William Lewis Moody, his wife and children, came to Texas in the late 1850s and settled in Galveston a few years later.

Col. Moody and his son, W.L. Moody, Jr., built an empire whose foundation was cotton compressing, wharf ownership, and banking.  At the turn of the century, a life insurance company was added that would sell small weekly-premium insurance policies to the working class.  It grew into a huge company, the American National Insurance Co., and it still maintains its home office in Galveston.

When W.L. Moody, Jr. died in 1954 the value of the estate was nearly one-half billion dollars.  The majority of those assets became the corpus of a charitable foundation whose beneficiary is listed as "the people of Texas."

Today the family's patriarch is W.L. Moody, Jr.'s grandson, Robert L. Moody, Sr.

The home of W.L. Moody, Jr. is one of the mansion museums on the Island, and like the others, it attracts thousands of visitors every year.  The home survived the 1900 storm.

The Moody family commissioned author Henry Wiencek to write their story and then to describe in detail the Moody home museum and its furnishings.

E. Douglas McLeod, an attorney and a senior official of the Moody Foundation, is the brother-in-law of Robert Moody. A former state legislator, city councilman, school board trustee and Rotary Club president, McLeod has been associated with the Moody family since he served as a lifeguard at one of their Island hotels when he was a teenager.  That is an association that has now passed fifty years.

Robert Moody contributed a foreword to the book where he tells the stories of learning about business from his grandfather.  Douglas McLeod provides an epilogue that further explains the Moodys, their traditions and current activities.  These are,  in my mind, very important additions to Mr. Wiencek's work.

Because I was a precocious child, I made it a point to meet W.L. Moody, Jr., at his home when I was about ten years old.  Those visits, I think, helped me to know about him and his family, a knowledge that was and remains primarily unknown by the public.  You see, the Moodys are traditionally a private family.

So I believe I can accurately assure those who are interested, that the contributors to The Moodys of Galveston & Their Mansion provide readers good insight.

The great irony, however, is that the publisher, Texas A&M University Press,  had the book printed in China by Everbest Printing Co., Ltd.

The Moodys of Galveston & Their Mansion by Henry Wiencek. Texas A&M University Press.
108 pages: Publishers Price: $19.95

From the Real Estate Research Center at Texas A&M University.

Here is how select Texas cities fared in March (data current as of July 26, 2010):

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In 2002, radio broadcaster, Larry Shannon, and sixteen others who had built remarkable careers for themselves in Texas radio, established the Texas Radio Hall of Fame.  On the recommendation of famous DJ Chuck Dunaway of the Gordon McLendon days, I got Premier Member status in 2005, as number 96.

What is usually unknown by the public is how insecure a radio career is, and in general how poorly the on-air personalities are paid.  Oft times, for an example, a newsman or DJ goes to work only to find out that it will be his last day.  He's fired!  The reason?  "Just because."

He quickly has to find a new job at a new station, and usually that requires that he and his family move to another city, frequently many miles away.

I began as a radio personality at 14, and I worked in radio, later TV, as an avocation for the next 50 years.  And although I loved it, I never had the intestinal fortitude to depend on it for my livelihood. I have a strong need for stability.

There are many more like me out there.

<<---- Bill Cherry, 2006

So the real reason behind the Texas Radio Hall of Fame is that it is a method to celebrate the miracle of those who had the strength of character and conviction to make radio broadcasting their career and by gosh, they survived!

We've just completed voting to pick those who will be the 2010 inductees.  Larry told me that about 1,000 casted votes this year.

Of special note is that two of the inductees, Marty Ambrose and Paul Williams, passed away this year.  We are especially proud they were elected.  

Another friend who will be inducted is true legend, Bud Buschardt (ABC Radio).  I've written about Bud and his incredible record collection in another blog post.

Three that I was pulling for -- Bill "Rascal" McCaskill (KREL), Vandy Anderson (KGBC), and Walter Hammock (KQUE) -- didn't make it.  But then there's always next year.

So with that prologue, here's this year's "Chosen Few":

Marty Ambrose   (KEYH/KLOL/KUHF - Houston)
Brad Barton   (KRLD/WBAP - Dallas-Fort Worth)
Rolando Becerra   (KLAT/KEYH/KXYZ - Houston)
Tony Bridge   (KMHT/KHER/KLUE - Dallas-Fort Worth)
Bud Buschardt   (WFAA/KVIL - Dallas-Fort Worth)
Maurice "Crash" Collins   (KLOL/KZFX - Houston)
Don Couser   (KONO/KDOK/WOAI - San Antonio) 
Don "Skinny" Green (George Bason)    (KONO -  San Antonio)
Jack Hines (Heinritz)    (KNUS/KRLD -  Dallas-Fort Worth)
Scott Hodges   (KLIF/WBAP/KTSA - San Antonio - Dallas-Fort Worth)
Bill Kiley   (KONO - San Antonio)
Joe Ladd   (KIKK - Houston)
Mary McCoy   (KVST/KMCO/KIKR - Houston)
Bill Moffett   (KLOL/ KXYZ/KFMK - Houston)
Dayna Steele   (KLOL - Houston)
Jim White   (KRLD/KNUS - Dallas-Fort Worth)
Paul Williams   (KGKB/KNUZ/KDOK - Houston)

Congratulations to all!

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