Oil prices may or may not influence home values and sales in Dallas, but Houston and the Permian Basin may feel the effects of the dropping price per barrel.

Oil prices may or may not influence home values and sales in Dallas, but Houston and the Permian Basin may feel the effects of the dropping price per barrel.

It seems like economists can’t make heads or tails of the dropping oil prices, other than it’s good for consumers. I filled my little hybrid up the other day for less than $30, so I’m going to call it an obvious win in that column. But with the high demand and limited supply of housing in the Permian Basin, and how Houston home values have skyrocketed, we’re left wondering if these two Texas regions will bear the brunt of cheap oil.

“Oil prices are certainly something to keep an eye on,” said Metrostudy’s David Brown in this DMN report. “As long as oil prices do not continue to decline and don’t stay at a level below $55 a barrel for a sustained period, we should continue to see solid demand for housing in the region.”

On the other hand, Trulia’s Jed Kolko says the impact on home values is coming, but it won’t be felt immediately.

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Home For Sale Sign Dallas

Let’s just say that my eyes widened a little without the help of coffee when I read this story from Steve Brown. According to Fitch Ratings, Texas home prices are way overvalued, by 11 percent they say, and there could be a reckoning coming thanks to falling oil prices.

The financial analysts at Fitch are concerned about the year-over-year growth in Houston, Austin, and Dallas, which posted home price increases of 20 percent since 2011.

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One of the great things about the reports published by the Real Estate Center at Texas A&M University is that you don’t have to be an economist to understand them. Luis Torres, Jim Gaines, and Mark Dotzour all do a fantastic job of breaking down the information into digestible bits. I was very impressed by Torres when I heard him speak at the National Association of Real Estate Editors conference in Houston, and having previously worked with Gaines and Dotzour, I know that they are brilliant.

Of course, as the Real Estate Center publishes its annual outlook, we enjoyed taking a more in-depth gaze at inventory and what the numbers really mean. Months of inventory is a significant indicator for housing demand, and inventory can greatly influence pricing.

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Dallas Q3 Housing Report

During the course of the year, spring and summer tend to be the hottest seasons for home sales, with the pace of closings slowing as fall takes hold and school starts. That’s not what happened in Texas during the third quarter of 2014, says the Texas Association of Realtors Quarterly Housing Report, which was released just now. Additionally, inventory increased this quarter each month, continuing to fuel brisk sales in some areas.

In Dallas, though, sales are down year-over-year by 2.36 percent, while median home prices are up 8.73 percent and inventory is down precipitously from Q3 2013 by 10.71 percent. Logic says that, until inventory increases, home prices will continue to increase and sales will continue their slow, downward trend. Still, some areas are seeing increases (Midway Hollow, Lakewood, Lake Highlands, West Kessler) while some areas and price ranges remain sluggish. All real estate is local, y’all!

“The third quarter of the year is typically a much slower sales period – summer is over, school has started and families are staying put for the upcoming holiday season. That was not the case this year,” said TAR chairman Dan Hatfield. “Texas home sales continue to slightly exceed last year’s levels. If this trend continues, 2014 will surpass 2013 to become the second-best year ever for Texas real estate.”

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2142 Kessler Parkway Front

So, what can you get for a cool million in Dallas? The Motley Fool asked that question last week, and came up with 2142 Kessler Parkway, a luxurious North Oak Cliff house we previously featured as our Inwood Mortgage Home of the Week. When we featured this three-bedroom, two-and-a-half-bath home last July, it was on the market for $967,000. Today it’s listed, as the Motley Fool column writes, at $998,000. The more recent listing with Briggs Freeman Sotheby’s Kate Mote, is 3 percent higher than the July 2013 listing price.

The house is spacious, comes with a pool, and is genuinely very, very nice. But with an asking price of $998,000, you don’t get quite the same bang for your buck as you would in other cities, like Miami or Phoenix.

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I managed to pry myself away from the USA vs. Belgium World Cup match for long enough to tell you about the CoreLogic May 2014 HPI Report. Taking time out to write this was more difficult than scoring a goal on Tim Howard. But, this is news you can use, y’all, much like a stiff drink after the first extra time period.

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Home For Sale Sign Dallas

To put a cap on our National Association of Real Estate Editors spring conference report, let’s talk about the future of the real estate market.

Just yesterday, reports from the U.S. Commerce Department came in showing a much weaker economy in the first quarter than initial reports claimed. And on Tuesday we saw reports of cooling home price growth in North Texas’ key metro areas. So, what does it all mean for our economy, both long term and short term, and how can real estate professionals prepare?

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10245-Strait-Lane-ext-575x383There is good news today for the Dallas luxury real estate market, and one reason why there has been a flurry of mega mansion home sales the last few weeks.

There are more rich people in Dallas. According to Longnecker & Associates, a Houston consulting firm asked to compile data for the Dallas Morning News, Dallas area top execs are getting fatter paychecks. This is because most CEOs and execs get moneyed-up from stock dividends. And stock prices for most of Dallas-Fort Worth companies soared last year, churning out hefty financial packages for our top execs. (more…)