You know I am not a huge fan Standard & Poors/Case-Shiller Home Price Index. Why? you ask? I’m sure they are very nice people, but their data is old and does not take into account new construction. By old data, I mean that what they are reporting today, this news that has us all giddy, is coming from transactions that were conceived in 2012, like November and December. It takes time to buy a home. A transaction begun last November may be closed in January or February. And Case-Shiller does not take into account new home sales. So like the 6,000 units that Mehrdad Moaydi has vertical, the vast developments booming like Phillips Creek Ranch and Craig Ranch up north of us, all those new home sales are not counted. No condos, either. Case-Shiller only counts residential re-sales.
What I’m saying is that when Case-Shiller is positive, it’s not just good news, it’s UBER great news! And today, Case-Shiller was as positive as I have seen in eons.
Dallas area home prices rose by 6.5 percent in December of 2012, says CS. That gain was the largest local increase in twelve years of CS survey-taking.
Our market is hotter than blazes and it’s not even spring. Allie Beth Allman’s Debbie Ingram sold my daughter’s condo in seven days to a cash buyer. This was a small deal, relatively speaking, under $500K. But we know that 6601 Hunter’s Glen is under contract, as is Tim Headington’s fabulous Ritz penthouse condo. Tom Hicks has his home available (not on MLS) for an earth-shattering $135 million, but maybe that’s not so earth-shattering: the rich with all those advisers at their fingertips seem to REALLY be eyeing real estate.
Every time I look at my bank account, I want more real estate: savings accounts are earning nada.
I spoke to a Preston Hollow homeowner selling his home himself, in other words, a FSBO: the house is under contract.
“We waited it out for over a year,” he told me. “Then right after Christmas, it just exploded.”
Mike Davis of Capital Distributing is the best barometer I know because he sells beautiful, high end appliances to home builders. And he is busy, very very busy. Yesterday, in an informal conversation, he told me why he thinks our market is so hot right now: low interest rates, pent-up demand, and a bit of anxiety as we hear that inventory is so very, very low.
There’s also the concept of “herd mentality”, when people see their friends jumping in the water, they are usually next.
Today’s CS report is the 10th month in a row of higher Dallas-area home prices. Nationwide prices were up an average of 7.3 percent in the Case-Shiller survey.
Here’s what S&P’s David M. Blitzer said: “Dallas, Denver, and Minneapolis recorded their largest annual increases since 2001. Housing and residential construction led the economy in the 2012 fourth quarter.”
Once again, housing seems to be our economy’s main driver. Steve Brown says Dallas home prices at the end of 2012 “were about 5 percent below levels at the top of the local market in mid 2007.”
Only five percent!
“Home prices in all the 20 major cities Case-Shiller tracks are about 30 percent below where they were before the recession in mid 2006,” says Steve.
Us, we are down now by only five percent! And that’s pretty darn amazing!