This is very good news for home builders, not such great news for consumers. New home ownership is getting more expensive, even in North Texas. Hence all those apartments going up:
“New homes priced under $150,000 are rapidly disappearing from the market because of shrinking lot inventory, rising land and construction costs. There are just over 5,000 developed lots available for home in this price range and they are not being replaced. Only 2% of the new lot deliveries in Dallas-Fort Worth last year were for homes priced under $200,000. Buyers searching for a new home in this price range are being pushed to the existing home market in most submarkets. They may soon be forced to stay in the rental market,” said David Brown, Regional Director of Metrostudy’s Dallas Ft. Worth Market.
Steve Brown says that North Texas home starts were up 2 percent in the second quarter of 2014 from 2013, and that new home prices are soaring thanks to rising construction costs and ever-rising land prices.
In Dallas/Ft. Worth, 12.1% of annual starts were priced below $150,000 as of the first quarter of 2012. That proportion has decreased to 6.0% as of 1Q 2014. During the same period, starts of homes priced greater than $300,000 grew from 28.6% to 42.0%.
Then Metrostudy Inc. reported last week that that median new home prices in the Dallas-Fort Worth area have hit a new high, rising a whopping 24 percent since 2011, the turning point of the recession.
At mid-year, 2014, the average cost of a new home in North Texas is $269,400, according to Metrostudy, Inc.
Of course, in hot areas, you might even think it’s California, prices are getting so high and mighty. Metrostudy says new home prices have risen by 43 percent in Frisco, by 36 percent in McKinney over the last three years.
“Only 25 percent of the new home closings in the second quarter were for homes priced under $200,000, down from over 40 percent in 2011,” the new report says. “The higher prices are forcing many buyers to the nearby submarkets of Melissa, Anna, Celina, Little Elm, Oak Point and unincorporated areas of Denton and Collin counties.”
David Brown of Metrostudy says we are expecting a 10 to 15 percent increase in home starts this year, and that home starts in the D/FW area are up 2 percent from a year ago.
Still, the amount of homes Metrostudy found that on the market in North Texas at the end of June was down 12 percent from a year ago. There are fewer than 3,000 new homes on the market, though it does seem that every street in Preston Hollow and Park Cities is alive with the scent of fresh wood from pine two by fours.
Look at Northwest and North Central Dallas: an 86% change in median home prices from 2011 to 2014. That’s Preston Hollow, Park Cities, parts of Bluffview and Lakewood. And don’t you now wish you had bought something in one of those hoods back in 2011?