Sure, economists are saying that the Dallas-Fort Worth area have posted new gains in 2014, and that home price growth for the North Texas metro areas is projected to increase in 2015 to the tune of 9 to 11 percent, but more and more people are starting to take a closer look at those numbers and see that, while it’s good news overall, home prices need to be viewed with greater local perspective. Afterall, the MSA that includes Dallas — Dallas-Plano-Irving — is vast and diverse. The same can be said for the Fort Worth MSA — Fort Worth-Arlington.
So, while we are encouraged to see both Local Market Monitor and CoreLogic give glowing reviews of the Dallas area and Texas as a whole, we need to get more specific data to get a clearer picture of home prices, home values, and where you can buy a property that will actually appraise. After all, real estate isn’t just local, it’s hyper-local.
“For the full year of 2014, home prices increased 7.4 percent, down from an 11 percent increase in 2013,” said Sam Khater, CEO of CoreLogic. “Nationally, home price growth moderated and stabilized at 5 percent the last four months of the year. The moderation can be clearly seen at the state level, with Colorado, Texas, and New York at the high end of appreciation, ending the year with increases of about 8 percent. This contrasts with previous appreciation rates in the double-digits — for instance, Nevada and California, which experienced increases of more than 20 percent earlier in 2014.”
So, the big picture of Texas shows a moderation of home price increases, but we also need to be mindful of how our energy-based economy will be affected by tumbling oil prices and job cuts. And as Candy pointed out, homes in the price ranges below $500K move much faster than the $1 million and up market, which is quite soft at the moment. While it is a seller’s market, some areas aren’t seeing nearly as much demand because buyers are looking for move-in ready homes that provide excellent value. We also can’t discount the effects that mortgage regulation have had on the market, and how crucial it is for homes to appraise.
Consider Houston, which had amazing growth in 2014, could be heavily impacted by oil prices in 2015. There are already reports of a softening in the white-hot luxury market in this area. According to CoreLogic the Houston-The Woodlands-Sugar Land area — a truly mammoth MSA — saw 9 percent price growth (excluding distressed sales) in 2014. Dallas-Plano-irving was right behind at 7.7 percent. Still, CoreLogic’s Anand Nallathambi projects slower home price growth in 2015, but growth nonetheless.
I spoke to Coldwell Banker’s Dallas-Fort Worth president Frank Obringer last week on his outlook for 2015. “I’m still very encouraged,” he said. “Housing still very much speaks for itself.”
Urban sprawl, while it may get a bad name, is still creeping up as builders buy up raw land and build more rooftops and increasing inventory. Last year, however, there were some concerns about “shadow inventory,” or homes owned by investors that aren’t occupied nor are on the market, and how they could affect prices.
“I do think that there could be a negative impact regarding [shadow inventory],” Obringer said. But his bigger concern is hip-pocket sales, which aren’t reported to MLS and are left out of statistics.
“We have been very clear to our company, to our agents,” Obringer said. “We believe that it’s in the seller’s best interest to reach the most buyers and to get the most offers on a property.”
Obringer is optimistic about the luxury market and international buyers, and is seeing an uptick in demand with Coldwell Banker’s luxury brand, Previews.
“We anticipate a better year in 2015, which was better than 2014, which was better than 2013,” Obringer said.
What are your views on the overall health of Dallas and Fort Worth’s real estate markets? Are you expecting more growth in home prices? And how do we get a more complete picture of Dallas’ economic health?