Steve Brown has a snippet on his Biz Beat Blog the other day, saying the brakes are about to be slammed on DFW’s runaway home prices. This will happen next year.
Which is like in 3 weeks.
A friend in Phoenix is an appraiser, and lived through the mess that the Phoenix/Scottsdale market became during the downturn: it was a really rough ride. He tells me that DFW is regarded as one of the most over-valued, if not THEE MOST over-valued, markets in the nation. Dallas-area home prices are up almost 10% from 2014 levels, and CoreLogic, Inc. says we lead the pack on home price gains. We have not just re-gained the trickle that was lost during the Great recession, we have surpassed it.
So that means, if you sell your home before 2016 hits, you will have timed this market perfectly. At least according to Jonathan Smoke and the folks at Realtor.com, who say we will be cooling our horses in the price gains department:
In 2016, median single-family home price increases in the area will only be 2 percent, Realtor.com says.
“The meager growth in prices is related to an expected increase in supply and a softening in the unemployment rate,” the online real estate marketing site forecasts for D-FW. “Employment should grow during this period, but not at the pace of labor force growth.”
Home sales in North Texas are forecast to rise 7 percent tin 2016, according to Realtor.com.
We will have an increase in housing supply, or inventory, and a softening in the unemployment rate. Softening — what does that mean? Less unemployment? I know the nucleus of job growth is Billion Dollar Mile in the Plano/Frisco/Far North Dallas corridor. Those people have not moved here yet, and builders are building like no tomorrow to accommodate their thirst for homes. More Baby Boomers are unloading their homes, as well, and an increase in supply from the Boomers is expected across the country.
“In 2016, the unemployment rate is expected to increase as the labor force grows faster than jobs,” the new report says. “The contradictory trend of growth in sales with weaker price appreciation is due to employment growth but even stronger labor force growth coupled with expected growth in housing supply through more existing home owners looking to sell and increasing levels of new construction.”
We’ve sure had a good run, with low inventory creating bidding wars over most purchases. Like most economists, including Jim Gaines at Texas A&M and most of the appraisers I talk to, the word is not concern but rather “normal growth and appreciation”, a healthy 2 to 3%. Folks who have been waiting this steroidal market out by renting are smart. Friends have been trying to buy an under $1 million home now for months, getting into bidding wars each time.
Steve went on to say that “the supply of houses for sale has been constrained, particularly for properties priced below $200,000.”
Well please tell me where we have homes for sale below $200,000? We kill ourselves every week trying to find our Tuesday $200’s, mostly because we are so picky. You have to head out to Irving or Arlington or north to Carrollton to find much in this price range, unless you are talking condos.
What do you see in store for home sales and prices in 2016? Will inventory loosen up? And in what price ranges? Inquiring real estate minds want to know!