Even as the price of new-builds in Dallas remains largely stagnant, a report last month suggests that housing affordability will remain a primary concern for the foreseeable future. According to Metrostudy, the area’s low housing inventory streak continues unabated, and the median home price inches ever upward, reaching $320,600 last quarter. Resale prices of homes show no signs of slowing and new home starts in the $200,000 or under price range have become relics of the past.
“New homebuyers are stretched to the limit of what they can afford,” said Paige Shipp, Director of Metrostudy’s Dallas-Ft Worth market. Tell us about it.
Among the effects of the current market is the surge in the remodel market. Many homeowners are choosing to invest in remodeling their current homes instead selling and upgrading. Frustrating home searches yield the conclusion that there’s no ‘upgrading’ in this market without a huge buy-in or moving to a not-so-desirable location. According to the report, the stay-and-renovate trend only escalates the situation. “The apprehension to sell fuels the tight resale market and all but guarantees price appreciation.”
Builders Try to Combat Price Ceiling with Hot Deals
However, the current market presents a potential silver lining or two, temporary and fraught as they may be. As new-build prices flatline, builders aren’t sitting idly by. Shipp suggests that buyers may see some breaks from all of this, but at what cost and to whom? “Many builders and communities have hit a price ceiling,” Shipp pointed out. “In an effort to spur sales, some builders are either reducing prices or minimizing price increases all while costs, including land, labor and materials, march higher.”
What that means for the future of Dallas area builders remains uncertain.
“…builders and developers struggle to find land and lot positions that make financial sense. Land and development costs continue to rise, complicating a market hitting a “price ceiling”. Lot and land purchases contracted today will not deliver until mid-to-late 2019, and the DFW market’s crystal ball is hazy. Development in previously considered “tertiary markets” is encouraging, as are smaller, defeatured homes entering the market. The speed at which these lots and home are delivered will determine the future of DFW’s housing market.”
So, perhaps price breaks in the short term don’t register as a silver lining for anyone but the buyer who snags a great deal.
Starts Below $250,000 See Potential Growth
However, there are a few stats that suggest it’s not all doom and gloom. True, the report says the sub-$200,000 market is dead and gone. And there’s reason to believe that’s accurate. Of the 31,409 new home starts in Dallas over the last 12 months, only 329 of them were priced below $200,000. Yikes. According to the report, though, “the 28 % increase in starts between $200,000 and $250,000 suggests that builders and developers are working to deliver more affordably priced homes. The price tranche experienced the highest jump in starts, which is encouraging.”