It’s official — the likelihood of finding an affordable home for less than $200,000 in Dallas-Fort Worth is slim to none, economists with Metrostudy said last week.
“While DFW’s strongest price point during the last cycle, below $200,000, is no longer viable, the “new affordable” price bracket, $200,000 to $300,000 grows,” Paige Shipp, regional director of Metrostudy’s Dallas-Fort Worth market said.
In fact, Metrostudy found that the majority of affordably priced new homes being built by builders in the North Texas area are between $300,000 and $400,000. The majority of the demand in the area is below that $400,000 threshold, and the median new home price in DFW was $323,100 in the first quarter of 2018, which is a decrease of 2.4 percent over last year (which only increased 2.6 percent that year).
“As builders race to reintroduce more affordable product, the median new home price will continue to drop or remain flat,” Metrostudy’s report said. “The decrease in median price can be attributed to both the product mix, smaller, less expensive homes, as well as fewer sales in the higher prices.”
Metrostudy found that the median resale price has increased 1.3 percent in the first quarter of the year versus 2017. The difference between the median resale price and the median new home price is just shy of 30 percent.
In the first three months of 2018, 22,037 existing homes were sold in DFW, with a median price of $249,500, a six percent increase over the fourth quarter of 2017.
New home starts fell in first quarter by 11.3 percent over the previous quarter, with builders starting 33,518 homes in the past 12 months and 7,537 in the first quarter. Annual closings increased to 31,923 in the first quarter, compared to 31,755 in 2017. First quarter closings however, dropped by 14.3 percent compared to the fourth quarter of 2017.
Year-over-year quarterly closings rose 2.4 percent.
Shipp said that the difference between resale and new prices is the lowest it’s been since 2005.
There are 38,944 lots under construction in Dallas-Fort Worth, an increase of more than 1,150. Topping out those lots under construction is north Fort Worth with 4,386 — an almost 19 month supply. Southwest Fort Worth has 2,196 lots, or a near 32 month supply. Vacant developed lot inventory rose by 1.1 months, bringing the area supply to 19.2 months.
“In 1Q18, annual starts outpace closings by almost 11 percent between $200,000 and $300,000,” Shipp said. “This difference is considerably higher than the market average of starts outpacing closings by 5 percent.”
“As DFW transitions to a sub-$300,000 market, builders will continue to build and inventory spec homes, especially since making money in the lower price points is about volume and speed of construction rather than margin,” she added. “However, for communities priced above $400,000, builders must be vigilant about not exposing themselves to too much inventory as we enter into a historically slower selling season.”
Overall, Metrostudy’s report said that the increased efforts of developers and builders to provide more new inventory in the $300,000 and below market will translate into more stability in the area’s housing market, providing “a buffer from future economic distress.”