Dallas-Fort Worth Boasts One of Lowest Home Buy-Rent Breakevens

homeIt takes about a year and a half for a home to hit the buy-rent breakeven horizon in the Dallas-Fort Worth area, research by Zillow economists for the first quarter of 2018 revealed.

The Zillow Buy-Rent Breakeven Horizon measures the amount of time it takes for owning a home to make more financial sense than renting the same home.

Nationally, it takes almost two years to reach that point, research showed. The shortest amount of time in Q1 2018 was in the Memphis market, where it takes about a year and four months. The longest breakeven is in Los Angeles, where it takes three years and more than eight months for a home to hit breakeven.

In Texas, Austin’s breakeven point is 2.84 years, while Houston’s is 1.67. San Antonio’s is 2.31.

“he reasons can be complex. Rents, home value appreciation, and interest rates play a role in the breakeven equation,” Zillow’s research report said. “It also factors in the hefty transaction costs of buying and then selling a home in order to realize gains – as well as the savings and investment gains you could make as a renter by putting that down payment toward some other venture and avoiding homeownership expenses like real estate agent commissions and property taxes.”

Housing Production Falls, But Is Still Better than 2017

Housing production fell in April, but is still higher than a year ago, new federal reports revealed last week.

Total housing production fell 3.7 percent in April to a seasonally adjusted 1.29 million units, the U.S. Department of Housing and Urban Development and the Commerce Department said.

The National Association of Home Builders said that the drop in overall production can be attributed to a slowdown in the multifamily sector. Multifamily starts fell 11.3 percent in April, and single-family starts remained flat.

“Single-family starts are up 8.3 percent for the first four months of the year relative to the start of 2017, which is higher than our forecast and bodes well for the rest of the year,” said NAHB Chief Economist Robert Dietz. “However, builders must manage supply-side hurdles, such as ongoing building material price increases and shortages of land and labor, to meet growing housing demand. Lumber prices continue to rise, with recent increases adding more than $7,000 to the price of an average single-family home.”

In the south, housing production increased 6.4 percent, while it fell in the Northeast, West, and Midwest.  Permits rose 12 percent in the South and fell everywhere else.

Overall permits declined by 1.8 percent to a seasonally adjusted annual rate of 1.35 million units in April. Single-family permits were up by 0.9 percent and multifamily permits fell 6.3 percent.

Prospective Homebuyers Becoming Iffy on Desire to Buy

While people still want to own a home, many are less-than-secure about the state of the American housing market, a new survey of homebuyers revealed.

The ValueInsured quarterly Modern Homebuyer Survey revealed that 79 percent of non-homeowners want to own a home, but 67 percent think the housing market is unhealthy — and 52 percent no longer believe buying a home is a smart investment.

The Dallas-based PVI agency’s Housing Confidence Index hit 62.0, a 4.9 point decline from the first quarter of the year.

“Housing confidence – as do home prices – goes up and down, but what’s noteworthy now is the decline among homeowners, in particular millennials,” said ValueInsured CEO Joe Melendez. “Many are stuck in homes they have outgrown and cannot upgrade, which explains the inventory shortage we see at the starter-home level.”
The company said that three things seem to impact prospective homebuyers: the confidence in the ability to afford a home; concern about rising interest rates; and doubt that rising home prices are sustainable.

“This is a pivotal time with rising prices and rates weighing heavily on consumers,” Melendez said. “Flat to declining home sales volume indicates sellers and buyers are not exactly jumping in with both feet. More of them could be moved off the sidelines if perceived security and confidence in home buying could be restored.”

Housing Confidence Bottoms Out (infographic) (PRNewsfoto/ValueInsured)