Dallas Home Values Hitting Pre-Recession Levels, Study Says

Dallas was among nine metros where the bulk of home values have hit pre-recession levels, affordability is hampering one age group in particular from purchasing homes, Zillow is making yet another bid toward world domination, and mortgage rates are ticking up — all this and more in this week’s real estate news roundup.

HALF OF ALL U.S. HOMES HAVE REGAINED THEIR PRE-RECESSION VALUES

Dallas was one of nine major cities to see some of the highest post-recession recovery rates across the country, Zillow’s monthly Real Estate Market report revealed.

San Antonio, Austin, and Houston were also on the list of major metros where 95 percent or more of all houses are now worth more than their peak value during the housing bubble.

The median home value – $217,300 – surpassed its pre-recession peak in 21 housing markets as well.

What bounced back the fastest? Luxury properties, with 57.1 percent of luxury homes returning to their pre-recession levels, compared to 39.7 percent in the most affordable markets.

LACK OF AFFORDABILITY PREVENTING MILLENNIAL HOMEOWNERSHIP

A perceived lack of affordability is preventing many millennials from becoming homeowners, the June 2018 Corelogic Home Price Insights report released today revealed.

CoreLogic said that its consumer housing sentiment study, which gauged attitudes toward home buying and renting, found that the desire to own a home was significantly higher in younger groups than older age groups surveyed, but affordability held them back.

“Younger millennial renters (those under the age of 29) are significantly more likely to want to buy a home in the next 12 months than older millennial or Generation X renters,” the report said. “Sixty-three percent of younger millennials who are not interested in home ownership identified the inability to afford a home or down payment as the reason they are not interested in buying at this time.”

Only 50 percent of older millennial renters and 52 percent of Generation X renters said affordability was a factor in their decision to rent versus own a home. Boomers said they rented because they lacked interest in home ownership, driven by their need at this particular stage of their lives.

Nationally, the year over year home price increased by 6.8 percent, with all states experiencing some kind of increase. Texas had a 5.5 percent increase year over year, and is predicted to have a 3 percent increase year over year in June 2019.

“In an analysis of the country’s 100 largest metropolitan areas based on housing stock, 41 percent of cities have an overvalued housing stock as of June 2018, according to CoreLogic Market Conditions Indicators (MCI) data,” the report said. Both the Dallas-Plano Metro market and the Fort Worth-Arlington markets are considered overvalued at this time.

MORTGAGE RATES CLIMBING, FREDDIE MAC SAYS

Although they had barely moved all summer, mortgage rates began moving higher last week, data released by Freddie Mac revealed last week.

As reported by the Washington Post, the 30-year fixed-rate average rose to 4.54 percent with an average 0.5 point. The week prior, it was 4.52 percent, and in the same week last year it was 3.92 percent. The 15-year fixed-rate moved to 4.02 percent, up from 4 percent the week before and 3.20 percent the year before. The five-year adjustable rate mortgage was unchanged from the week before at 3.87, but still much higher than the 3.18 percent it was the year before.

“Mortgage rates increased early this week, erasing the past month of gradual declines,” said Aaron Terrazas, senior economist at Zillow, told the Post. “The combination of a new round of trade tensions between the U.S. and China, comments from several Federal Reserve officials and the shifting monetary policy outlook in Japan all contributed to the trend. Q2 GDP data due Friday are the most important economic data to watch, as markets aren’t expecting any changes to the interest rate policy from the [Federal Open Market Committee’s] meeting next week.”

“The next few months will be key for gauging the health of the housing market,” Freddie Mac chief economist Sam Khater said in a statement. “Existing sales appear to have peaked, sales of newly built homes are slowing and unsold inventory is rising for the first time in three years. Meanwhile, affordability pressures are increasingly a concern in many markets, as the combination of continuous price gains and higher mortgage rates appear to be giving more prospective buyers a pause. This is why new and existing-home sales are not breaking out this summer despite the healthy economy and labor market.”

According to the Mortgage Bankers Association, mortgage applications were flat last week, and loan application volume has decreased 0.2 percent from a week earlier. The refinance index was up one percent, and the purchase index fell one percent. Refinance activity accounted for 36.8 percent of all applications.

ZILLOW HURTLES TOWARD WORLD DOMINATION

Zillow, in another bid to be all the things (we talked about one of those things last week), announced it would be entering the mortgage business, the company announced Monday.

The company announced it would be buying Mortgage Lenders of America, so that the company could “shorten the home-buying process for consumers who purchase homes through Zillow Offers.”

For Mortgage Lenders of America, they will continue to do business as usual, offering mortgages to consumers, but would also power the Zillow Offers program.

The company said that through Zillow Offers, the company will now directly buy homes from sellers in the Denver, Atlanta, Las Vegas, and Phoenix markets. After purchasing the home, Zillow makes whatever repairs and updates are needed and lists the home.

Monday, the company also said that other companies would no longer be participating in the Offers program.

“Going forward, we will be the only buyer participating in the Zillow Offers program,” the company said Monday in a letter to investors. “We no longer facilitate third-party investors to make offers to home sellers through a marketplace. This will ensure the process is as efficient and seamless as possible for sellers, agents and brokers.”