North Texas Boasts Eight Towns on List of Best Markets in the U.S.

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(Photo courtesy VisitFrisco.com)

How did North Texas fare in a ranking of overall best housing markets in the U.S.? How far has the Dallas-Fort Worth apartment market come in recovering after the recession? How much of their income is the average Dallas-Fort Worth homeowner spending on housing? All this and more in this week’s review of real estate news.

NORTH TEXAS TOPS WALLETHUB 2018 LIST OF BEST MARKETS

North Texas can boast eight cities or towns on WalletHub’s list of overall best markets in the country, the financial site revealed last week.

The site said it compared 300 cities of varying sizes, utilizing 22 indicators of housing-market attractiveness and economic strength.

“Our data set ranges from median home-price appreciation to home sales turnover rate to job growth,” WalletHub said.

Overall, Frisco was tapped as the best city to buy a house in the U.S., with McKinney and Allen coming close behind at No. 2 and No. 3. Richardson came in at No. 7, Denton was No. 10, Carrollton No. 12, Fort Worth No. 15, and Irving No. 21. Garland, Plano, Dallas, Arlington, and Mesquite came in at 41, 44, 84, 86, and 112, respectively.

However, when ranked by city size, Fort Worth came in at No. 3 for large cities. Dallas came in at 17.

McKinney came in at the top of midsize cities, Irving was No. 6, Grand Prairie No. 12, Garland No. 14, and Plano No. 16. For small cities, Frisco was at the top, with Allen next at No. 2. Richardson was No. 5, Denton No. 7, and Carrollton No. 9.

LARGER PERCENTAGE OF INCOME NEEDED TO PAY FOR HOUSING IN NORTH TEXAS, STUDY FINDS

Dallas-Fort Worth homebuyers don’t have to spend as much of their paycheck on mortgage payments as the national average, but not by much, Zillow’s second-quarter affordability study found.

The study, which looks at 35 of the country’s largest markets, found that homebuyers nationally spend 17.5 percent of their monthly income on their mortgage.

The share of median household income needed to make the median mortgage payments on a median-priced home jumped by more than 2 percent year-over-year in the second quarter, the report said. That increase is attributed to higher home prices and higher mortgage interest rates.

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Still, 17.5 is still less than the historical average of 21.2 percent. But the income to mortgage ratio has not been this high since 2009.

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“While mortgage rates remain low by historic standards, they are creeping upward, eating into what buyers can pay, and in a handful of pricey markets, affordability already looks unnervingly low,” said Zillow Senior Economist Aaron Terrazas.

Terrazas said that among lower-income buyers in pricey markets, it’s impossible to afford the mortgage on even the lowest-priced home.

Zillow’s analysis said that paychecks are not keeping up with the ever-increasing costs of buying a home. In 2017, low-earning households paid 23.9 percent of their income on their mortgages, while higher-earning households paid less than 13 percent.

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And it’s worse for renters, who pay an average of 28.6 percent of their earnings toward rent, and even more worse for those in the lowest income brackets, who can pay upwards of 60 percent of their income on housing.

APARTMENT MARKETS IN TEXAS NEARLY RECOVERED FROM RECESSION

Apartment markets in Austin, Dallas-Fort Worth, and San Antonio have nearly recovered from the recession, a new Texas A&M Real Estate Center study found.

Houston’s market has started a new cycle of recovery, thanks to Hurricane Harvey last year.

“In the absence of a major shock to the U.S. and Texas economies, apartment markets in Austin, DFW, and San Antonio are projected to move toward their long-term, steady-state average growth rates,” the study found.

The study used time series of vacancy rates and rent-growth rates for apartment markets from the third quarter of 2005 through the first quarter of 2018.

Dallas-Fort Worth’s vacancy rate during the recession reached a peak of 13.3 percent in 2009, and then fell to eventually trough at 6.8 percent in 1Q 2016.

“Absorption exceeded unit deliveries in five of the six years between 2010 and 2015,” the study said. “Vacancy rates trended upward to 9.4 percent in first quarter 2018.”

The study projects a vacancy rate that will continue increasing until 3Q 2019, and then they will settle to a long-term average of about 8.9 percent.

Apartment rent-growth rates peaked at 8 percent in 2Q 2016, and then reverted to 3.6 (the long-term growth rate).

“Austin, DFW, and San Antonio markets are currently experiencing decreasing rent-growth rates while Houston is in an early stage of increasing rent-growth rates,” the study concluded.

RESIDENTIAL CONSTRUCTION EMPLOYMENT SHOWS STRONG GROWTH IN AUGUST

Employment in residential construction continues its upward trend, with those jobs rising by 12,900 in August after a 6,800 increase in July, the National Association of Home Builders reported.

Residential construction employment now sits at 2.83 million last month — or 802,000 builders and two million specialty contractors. The six-month moving average of job gains in the industry is 5,383 a month, with home builders and remodelers adding about 136,600 jobs on a net basis.

Unemployment rates for construction workers dropped to 4 percent on a seasonally adjusted basis, down .4 points from July, and is the lowest rate for construction workers since 2001.

Jobs increased by 201,000 and employment held steady at 3.9 percent, after an increase of 147,000 jobs in July, the Bureau of Labor Statistics said. Job gains have averaged 207,000 a month this year. The number of unemployed persons decreased by 46,000, and the number of unemployed persons fell by 423,000.