Housing Affordability Continues to Lag in Dallas

housing affordabilityFrom staff reports

Although housing affordability is at an all-time low in Dallas, home price appreciation has decelerated recently, the latest report from the Federal Reserve Bank of Dallas revealed.

The report, released March 14, also revealed that Dallas-Fort Worth employment grew by 2.5 percent in 2018.

DFW home prices rose 1.1 percent in Dallas and 2.4 percent in Fort Worth in the fourth quarter of 2018, according to the Federal Housing Finance Agency’s house price purchase-only index.

Year-over-year, prices were up 3.6 percent in Dallas, and 6.9 percent in Fort Worth. The state rate is 5.1 percent, and the national rate is 5.7 percent.

“Home-price appreciation in the metroplex has slowed from its torrid pace in 2015–17, when prices in both Dallas and Fort Worth rose by 10 percent annually,” the report said.

 

Despite a rise in home prices, housing affordability in Dallas is at a historic low, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Indexes. Only 46 percent of the homes (both new and existing) sold in Dallas in Q4, barely moving the needle from 3Q’s rate of 45.5 percent.

The national figure was 56.6 percent.

“Housing affordability in Dallas is the lowest among major Texas metros, including Austin, which has a slightly higher median sales price; affordability in Dallas was eight percentage points lower than Austin,” the report said. “Affordability in Fort Worth stood at 56 percent at the end of 2018, similar to other major Texas metros.”

Inventories of existing homes rose in Q4, but were still well behind the generally accepted healthy six month supply.

“In January, overall inventories edged up to 3.4 months in Dallas and 2.6 months in Fort Worth but remained below U.S. and Texas levels,” the report said, adding that entry-level homes (homes priced below $200,000 are considered to be in this range) were at 1.6 months.

Unemployment rose to 3.7 percent in Dallas and 4 percent in Fort Worth in January 2019, the Dallas Fed reported, with area employment expanding at a rate of 1.8 percent a year in January. Payrolls rose 4.8 percent, or 10,500 jobs in Dallas, but contracted 4,800 jobs in Fort Worth.

“With the Bureau of Labor Statistics’ annual benchmark revisions, DFW job growth was revised up to 2.5 percent from its previous estimate of 2.4 percent in 2018,” the report said. “In the Dallas–Plano–Irving metropolitan division, employment grew by 2.5 percent last year—faster than its earlier estimate of 2.1 percent.”

“Meanwhile, job gains in Fort Worth–Arlington were revised down from 3.0 percent to 2.6 percent—still above their long-term average pace.”