Imagine a positive coming from a negative in 2020. At the moment, it’s happening for Texas home prices.
Analysts say some consumers have stronger credit profiles, more stable income and asset resources during the COVID-19 outbreak. Ironically, this has created a prosperous environment for home prices.
The Real Estate Center at Texas A&M University’s Texas Home Price Index shows home prices increased 4.18 percent year over year in July, the latest data available.
Other data reports also have shown the housing market has sustained momentum in this economic downturn.
As an example, Zillow’s Weekly Market Report reveals the median list price for Dallas-Fort Worth homes to be up 4.4 percent ($359,472) year over year in September. The median sales price ending July 25 was $300,062, which is 8 percent higher than a year earlier, according to Zillow.
Real Estate Center senior data analyst Joshua Roberson says two factors contribute to this positive performance in the REC report.
“First, bottomed-out mortgage rates have sustained interest in housing,” he says. “Second, an even greater bottoming out of housing supply has produced a fiercely competitive market for those eligible to play.”
As for mortgage rates, Freddie Mac’s latest Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage averaged 2.86, the lowest rate in the survey’s 49-year history.
“However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity,” Sam Khater, Freddie Mac’s Chief Economist, says in the report.
Zillow’s Weekly Market Report shows total inventory is down 28.2 percent year over year with homes typically under contract after 23 days, 13 days faster than last year.
Homes in the $300,000 range are taking the place of $100,000 homes in available inventory, according to the REC report. That’s a good thing.
“Typically, homes in the lower-priced tiers contribute most to local price growth when the market is tight,” he says. “Currently, though, it’s the mid- and higher-priced homes.”
Of course, the news isn’t all rosy. According to a new report by CoreLogic, 8 percent of Dallas-Fort Worth residents with mortgages have missed at least one payment, a tick higher than the national average. Only 0.3 percent of Dallas-Fort Worth home mortgages were in foreclosure in June, matching the national rate, CoreLogic found.
“Three months into the pandemic-induced recession, the 90-day delinquency rate has spiked to the highest rate in more than 21 years,” Frank Nothaft, CoreLogic chief economist, says in the report.
Dr. Jim Gaines, chief economist at the Real Estate Center isn’t worried about interest rates slowing momentum for home prices, however.
“It’s not likely the Federal Reserve will increase interest rates anytime soon,” Gaines says. “They are on record as saying they will allow inflation to go to 3 percent or more and stay there for a while to get the overall economy moving.”