Home Equity Economy

Don’t get me wrong, I am thrilled to see Case-Schiller reporting double-digit annual growth across all composites in their latest report. The 10- and 20-city composites showed gains of 10.3 and 10.9 percent through the year ending in March 2013.

For the Dallas area Home Price Level Index, the year-over-year growth according to Case-Schiller’s indicies was a very healthy 7.94 (117.02 in 3/12 and 124.96 in 3/13). So yes, we’re experiencing growth, but why is our total economic recovery so slow?

Mark Dotzour, chief economis at the Real Estate Center at Texas A&M University, explains it this way:

We are witnessing a recovery in the housing market. Housing prices are increasing, and new residential construction is picking up. The increase in home prices has a positive effect on economic activity in two ways.

First, an increase in housing prices gives way to investment in new housing construction. Second, the “housing wealth effect” is magnified as an increase in residential prices causes some households to increase their expenditures on home improvement, consumption or both. But to do so, they must first get a loan from a financial institution. This is extremely difficult to achieve under current borrowing constraints and behavioral biases.

As discussed earlier, households have been deleveraging from high debt levels as they attempt to manage debt. Conditions are tight; banks are not willing to lend easily. Uncertainty about job retention and professional growth is another factor that lowers the probability households will increase their debt burden.

Dotzour goes on to add that homeowners with less-than-stellar credit are less likely to capitalize from the recovery of the housing market. It’s those homeowners who have pristine credit, high levels of equity, and very little debt who are able to make money from the process of selling their home.

So what amounts to a full economic recovery? Well, it’s bigger than the housing market, Dotzour says. Sure, a sharp decline in the housing market can tank the economy, but home prices and construction alone won’t revive it.

If household debt decreases and technological gains increase, then employment increases, and, therefore, household income rebounds, Dotzour adds. So while it’s good to be optimistic about the housing market, our economic recovery is still waiting in the wings.


According to Hexter-Fair Title Company, total sales for the region are already surpassing 2011 numbers.

I love Dallas, y’all.

We’ve got a lot of things going for us. Take our beautiful Arts District, our growing Southern sector, and our rebounding downtown, for example. And according to Standard & Poors/Case-Schiller Home Price Indices, Dallas is maintaining its ground when it comes to residential real estate.

In the S&P/C-S report released today, nationwide, home prices are dipping by 3.5 percent over the past year ending in February. In Dallas, though, prices were flat.

Normally, when people say that something was flat, it’s more like, “Meh, things are flat. Whatever.” But y’all, I’m sure Atlanta would LOVE for their home prices to be flat. If you bought a house there in the past year, it is worth 17 percent less today than a year ago. SEVENTEEN PERCENT LESS! Crazy.

And while S&P says Dallas’ market is flat, well, Hexter-Fair Title Company is a bit more optimistic. In a presentation to Allie Beth Allman agents last week, numbers culled from NTREIS reports show that total residential sales for 2012 are already surpassing 2011 sales through February. Some agents are even saying that sales are actually up 5 percent if you follow MLS numbers.

Really, though, it’s evidence of what many agents have been telling us for weeks: It’s a seller’s market, and there’s a lot of new buyers looking for quality homes. And boy, do we have the inventory!

So far, 2012 is off to a good start, and as long as the world doesn’t end, it looks to be a great year for Dallas Dirt! Do you agree?