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New housing starts have grown the most in the $300,000 to $400,000 price ranges. (chart: Metrostudy)

 

More confirmation that Dallas has pricey dirt in this latest report from Metrostudy: While housing starts are up to the tune of 12.4 percent year-over-year and 8.3 percent over last month, few of those have been in more affordable price ranges. More people who would have preferred to buy new construction have turned to the existing home market, and those unable to find an affordable home in the market have turned to renting in droves.

“New home starts below $200,000 dropped as starts between $250,000 and $400,000 surged,” said Paige Shipp, Regional Director of Metrostudy’s Dallas Office. “Although starts between $200,000 and $250,000 increased, a diminishing supply of homes at that price point is a concern. Buyers seeking affordable housing near employment and urban core are forced to buy from the limited resale market or into the rental market. Starts during the third quarter surged 38.9% and 74.5% higher than the second quarter for homes priced $250,000 to $750,000. The most notable increase in starts was in the $300,000 to $350,000 range, which is quickly becoming DFW’s new “affordable” price point.”

That’s exactly what we heard from the Real Estate Center at Texas A&M University last month, as economist Dr. Jim Gaines noted the gap in the less-than-$200,000 bracket:

“For years in Texas, we have had the most affordable housing for a major metro area,” said Dr. James Gaines, chief economist with the Real Estate Center at Texas A&M University. “Affordability and workforce housing are going to be a major issue.

“We are not building enough houses in the $150,000 to $200,000 bracket.”

So what fallout could we expect from that? What is the increased demand for leases in Dallas-Forth Worth doing to rents?

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Home For Sale Sign Dallas

Let’s just say that my eyes widened a little without the help of coffee when I read this story from Steve Brown. According to Fitch Ratings, Texas home prices are way overvalued, by 11 percent they say, and there could be a reckoning coming thanks to falling oil prices.

The financial analysts at Fitch are concerned about the year-over-year growth in Houston, Austin, and Dallas, which posted home price increases of 20 percent since 2011.

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Photo courtesy of Ray Bodden

Photo courtesy of Ray Bodden through a Creative Commons license

Texas is the place to be for economic prosperity and job growth, which in turn has made our real estate market one of the best in the nation, according to the 2014 Texas Annual Housing Report, released this week by the Texas Association of Realtors.

Nearly every area of real estate in the Lone Star State continues to get bigger and better, some of it astoundingly so, the report shows. Most notably, growth has happened in luxury home sales, international home buying, relocation activity, condominium sales, and remodeling trends.

“It’s a great time to live in Texas. The high demand for Texas real estate is not being fueled by speculation and investment activity—it’s driven by the thousands of people who move to the Lone Star State daily,” said Dan Hatfield, chairman of the Texas Association of Realtors. “People are moving to Texas from across America and around the world to take part in our state’s booming economy, business-friendly environment, and quality of life.” (more…)

Home For Sale Sign Dallas

Maybe so, or maybe the market is just taking a breather while the summer heat is on before it grows legs again. According to Standard & Poor’s/Case-Shiller’s Home Price Index, Dallas has seen the smallest increase in home prices since August of last year. Still, prices are growing, at an albeit slower rate. In fact, all of the MSAs Case-Shiller surveys saw growth from April to May of this year, even beleaguered Detroit.

Regionally, home prices increased 8.6 percent in Dallas from May 2013 to May 2014, and between April and May of this year, the increase was 1.3 percent. That’s a decrease from March to April 2014, during which Dallas saw a 1.6 percent price growth. Nationally, housing prices are up 9.4 percent from May 2013, with a flat month-over-month HPI.

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