The Lone Star State isn’t the same place as it was during the big 1980s oil bust, and is better weathering falling oil prices, but further price plunges and worker layoffs could negatively impact home sales and construction.

This is according to new research by Texas A&M Real Estate Center research economist James Gaines, who published Texas 2015 Housing Market and the Price of Oil last week. The six-page report explains that Texas’ economy has diversified significantly since the 80s bust, relying much more on healthcare, technology, and other sectors.

Here’s the takeaway:

The price of Texas oil and the upstream energy sector is a prime cause of concern for Texas’ 2015 economy and housing market. History shows that Texas’ housing does not depend on high oil prices. In fact, the state’s housing market has thrived at prices within a wide range of oil prices lower than those experienced in 2013 and the first half of 2014.

Read the full story over on MidlandDirt.com!

 

 

 

Oil prices may or may not influence home values and sales in Dallas, but Houston and the Permian Basin may feel the effects of the dropping price per barrel.

Oil prices may or may not influence home values and sales in Dallas, but Houston and the Permian Basin may feel the effects of the dropping price per barrel.

It seems like economists can’t make heads or tails of the dropping oil prices, other than it’s good for consumers. I filled my little hybrid up the other day for less than $30, so I’m going to call it an obvious win in that column. But with the high demand and limited supply of housing in the Permian Basin, and how Houston home values have skyrocketed, we’re left wondering if these two Texas regions will bear the brunt of cheap oil.

“Oil prices are certainly something to keep an eye on,” said Metrostudy’s David Brown in this DMN report. “As long as oil prices do not continue to decline and don’t stay at a level below $55 a barrel for a sustained period, we should continue to see solid demand for housing in the region.”

On the other hand, Trulia’s Jed Kolko says the impact on home values is coming, but it won’t be felt immediately.

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One of the great things about the reports published by the Real Estate Center at Texas A&M University is that you don’t have to be an economist to understand them. Luis Torres, Jim Gaines, and Mark Dotzour all do a fantastic job of breaking down the information into digestible bits. I was very impressed by Torres when I heard him speak at the National Association of Real Estate Editors conference in Houston, and having previously worked with Gaines and Dotzour, I know that they are brilliant.

Of course, as the Real Estate Center publishes its annual outlook, we enjoyed taking a more in-depth gaze at inventory and what the numbers really mean. Months of inventory is a significant indicator for housing demand, and inventory can greatly influence pricing.

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New House under Construction

Recent reports show that new home sales are at their highest since 2008, while prices of existing homes are up year-over-year.

New home sales are up 17 percent from the same time last year, according to Residential Strategies, and new home starts are up 11.4 percent, too, at 6,511. Builders are trying to keep up with demand while also trying to keep new homes affordable for buyers, according to a story from Steve Brown:

“Start activity remains strong as builders maintain healthy sales backlogs and are working to reestablish depleted speculative inventory,” Residential Strategies’ Ted Wilson said in the report. “Robust job formation, in combination with tight housing inventories, has kept builders optimistic about sustained new housing demand.”

Rising new home prices have caused a slowdown in sales for some buyers.

Since 2007 the median price of a new home in North Texas has increased $69,000 – 33 percent – to $275,000.

“Affordability continues to be a primary concern for new home builders,” Wilson said.

“Many are anticipating that at some point down the road, interest rates will increase, and they want to ensure that their housing prices are still within reach of the consumer.”

Additionally, a new report from CoreLogic shows that the Dallas-Plano-Irving area is posting an 8.5 percent increase in home price appreciation according to the firm’s most recent HPI.

“Home prices continue to rise, albeit more slowly, across most of the U.S., ” said CoreLogic CEO Anand Nallathambi. “Major Metropolitan Areas such as Riverside and Los Angeles, California, and Houston continue to lead the way with strong price gains buoyed by tight supplies and a gradual rebound in economic activity.”

In Texas, that means we’re holding steady at our return-to-peak price levels, with no major increases. With new home construction up, a positive outlook for investors in several niche markets, and with prices still on the rise, are you optimistic about the Dallas/Fort Worth real estate market going into Q4 2014?

3958 Clover Front

Let’s just clarify for clarity’s sake: Dallas home prices are breaking records, y’all, and if you want a great home inside the loop, you’re going to pay for it. There was quite a debate in the comments of our Tuesday Two Hundred, a super-cute Craftsman home in Sunset Hill that is priced at $239,000. Some folks felt that was too steep. Others thought the renovation was too modern and not true to the architecture of the home.

Here’s the honest-to-goodness-backed-by-economists truth: Someone is going to buy that house, and considering the state of the market and the desirability of this area compared to the prices of adjacent Winnetka Heights homes in similar condition, the homeowner will probably get within $7 to $10K of their asking price with the right buyer, one who will appreciate the Oak Cliff vibe and the cool people who live there. That’s just based on the fact that home prices in our area are up 10.4 percent year-over-year and there are more buyers out there than sellers, especially with the influx of new workers thanks to our booming job market.

3958 Clover Living

Same thing goes for this adorable Midway Hollow post war traditional at 3958 Clover. It’s not as big as a home you’d find in the northern suburbs, such as Carrollton, for instance. No, it clocks in at a modest but capable 1,524 square feet with three bedrooms and two full baths. But you’re not buying a big home when you move inside the loop in this price range. You’re buying location. You’re buying proximity to work, culture, restaurants and shopping. This home is priced at $299,000, and it’s already under option.

3958 Clover Kitchen Dining

Homebuyers will appreciate the renovations to this home, which include an open floor plan that flows from the living room to the dining area and open kitchen, all of which have gorgeous pine floors underfoot. This home feels light and bright thanks to the remodel, and it places the emphasis on the kitchen and living areas as public spots. I also love the open cabinets and the green paint inside that adds a colorful punch to a monochromatic kitchen. The addition of the island not only brings in more prep space, but it’s an informal dining area and a great spot to connect with kids after a day at school and work.

3958 Clover Kitchen

The master bedroom, like the rest of the home, is modest in size at 18 x 10, but that’s not shrimpy or anything for a home in this neighborhood. I also love the cool master bath, that, while it doesn’t have double sinks, it instead has a massive tub with a huge window to bring in some ambient light.

3958 Clover Master 3958 Clover Master Bath

The backyard is a great size for kids to run around in, and thanks to the pine tree in the center of the yard, you won’t have to worry with a ton of leaves coming down every fall, and you get to benefit from its shade. You’ll also appreciate the cool pergola that, with the addition of an outdoor kitchen, would be my hangout from late March until July.

What do you think?

3958 Clover Backyard 3958 Clover Backyard 2

CoreLogic HPI Jan 14

CoreLogic’s newest HPI report released today showed that Texas real estate professionals have good reason to blame their busy days on the hot market. Home prices in Texas are at new highs (yes, higher than pre-bubble manic market highs!), with January 2014 up 10.1 percent over a year ago, and home prices up 1.2 percent from Dec. 2013 (numbers include distressed sales).

In the Dallas-Plano-Irving MSA, home prices are up 12.2 percent year-over-year including distressed sales, and up 10.4 percent excluding distressed sales. National numbers show home prices up 12 percent year over year for January. This is the 23rd consecutive month that home prices have increased, and Texas is one of only three states that has reached a new peak in home prices after the housing bust. And despite near-record appreciation, Nevada is still 40.1 percent below peak prices, CoreLogic’s report showed. Incredible.

“Polar vortices and a string of snow storms did not manage to weaken house price appreciation in January,” said CoreLogic chief economist Mark Fleming. “The last time January month-over-month and year-over-year price appreciation was this strong was at the height of the housing bubble in 2006.”

So, winter didn’t slow Dallas down, and we’re looking at a brisk spring selling season ahead. Still, real estate prices are a hyper-local economy, and while some areas are seeing hand-over-fist sales and appreciation (we’re looking at you, Lake Highlands and University Park) some areas will only see more modest gains. The key, of course, is pricing a home correctly and being flexible.

Where are you seeing break-neck appreciation and sales pace?

7203 Morton

FSBO

Steve Brown jumped on Tuesday’s Case-Shiller report like a kid with a shiny new bike (pay wall? not sure). The report showed Dallas-area home prices up by the largest percentage in more than a decade

Dallas home prices rose 5.7 percent in November from the same period a year ago in the monthly Standard & Poor’s/Case-Shiller Home Price Index. I will caution you, these are sales from November because by now, end of January, all paperwork is in. And it was the ninth month in a row that local prices were up from 2011. Our Dallas-area increase was slightly higher than the 5.5 percent average price rise in the other 20 major cities that Case-Shiller tracks, so yes, I would say that it is time to be very happy indeed. Get on a new bike and hit the Katy Trail!

But from what I see of the flurry of business agents are up to eyeballs in this month, I say we ain’t seen nothing yet when it comes to price increases.

There is so little on the market: local home inventory levels are at the lowest point since the early 2000s, and the analysts Steve interviewed say North Texas could see even bigger price increases in 2013 because there is, quite simply, less to choose from:

“If the inventory doesn’t improve, we are going to see remarkable price increases this year,” said Dr. James Gaines, an economist at the Real Estate Center at Texas A&M University. “If you own a house and want to sell, it’s probably the best time in years.”

Steve says “the number of pre-owned homes on the market in North Texas last year was down about 20 percent. And inventories of new homes are at the lowest point in more than a decade.” Well, what if everyone reads this and decides to put their house on the market? Herd mentality. Folks back in 2008/2009 pulled back, re-grouped, and got a bad taste for real estate. Now, they start hearing about a few good deals, they will get back in.

And Gaines estimates “that Dallas-area pre-owned home prices were up 7.6 percent in 2012 from 2011.” 2011, if you recall, was the first year of median price increases since before the Great Recession. We were probably the least affected state in the Union during the housing crash, but our values still took a 15 percent hit, which we are making up this year.

If the economy continues to chug along and Washington doesn’t do anything stupid…

The big boys confirm that housing is contributing to the nation’s economic growth, which is so interesting because housing is what spurred the crash.

Who is benefitting the most? Phoenix, prices up 22.8 percent, and San Francisco, prices up 12.7 percent from November 2011. Tell me about it: my son is trying to buy a house there.

You know who’s really happy in Dallas right now: home builders. Steve says home construction is still down here and not expected to return to pre-recession levels for years. Actually, Steve, it never will — there are not that many builders out there and banks still have a tight leash.

Steve talked to Dallas real estate appraiser Chuck Dannis, who said he wouldn’t bet on North Texas home prices rising at double-digit rates in 2013:

“but the laws of supply and demand suggest it could happen. If it does, it will just shock people,” Dannis said. “When we had double-digit inflation in housing prices around here, it was always tied to inflation and not necessarily supply and demand.”

Dannis told Steve that appraisers “will be reluctant to sign off on big price increases unless they can support the figures with data from closed home sales.”

Why? Because lenders won’t lend without appraisals that are as tight as Fort Knox security.

I also think that when buyers see billionaires putting their homes on the market, like the $135 million home of Tom and Cinda Hicks, it encourages more people to stick a toe in the water and make a move. In fact, that’s exactly how the herd mentality starts!

 

They may be talking Fiscal Cliff in D.C., but you can only say good things about our housing market unless, that is, you live in Chicago. Or New York. The Standard & Poor’s/Case-Shiller Index shows home prices continued to rise in October, with prices up 4.3% annually within the 20-city composite index that S&P scrutinizes for us.

Why October? Because right now, in December, that is the latest month that has all the documentation in and complete from the recording offices across the nation.

S&P says it’s a “sustained recovery” in home prices, and S&P does not fool around. I heard Robert Shiller speak in 2009 and he was Debbie Downer when it came to housing then. S&P is not the only research firm calling for the bubbly. Lender Processing Services says that pre-owned housing prices are now up 4.3% year-over-year in October. In September the index was up 2.1%; it showed a 3.4% annual gain in October.

Poor Chicago and New York were the only cities with negative home price returns for October. September was a better story:

“The five MSA’s where home prices fell in October but not in September were Atlanta, Dallas, Miami, Minneapolis and Seattle”

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, says housing is gaining strength. The strongest performances are in the southwest and California, like Phoenix where homes were selling for a quarter on the dollar just a few years ago.

Over the holidays, I met a delightful Phoenix transplant to our region who told me they had no problem selling their home to move here.

And again, we hear what I have preaching to you since Day One: real estate is a LOCAL story. You have to look at individual markets which show us how high we’ve come from the bottom pits of 2008/2009. And right now, even old, icky stuff is moving in Dallas,

See this treasure? It was vacant for more than 22 years in Oak Lawn Heights, Rob Elmore of the crack Garrey & Elmore team at Keller Williams got six offers in two days and closed in under thirty days… for 98% of list.

Dallas home prices were up 4.6% over October 2011, with a few gyrations there in September and October that I don’t really care about because I know how busy everyone is selling.

Blitzer almost seemed to say that our market is “normal”, like it was pre-steroidal market:

“San Francisco and Phoenix have also rebounded from recent lows by 22.5% and 22.1% with prices comfortably higher than 12 years ago,” said Blitzer. “The smallest recoveries are seen in Boston and New York, two cities in the northeast which suffered smaller losses in the housing bust than the Sunbelt or California.”