Unless you’ve been on a “cut the cord” vacation, you’ve seen last week’s headlines warning that an inversion in the bond market has folks worried we’ll be entering a recession soon. About a third of economists think we’re likely on that road. Remembering the Great Recession, should we shun the real estate market?


As the New York Times points out, the last two big recessions occurred because something was in a bubble. In the early 2000s, it was the tech bubble and resulting crash made worse by September 11. The Great Recession began in the housing market that exposed shady lending and rippled into the global financial crisis.

At the moment there is no similar bubble out there. There are trade wars and tariffs. There are diplomacy stand-offs and a global rise in nationalism and populism that are fraying the stability of historic global ties. These governmental policy issues largely affect the business world and cause uncertainty which leads to conservative spending. Consumer spending is still chugging along fine.

But let’s say that business decides to pullback in a real way which starts the domino effect of lost jobs, lower wages that then do impact consumer spending (two-thirds of spending). Then we may see real estate prices impacted.

But again, learn from history.


dallas housing prices

Could rising housing prices in Dallas-Fort Worth indicate another bubble?

There’s no doubt that Dallas-Fort Worth is one of the hottest real estate markets in the U.S.

dallas housing prices

Aaron Terrazas, senior economist at Zillow. Photo: Zillow

Zillow recently named it No. 3 in the country, noting a 4 percent unemployment rate and solid income growth. Additionally, the Zillow Home Value Forecast predicts the Dallas-Fort Worth median home value will go up by 5.6 percent in 2016.

But some housing analysts and mortgage insurance companies fret over the 6 percent increase in North Texas home prices over the past six years. They wonder, could this be another bubble?

Probably not, according to Zillow senior economist Aaron Terrazas.

“Dallas looks pretty good compared to so many other parts of the country,” Terrazas told the Dallas Morning News‘ Steve Brown. “We don’t have anything artificial right now inflating the housing market—the lending standards remain fairly tight.”


Troy Aikman's home on Normandy in Highland Park went up in price within the first week on MLS, showing strong demand in the luxury market. (Photos: Shoot2Sell

Troy Aikman’s home on Normandy in Highland Park went up in price within the first week on MLS, showing strong demand in the luxury market. (Photos: Shoot2Sell)

I find it so interesting that just after our boy Troy Aikman upped the price on his Highland Park abode by 12 percent, CoreLogic released its HPI saying home prices are up 6.1 percent year-over-year from October 2013 and 0.5 percent from September to October 2014 nationwide.

In Texas, though, our market is seeing record gains that, while slower than last year, still show moderate growth. The Lone Star State is among four other states to post year-over-year gains with an HPI 8.7 percent higher in Oct. 2014 from a year ago including distressed sales, and 8.1 percent higher without distressed sales.

“Home price growth is moderating as we head into the late fall and is currently running at half the pace it was in the spring of 2014,” said CoreLogic deputy chief economist Sam Khater. “However, there are still pockets of strength, especially in several Texas markets, as well as Seattle, Denver, and other markets with strong economic fundamentals.”


Spoken For

It’s official: According to the latest numbers from CoreLogic, the Dallas-area real estate market is fully recovered from the recession and housing bubble. Dallas real estate prices are up 9.7 percent according to the CoreLogic HPI report.

Nationally, prices are up 12 percent year-over-year, too, the report showed, showing that regions across the U.S. are making great strides. It’s the 19th straight month that the housing market has showed gains.

“U.S. home prices continued their ascent in September. Average home prices in nearly half the states are now within striking distance of their pre-downturn pricing peaks,” said Anand Nallathambi, president and CEO of CoreLogic. “We are seeing a slowdown in the rate of price appreciation over the past few months from the rapid pace experienced over the first half of this year. This deceleration is natural and should help keep market fundamentals in balance over the longer-term.”

Let’s juxtapose that great news (and it is great!) with some less-than-stellar reports from the National Association of Realtors. According to the NAR’s Pending Home Sales Index, fewer people are poised to buy homes. The index fell for the fourth month in a row this past September, down 5.6 percent. It was a shock to economists who had forecasted a slight increase.

It’s been attributed to the rise in mortgage rates and an increase in prices in some markets, as well as the shrinking middle class income.

Does the NAR report affect your optimism about the Dallas real estate market?

In the eyes of the latest S&P/Case-Shiller housing report, which indexes existing (not new) home sales in 20 major U.S. cities, it’s 2003 when it comes to housing prices. That’s good news. We are told the average U.S. home price in July rose 1.6%, this compared to the previous month, marking the third straight month that prices in all 20 major markets followed by the index improved. And had it not been for a slight spring decline in April, it would have been the fourth straight month of real estate price improvement across the full spectrum.

Blame Detroit, in April.

The index was up 1.2% compared to a year earlier, an improvement from the year-over-year change reported for June. Home prices have been showing a sequential change in recent months, but it wasn’t until June that prices actually marched higher than a year earlier.

Since the July numbers match levels last seen back in summer 2003, when the market was racing towards it’s 2006 peak, experts speculate whether we could be heading into another housing bubble aka the financial crisis of 2008.

No, they say: the market may not be as dismal as it was, but lending practices are much tighter than they were pre 2008. Also, there is still a reluctance by many to get into the market — or a lack of down payment cash, underwater mortgage. Those who are taking advantage of the lower prices are cleaning up on foreclosures and other bargains, becoming landlords. It will take many years before we see a steady, significant appreciation.

But you know my mantra: real estate prices are a totally local story. Dallas home prices are basically steady as she goes and oh so healthy: 3.7% higher than they were same time last year. Last week, appraiser Brian Hagan spoke to a select group of  agents over at one of Becky Frey’s gorgeous listings, the penthouse at 4611 Travis Street, for the low-down on the UP, HP and Preston Hollow markets. Take-away: University Park is so hot with multiple offers and swept up inventory, homes are tough to find. Highland Park, less so because you have pricier homes and a lot of private, off the record sales. Preston Hollow land sales are up again, and lot prices are creeping up south of LBJ, too.

“In Park Cities, University Park, I’m feeling more like 2008,” said Brian. “Multiple offers, land values up 20%.”

Luxury home builder Robert Elliot is moving the University Park market with 28 lots, and his homes are selling before completion. East of Hillcrest, even the smaller lots are hitting $80 per square foot or more, this increase in just over a year. There is no over supply of building in UP, he says. In the honeypot estate area, acres are going for $1.5 to $1.7 million per for prime properties, this compared to the peak of $2.6 per acre in 2007.