Huge Wall Street Journal story being circulated via Twitter, etc. today, The U.S. Housing Boom Is Coming to an End, Starting in Dallas.”

Dallas, really?

“Home prices zoomed higher in recent years, and mortgage rates are climbing. Buyers are queasy.”

Now we know our market is not as hot as it was in 2015 and 2016, two of the hottest years for DFW real estate values, which have really growth-spurted in recent years. As the WSJ puts it, affordability has gotten “out of whack with historic norms.” A median priced home is now about $235,000 in Dallas, about 50 percent more than what it cost in 2007 before the Great Recession. We know that the corporate relocations to Plano and areas north have cooled, with transplants’ primary homes, at least, snapped up. But (and I actually have many “buts” here) I might use another verb other than “sputter“:
PLANO, Texas—A half-hour drive straight north from downtown Dallas sits one of the fastest-growing counties in the country. Cotton fields have been replaced with Toyota’s new North American headquarters, a Dallas Cowboys training facility and a sand-colored shopping strip with a Tesla dealership and a three-story food hall.

Yet even with the booming growth, Dallas’s once vibrant housing market is sputtering. In the high-end subdivisions in the suburb of Frisco, builders are cutting prices on new homes by up to $150,000. On one street alone, $4 million of new homes sat empty on a visit earlier this month. Some home builders are so desperate to attract interest they are offering agents the chance to win Louis Vuitton handbags or Super Bowl tickets with round-trip airfare, if their clients buy a home. Yet fresh-baked cookies sit uneaten at sparsely attended open houses.

First of all, developers have long offered agents perks to sell their homes — hate to tell you, but Louis Vuitton handbag lures are nothing new. (I sure hope they are not knock-offs!) We have talked before about the North Texas slow down, particularly in million dollar plus homes.

How many ways can an agent say “price reduced” without really saying it?

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starbucks

If you think coffee is only good for getting you moving in the morning, this new study will wake you up. Apparently, it can also provide a jolt nearby home values.

That’s according to Zillow CEO Spencer Rascoff and Chief Economist Stan Humphries. In their New York Times bestseller, Zillow Talk: The New Rules of Real Estate, they crunched the numbers and found that houses located within a quarter mile of a Starbucks location appreciated more quickly than houses overall.

Rascoff and Humphries knew the traditional guideline for finding real estate that would appreciate the most – good schools, easy access to major job centers, or a quick drive to the grocery store. They wanted to dig deeper.

“We were looking for other markers that could tell us where home values would appreciate the most, and in doing the research, we found that if you live near a coffee shop, chances are your house outperforms other houses further away,” Humphries said. “When we dug even deeper, we found that living close to a specific coffee shop – Starbucks – was the best indicator your house would out-perform other houses in the area.”

This trend held true nationwide, although results varied by region. In North Texas, there was a 7.2 percent difference during the time measured.

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Photo courtesy Brian Dooley via Creative Commons

Photo courtesy Brian Dooley via Creative Commons

Strong economic factors, job gains, and population increases have experts predicting strong growth in North Texas home prices in 2015, and a 35 percent increase in home prices over the next three years in the Dallas-Plano-Irving areas.

Local Market Monitor, Inc. released its December 2014 local market reports for North Texas, looking at factors like jobs, migration, housing permits, local market risk premium, and average home prices. Based on those analytics, they say home prices will likely grow 11 percent in the eastern counties of North Texas and 8 percent in the western counties over the next 12 months. Nationally, prices are forecast to increase by 6.3 percent.

They’ve extended their forecast two and three years, as well. In the eastern DFW counties, home values are predicted to increase 11 percent in 2016 and 10 percent in 2017.

In the western counties, home values are expected to increase 8 percent in both 2016 and 2017. The report predicts home prices to increase 25 percent over the next three years, noting that market is currently underpriced 17 percent relative to income.

County level forecast for Home Values

These reports echo the sentiments of local realtors and real estate experts, who have been crowing about strong North Texas job growth, more buyer and seller confidence, continued low interest rates, and investor demand. Jump to read more!

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I’m not going to say Dallas Real Estate is a hoppin’, but we are really hanging in there. Really. As I mentioned yesterday, I was in Southlake on Saturday, and I went to that adorable Southlake Town Center. Met a cute couple who were building a home in Colleyville because they had just sold their home in Keller in 6 days. Wow!¬† I got nosy and said, so how much did you reduce it by? Was it a fire sale? Only $2000 under asking, they said. You live out here, I asked? Nope, both work in downtown Dallas. They are in Colleyville for a new home, schools and safety.

Welcome to the suburbs, which are not as dead as the media might have you believe. Over on YouPlusMedia, my good friend and super respected home builder Brad Holden says the Frisco new home market is “experiencing a growth that has builders scrambling to get permits for new lots in their communities. This increase in new contracts over the past couple months shows me signs of buyer confidence and the fact of low interest rates slowly rising.” Case in point: Meritage Homes, he said, had 649 closings last year, so Brad wonders where Steve Brown gets his info on home starts plummeting.

Case-Shiller spoke this week, and we all grabbed our Depends. CS says Dallas-area pre-owned home prices dropped just 1.2 percent in February 2011 from a year earlier. That’s really not bad. Not trying to be Susie Sunshine, but I’d almost say they just held steady.

In fact, the decline in the LOCAL Standard & Poor‚Äôs/Case-Shiller Home Price Index was a lot better than what we’ve been hearing, especially when prices were about 3 percent or 4 percent lower than last year.

There are two ways to look at this. One, is to be Steve Brown and note that Dallas-area home prices have been down for eight consecutive months. Well, he has a point.

Or we could note, as Dr. James Gaines over at the Real Estate Center at Texas A&M University, that the diminishing is getting better.

“It could indicate a trend toward being back to even or perhaps even start a trend toward positive increases,” Gaines said Tuesday.

Did he say positive increases?

Case-Shiller said our price decline was less than half of what the rest of the nation suffered, which was about 3.3 percent. Prices were down in all of the 20 major Case Shiller markets with the exception of Washington, D.C.

Nice to know our tax dollars are helping lift that market.

‚ÄúThere is very little, if any, good news about housing,‚Äù Standard & Poor‚Äôs David Blitzer said. ‚ÄúPrices continue to weaken, while trends in sales and construction are disappointing.”

You talk to these guys, it seems that the economic recovery is moving about as fast as a slug.

Steve says Dallas-area home prices are now about 10 percent below the Case-Shiller mid-2007 peak in the Case-Shiller index. Could we be coming out of the tunnel? David Brown at Metrostudy says maybe. Brown  also thinks that the dearth of housing inventory could bring on inflation in home prices.

“For-sale housing inventory is not growing, even with sales at a low for this housing cycle,” Brown said. “Demand is likely to grow.”