Experts Say Jump in Dallas Home Prices Likely to Continue
Dallas prices rose 5.7 percent in November from a year ago in the monthly Standard & Poor’s/Case-Shiller Home Price Index, released Tuesday.
It was the ninth month in a row that local prices were up from a year earlier in the closely watched comparison of home values.
The Dallas-area increase was slightly higher than the 5.5 percent average price rise in the 20 major cities that Case-Shiller tracks.
Local home inventory levels are at the lowest point since the early 2000s, and longtime industry analysts say that North Texas could be in for some even bigger price increases in 2013.
“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.”
The last time Dallas-area prices rose at these rates was in 2001, according to the Case-Shiller index.
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.
“Right now, we are showing Dallas with a three-month inventory [of listed pre-owned homes], which is virtually nothing,” Gaines said. “Any kind of house in good condition that is in an attractive neighborhood will get multiple offers and sell for more than asking price.”
With interest rates low and the economy gaining ground, the number of homebuyers in the market this spring is expected to climb significantly.
Gaines said that the Real Estate Center estimates that Dallas-area pre-owned home prices were up 7.6 percent in 2012 from 2011. It was the first year of median price increases since before the recession.
He said prices could possibly rise at double-digit rates this year if supplies of homes on the market stay tight.
The rebound in prices would have been unthinkable even a year ago as the country crawled out of the worst housing bust since the Great Depression.
While Texas was one of the least affected states in the housing crash, overall prices in the Dallas-Fort Worth area were down almost 15 percent at the bottom of the market. Prices have made up all but about 4 percentage points of that decline.
And values are coming back in other major markets, too.
Prices were up in all but New York City in the November Case-Shiller survey.
“Housing is clearly recovering,” S&P’s David Blitzer said in the report. “Prices are rising, as are both new and existing home sales.
“These figures confirm that housing is contributing to economic growth.”
The largest price increases were in Phoenix, up 22.8 percent, and San Francisco, up 12.7 percent from November 2011.
The Case-Shiller price gain for Dallas is in line with North Texas Realtor statistics, which show median pre-owned single-family home sales prices were up 8 percent in 2012 from 2011. That increase includes all houses sold through the real estate agents’ multiple listing service.
Case-Shiller’s index tracks over time the prices of specific single-family homes in each metropolitan area. The index survey does not include condominiums and townhouses. It covers only pre-owned properties — no new construction.
Nationwide prices are down about 30 percent in the Case-Shiller index from 2006.
No place to move
Real estate agents say that one reason many potential home sellers in North Texas haven’t made a move is they see little property on the market where they can move up.
Also, home construction is still depressed in Dallas-Fort Worth and is not expected to return to pre-recession levels for years.
Dallas real estate appraiser Chuck Dannis 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 said that home appraisers will be reluctant to sign off on big price increases unless they can support the figures with data from closed home sales.
“That will be a throttle on the market for sure,” he said, since lenders are more conservative about appraisals.
Low mortgage rates, which are expected to increase only modestly this year, will cushion the impact of higher home prices, Dannis said.
“We have these historic low interest rates in place, which leads to price increases because you can more afford it,” he said
Source: Steve Brown, Dallas News. January 29, 2013