By STEVE BROWN
Real Estate Editor firstname.lastname@example.org
The Dallas area’s smoking-hot housing market is breaking records every month.
Home prices in the area are rising faster than at any other period in memory. And North Texas’ total home sales will top 100,000 in 2016 for the first time ever.
Even the onset of higher interest rates might not be enough to put the brakes on Dallas’ runaway housing market, industry analysts say.
“At least for the first six months of the year, I don’t think things will slow down,” said James Gaines, top economist at the Real Estate Center at Texas A&M University. “Normally, higher interest rates put a damper on things, but it may do the opposite because people think rates will be higher in six months and are making a move.
“There’s still not enough inventory of homes for sale, and that will keep driving prices higher.”
North Texas home prices have shot up more than 40 percent in the last four years to record levels. The Dallas area is among the markets that have seen the greatest home price increases over the last housing sector peak 10 years ago, new reports show.
But the increases haven’t been even across the area. A look at appraised values on more than a dozen specific properties that The Dallas Morning News has tracked since the mid-1980s reveals big differences in appreciation.
Three of the houses haven’t recovered value to their 2007 levels. But over half of the homes are now appraised at record levels.
The average appreciation of the properties since 2007 is about 13 percent.
Gaines said the overall rate of home price gain in North Texas is causing concern among analysts and has created worries about another housing bubble.
“I’m not saying that’s going to happen,” he said. “I’m saying that’s what you worry about.”
But as long as job growth and population increases in North Texas continue near current high levels, he doesn’t see the housing market here getting out of whack.
David Brown of housing analyst Metrostudy Inc. said that only a slowdown in job growth in the area or an economic shakeup is likely to derail the housing boom.
“Right now there is nothing out there pointing to appreciation rates slowing,” Brown said. “Not in my professional career have we seen appreciation like this.
“This is uncharted water for us.”
Brown said the rise in mortgage costs shouldn’t be enough to rein in the North Texas home market. That means that Dallas-Fort Worth homebuyers will have to dig deeper to afford a roof over their heads.
Recent increases in mortgage rates have added almost $120 to the monthly payments on a mid-priced D-FW new home, said Ted Wilson of Residential Strategies Inc.
“We have been able to digest higher house prices because of ultra-low mortgage rates,” Wilson said. “But DFW housing is going to get pretty pricey.
“There is a lot of sticker shock.”
Wilson said the biggest home price hikes are happening in the low and moderate segments of the market. He said sales and price appreciation for higher-priced houses have slowed in recent months.
“There is more inventory in the upper price levels,” Wilson said.
As long as the economy keeps humming, he’s optimistic 2017 will be another good year for the D-FW housing market.
“I still think we will have a pretty decent spring market. A lot of it depends on how quickly rates move up,” Wilson said.