ActivePaper Archive D-FW home prices on meteoric rise - The Dallas Morning News, 2016-10-11

REAL ESTATE

D-FW home prices on meteoric rise

Labor, construction costs boost new house to median $336,381

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Dallas-Fort Worth home prices have risen more than 40 percent in the last four years — and they rocketed even higher in September.

Because of higher labor and construction costs, the median price of a new house sold in D-FW in the third quarter rose to $336,381, more than 13 percent higher than in the same quarter of 2015.

Consumers are “really starting to bump their heads on a price ceiling in the market,” said Ted Wilson, principal with Dallas-based housing consultant Residential Strategies Inc.

Wilson said builders are particularly getting resistance from buyers at the upper price points.

“The builders are trying to find locations and products to get their prices down,” he said.

But that won’t be easy because of rising construction costs.

Labor shortages have added more than $4,000 to the price of a new house this year because of delays in construction and higher costs, according to a recent study by the Dallas Builders Association.

The local housing market lost about 30 percent of its construction labor force during the recession, and many of those workers never returned.

Wilson said labor shortages and slower approvals from local governments for projects have added about three months to the time to build the average house.

“Instead of the four months we saw in the last housing cycle, it now takes seven months,” he said. “The labor shortage is keeping a lid on the construction capacity.

“It looks to me like we will have a hard time starting more than 8,000 units a quarter because of the lack of labor,” Wilson said. “The builders are working hard to increase their capacity, but they are not making huge strides.”

Home starts fell 3 percent from a year ago in the D-FW area in the three-month period ending in September.

But 7,824 D-FW houses were started in the quarter this year, still one of the highest levels in recent years, Wilson said.

Builders sold more than 7,000 houses in the same period, 3 percent more than a year ago, Residential Strategies reports.

The rise in new home costs was bigger than in the existing home market, which is also setting records.

Pre-owned prices in North Texas were up 12 percent last month, the biggest year-over-year gain in 2016, which has been a record year for housing.

The median price of pre-owned single-family homes sold in the area rose to $225,000.

“As long as so many people keep moving here, demand will keep exceeding supply of housing,” said Randall S. Guttery, real estate programs director at the University of Texas at Dallas. “That keeps propping up prices.”

Pre-owned home sales spiked during September, rising 11 percent from the same month last year, according to data from the Real Estate Center at Texas A&M University and the North Texas Real Estate Information Systems.

More than 9,500 pre-owned single-family homes were sold by area real estate agents last month. Through the first nine months of 2016, a record 78,154 houses have changed hands.

The increase in home sales has kept the inventory of houses on the market in North Texas at low levels. The number of houses in North Texas listed for sale by real estate agents was down 3 percent from September 2015.

And it took on average less than 40 days to sell a house in the area.

“Homes are sold before entering the system as available listings,” said Dr. James Gaines, chief economist with the Real Estate Center. “New listings enter as pending sales rather than active listings.”

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