Thursday, May 14, 2009

Foreclosure sales pull down Dallas-Fort Worth home prices

An increase in foreclosure sales helped pull down Dallas-Fort Worth home prices in the first quarter.

But D-FW's 4.7 percent decline from a year ago was well below the almost 14 percent drop nationwide, the National Association of Realtors said Tuesday.

The first-quarter annual decline here was about the same rate as at the end of 2008.

Local home prices have been falling for more than a year as the nationwide housing downturn has spread to Texas. But the dip has remained well below what most of the country is seeing.

In San Antonio, first-quarter prices were off 1 percent from a year ago, and in Austin, median home sales prices were down 1.2 percent, the Washington, D.C.-based Realtors association said. Houston prices were down 6.7 percent.

Housing analysts say Texas' home price fallout has been less because the state hadn't seen a run-up in home values like many U.S. markets did.

"The decline in demand and prices correlates more to the job losses now showing up in markets in Texas than because of excess inventory," said Ted Wilson of Dallas housing analyst Residential Strategies Inc. "Interestingly, job losses have occurred late in this recession compared to previous recessions."

Rising foreclosure sales in D-FW and most U.S. cities are also pressuring home prices.

The Realtors say that almost half the nationwide sales are foreclosures. More than 30 percent of local sales in recent months have been foreclosed properties, reports indicate.

"In areas with the biggest price declines, we also see much higher levels of distressed sales, which are distorting the data," Realtors economist Lawrence Yun said. "In many cases, homes are selling below replacement construction costs, which speaks to great value in the current market."

Home prices fell in 134 of the 152 metropolitan markets the Realtors track each quarter.

Changing mix
Along with foreclosures, median home prices in the Dallas-Fort Worth area have been pushed lower because of a plunge in the sale of high-end homes.

"Although the average and median prices are down, some of that decline has to do with the mix of homes that sold," said David Brown, who heads the Dallas office of housing analyst MetroStudy Inc. "I don't think we have the risk of significant value declines like other parts of the country because we did not suffer from the affordability issue.

"I believe housing demand will recover sooner in Texas because the recession has been much shallower here and we should benefit from an eventual improvement in the national economy."

Local performance
D-FW's home price performance in the national report was a bit better than local statistics show. First-quarter median home sales prices fell 8 percent in the area, according to the North Texas Real Estate Information Systems Inc. and Texas A&M University's Real Estate Center. Purchases of pre-owned homes in North Texas during the quarter were down 25 percent from the first quarter of 2008, based on sales through the Realtors' Multiple Listing Service.

It's probably too early to say when Texas home prices will bottom out, said James Gaines, an economist with Texas A&M University's Real Estate Center.

"The key probably is the rate of foreclosure during the next six to nine months," he said.

There are predictions that home foreclosures nationwide will rise in the next couple of months as lenders end their moratoriums on forced home sales, he said.

"To the extent that Texas can avoid significant foreclosure increases, we should do OK," Gaines said.
By STEVE BROWN / The Dallas Morning News