Tuesday, September 18, 2012

Dallas-Fort Worth Housing Data is Missing Part of the Market Picture

This year most of the news about the local housing market has been good. But how good is the data these reports are based on?

Pre-owned home sales in North Texas have risen 16 percent in 2012 and median sales prices are 7 percent higher, according to the multiple listing service. That’s the database real estate agents use to display home sales listings and record completed purchases. Those MLS listings also provide information for Internet marketing sites including Realtor.com and others.

And every month we report the health of the local housing market based on those MLS results. There’s only one snag. Not everything is in there. Hundreds of properties are sold every month in the Dallas-Fort Worth area and never wind up in the MLS reports.

“That’s always been the case,” said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M University. “We never have known all the new homes being sold because a lot of the builders don’t use the MLS.

In neighborhoods where competition for houses is strong, agents aren’t even putting their listings in the MLS. With these so-called hip pocket deals, houses are bought and sold in under-the-table transactions. Also, sellers of exclusive properties are shy about letting the world know what their house fetched on the market. And they will sometimes require the real estate agent not to disclose the price at closing.

In Texas, where property sales data is deemed by state law to be confidential, there’s really no way of tracking down the withheld sales prices. Real estate agents estimate that about 10 percent of homes sold in the market trade without the help of a Realtor. Those properties aren’t in the MLS, either. Economists and consumers have to make do with what’s left. And fortunately that’s still a big slice of the pie.

The motivation is the owners want to keep their values hidden so you don’t get a big tax bill,” said Ted Wilson of Dallas-based Residential Strategies. “That hurts the market because there are no comps to use” for sales appraisals.

Steve Brown

Real Estate Editor 

Dallas Morning News