Monday, October 01, 2012
Housing Rebound Will Be Another Boost for D-FW Economy
The housing sector has traditionally been the tail on the economic dog. As the economy goes, so goes housing.
When times are good and financing costs are affordable, people buy homes or add on to the places they’ve already got. And that’s a big contributor to the overall economy, generating billions of dollars in revenue with everything from real estate commissions and construction material purchases to new appliance buys. By some estimates, housing contributes somewhere between 15 percent and 20 percent of the GDP in good times.
But in recent bad times, housing has been a huge drag on the economy. Starting in late 2006 when home prices began to slide in overheated markets, housing for the first time triggered the economic recession and financial markets’ meltdown. Homeowners lost more than $7 trillion in wealth as home values evaporated.
In the Dallas-Fort Worth area, home-building plunged more than 70 percent and sales of pre-owned homes dropped more than a third. And North Texas was one of the least affected housing markets in the country.
The D-FW area went into the housing downturn almost a year after prices were already falling in California, Florida, Arizona and Nevada. And Texas — thanks to its job market and modest home appreciation in the early 2000s — is now seeing one of the strongest housing recoveries in the country.
So now — in the D-FW area at least — housing is again a big contributor to our economy, not the drag it has been during the last few years. Pre-owned home sales are up almost 20 percent so far this year.
“The broader implication is that the real estate markets will now, hopefully, start feeding the economic recovery for the area,” said James Gaines, an economist with Texas A&M University. “Home sales, and especially new-home construction, can add a great deal to local economies and job creation. Right now, I’m looking at Dallas-area home building to be up somewhere around 20 to 25 percent this year.”
The surge in pre-owned home purchases — which is especially strong in affluent neighborhoods — is boosting business for everyone from movers to furniture retailers who get an increase in sales when home activity is strong.
And even if you aren’t buying a house, consumers feel less stingy when the value of the roof over their heads is rising again.
Real Estate Editor
Dallas Morning News