Wednesday, June 05, 2013

New Housing Bubble in Texas?

The 7.3 percent year-over-year price gain in January reported by the Standard & Poor’s/Case-Shiller Home Price Index was the largest percentage gain for the Dallas area since the numbers have been tracked starting in 2000.
In many North Texas neighborhoods, median home sales prices this year are growing at double-digit rates.
Of course, if you’ve been wanting to sell your house and prices in your neighborhood are soaring, good for you.
And I’m sure the taxman is tickled at the prospect of higher home value appraisals.
Still, I worry that there will be a downside to the sudden rise in home prices — if not today, then a couple of years down the road when mortgage rates move higher.
Housing analysts are scratching their heads about the takeoff in home prices, too.
“We are seeing stuff I haven’t seen in my entire career,” said David Brown, who heads the Dallas office of Metrostudy Inc., a nationwide housing analyst.
Brown is closely watching the rise in new home prices in the Dallas area.
“I do worry about it to a degree,” he said. “Is this movement in price creating somewhat of a bubble?”
Some of the recent price hikes have just made up for what was lost in the recession.
That’s certainly the case in places like Phoenix and Las Vegas, where prices are up about 20 percent this year but are still far below where they were in 2006.
Primary market
Many North Texas neighborhoods have regained much of the residential values lost in the downturn.
“The low inventory and high demand for certain properties — the best located, newer and most desired — will cause prices in those areas to increase dramatically,” said Dr. James Gaines, an economist at the Real Estate Center at Texas A&M University.
“Double-digit increases will be standard for this ‘primary’ market segment.”
If recent home price growth continues this year, the D-FW area will see record high prices in some neighborhoods and in the new home market.
“I, too, am surprised about the strong gains in prices,” said D’Ann Petersen, an economist with the Federal Reserve Bank of Dallas. “This is unusual for our area as we usually can add to inventories by building pretty quickly in response to rising demand.
“Price gains may continue in the short term, but I have a feeling they will ease when we add to inventories.”

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Steve Brown
Published: 04 April 2013 08:19 PM
Updated: 04 April 2013 08:19 PM