Monday, April 13, 2015

New report: D-FW housing market gets bad marks for soaring prices

Nationwide Insurance's new forecast ranking compares housing market conditions in more than 370 markets.
Nationwide Insurance’s new forecast ranking compares housing market conditions in more than 370 markets.
Dallas-Fort Worth and Houston have ended near the bottom of a new housing market ranking.
But the low marks for the two Texas cities don’t necessarily mean the market here is headed for a slowdown.
D-FW and Houston are on the list of the country’s least healthy housing markets in the new report by Nationwide Insurance.
The forward-looking ranking compares housing market conditions in more than 370 U.S. markets.
Nationwide’s report card finds that the country’s housing market is in the best shape since 2001.
“Today there is hardly any red on the chart at all,” said Nationwide economist David Berson. “The housing market is in pretty good shape overall.”
So what’s with the bad marks for Texas? Berson blames it on our run-up in home values.
“Looking at Dallas, Houston and Austin, all of them are in the neutral range in our performance ranking,” Berson said. “The big negative is house price growth vs. income growth.
“These markets are becoming unaffordable.”
North Texas home prices are at an all time high and have shot up by more than 40 percent since early 2008.
“If there is one thing that concerns me going forward is that trend continuing,” Berson said. “I’m concerned about house price growth continuing to be significantly faster than income growth.”
During the first quarter of 2015, median home sales prices in North Texas are 9 percent higher than where they were in early 2014. That’s twice the long-term average residential value growth rate for this area.
Berson says the jump in Texas home prices is due to a lack of inventory and said the same situation could spread to other U.S. markets.
“What we are seeing in Texas to a degree in other places is there is not much supply for sale,” he said. “It’s time for the builders to build more houses.”
Home construction in the Dallas-Fort Worth area is still about half what it was before the recession.
And in the first quarter, builders started almost 25 percent fewer houses than in the same period of 2014 due to wet weather and construction constraints.
The top U.S. home markets on Nationwide’s forecast were Northeastern and Midwestern cities where the housing market is recovering but prices remain affordable.
The only two negative markets on the ranking were Bismark, N.D. and Atlantic City.
Steve Brown, The Dallas Morning News