Monday, April 03, 2017

Housing in DFW is becoming less affordable, y'all


In a twist of irony, housing in Dallas-Fort Worth has become less affordable as in-migration from coastal cities attracted to the growing number of jobs puts a strain on the thing that attracted companies to North Texas in the first place: Affordable housing.

All six counties in Dallas-Fort Worth, including Dallas County, Collin County, Denton County, Tarrant County, Johnson County and Ellis County, sit below the normal affordability index of each respective county. The index measures the historic percentage of income required to buy a median priced home in a market.
And it's been that way for the past year, said Daren Blomquist, senior vice president of ATTOM Data Solutions, which analyzes the U.S. real estate market.
"Dallas County has been under normal affordability for the market for four consecutive quarters and it's continuing to deteriorate," Blomquist told the Dallas Business Journal.

"It's a continuation of what we have seen in this housing recovery is strong home price increases with weak wage growth," he added.

The trend is expected to continue for the next few years until "something gives," whether that be home prices, interest rates (which show no sign of lowering) or wage prices rise, he said. If there's a stalemate, home sales will cool as the pool of qualified buyers dwindle.

"The most likely scenario would be home price appreciation will start to cool off," he told the DBJ."It may take a little while for the market to catch up with reality, but I think we will see this happen."

After all, it's happened in other overheated markets, such as San Francisco, San Jose and Denver, where home price appreciation has slowed.

In North Texas, Blomquist said he sees a bright spot and that's some wage growth kicking into parts of the region. But it's too early to say wage growth is back from one positive quarter, he said.

Here's a look at how the counties stacked up in the first quarter:
  • Dallas County: Has a 92 on the affordability index, with a median home price that has risen 7 percent year-over-year to $210,264. To live and work in Dallas County, residents will fork over 26 percent of their paycheck to a mortgage. Historically, residents would pay 23.8 percent of their income on housing.
  • Collin County:Has an 89 on the affordability index, with a median home price that has risen 6 percent year-over-year to $312,710. To live and work in Collin County, residents will need to pay 39.9 percent of their income on housing. Historically, residents would pay 35.6 percent of their wages on housing.
  • Denton County: Has a 90 on the affordability index, with a median home price that has risen 9 percent year-over-year to $270,256. To live and work in Denton County, residents will need to pay 44.6 percent of their income on housing. Historically, residents would pay 40.1 percent of their wages on housing.
  • Johnson County: Has a 95 on the affordability index, with a median home price that has risen 6 percent year-over-year to $165,076. To live and work in Johnson County, residents will need to pay 32.4 percent of their income on housing. Historically, residents would pay 30.8 percent of their wages on housing.
  • Ellis County: Has a 96 on the affordability index, with a median home price that has risen 1 percent year-over-year to $189,680. To live and work in Ellis County, residents will need to pay 36.4 percent of their income on housing. Historically, residents would pay 35 percent of their wages on housing.
Dallas appears to be a bit of an "outlier," compared to other counties, which could mean executives work in Dallas and live in surrounding counties, Blomquist said.
"They could be working in Dallas County, but buying homes in Denton County, which clouds the issue in a market," he said.

North Texas isn't alone. About 25 percent of all counties in the United States share the common unaffordability index problem, he said.

"The Dallas-Fort Worth market is one of the leading markets in the U.S. with a lack of affordability," he said, adding this was a problem he has seen throughout middle markets in the nation, such as Dallas and Denver.

Candace Carlisle/Dallas Business Journal.