Monday, June 19, 2017

Housing market haves, have nots

Housing market haves, have nots

During the last few years, the cost of a house in Dallas-Fort Worth has shot up to unheard-of levels — for those who can even find a house to buy.

North Texas residents know firsthand about high home prices. During the last few years, the cost of buying a house in Dallas-Fort Worth has shot up to unheard of levels — if you can even find a house to buy.

And the State of the Nation’s Housing 2017 study shows just how much the price of homes has increased in D-FW.

Turns out price gains in the area — when adjusted for inflation — haven’t matched the national price growth since 2000, according to a report from Harvard University’s Joint Center for Housing Studies.

Compared with prevailing prices in 2000, Dallas-area prices are about 25 percent higher when adjusted for inflation, Harvard’s researchers found. In Fort Worth, prices are up 18.3 percent over the same period.

On an annual basis, that means Dallas home prices have risen about 1.5 percent every year since 2000.

Nationwide, prices were up 32 percent in real terms and are up 40 percent or more in 153 metro areas. The biggest such increase in Texas has been in Austin, where values are 42.6 percent higher than 17 years ago.

But that’s nothing compared with the almost 97 percent gain in Los Angeles, the 84.3 percent hike in San Francisco and the 73 percent price rise in Miami. Those markets, and other major cities, have seen huge gains in prices even with the housing crash of a decade ago.

“We are seeing the housing market coming back to normal,” Harvard’s Chris Herbert said this week at a meeting of real estate journalists. “Last year, home prices finally reached back to their peak of 2006.”

But there are big disparities, Herbert told the National Association of Real Estate Editors in a sneak peek at the annual Harvard report.

“It depends on where you are in the country,” Herbert said. “It also depends on what neighborhood you are in.

“Ninety-seven of the 100 largest housing markets in the country have seen housing prices rise in the last year,” he said. “In only 41 of those markets are prices back to their peak. In 32 markets, prices are still 15 percent below their peak.”

Herbert said the biggest price hikes have come in the more affluent cities and in the richer neighborhoods.

“Low-income neighbors are much less likely to have gotten back,” he said. “In the Midwest and parts of the South, house prices are less than they were in 2000.
“Where you are in the country has enormous importance.”

That was certainly the case during the Great Recession, where coastal cities and markets in the desert Southwest lost billions in home values as Texas metros saw only slight declines.

“One reason we are seeing these housing prices go up so sharply in some markets is we have housing inventory that’s incredibly tight,” Herbert said. “At the end of last year, we were at the lowest point in decades. That first-time, entry-level market is where the market is tightest.”

Herbert said most of what the housing builders are producing is for more affluent, repeat buyers.
“We are not seeing homebuilders building entry-level homes,” he said, with only about 138,000 nationwide starts in that category last year. “We have very little new housing, making that part of the market very tight.”

Just as in the homebuying market, developers of rental units have concentrated on the higher end of the business.

“We are getting a saturation of luxury downtown rentals where we have built a ton of them,” Herbert said. “We have had big growth in high-cost rentals.”

Nationwide rentals priced under $800 a month have gone down more than 260,000 units since 2005, the Harvard study found.

“Forty-eight percent of renters and 24 percent of homeowners are not finding housing that’s affordable,” Herbert said.


Steve Brown/Dallas Morning News