The pandemic hasn’t slowed down the Dallas-Fort Worth housing market. KERA’s Sam Baker talked about what’s behind the boom with Luis Torres, a research economist with the Texas A&M Real Estate Center.
INTERVIEW HIGHLIGHTS
What’s Driving The Current Market?
Homeowners, or the profile of homeowners, weren't affected as much by the pandemic. Most of them benefited. Why?
Because homeowners, if you look at the profile, are more educated. They work in industries where they can socially distance, so they didn't lose their jobs.
Because of the pandemic, they may not have to go into the office every day now. Going forward, to work from home, they may need a bigger house with an office in it. That was a boost to the market.
They could take advantage of the historically low mortgage rates.
All these different things, plus new millennials entering the market, played a positive role. That's why we see this strong housing market and strong demand.
Housing Supply
Months of inventory have fallen below historical lows. People aren’t offering their houses.
Some were uncertain about the future, or they were afraid of getting sick, so they don’t want to move right now.
You have that other counter effect on the supply side.
Competition For Houses
Right now, it’s a seller’s market.
Some are offering higher prices they normally wouldn’t. They're granting certain things in favor of the seller to get the home.
Maybe the air conditioning system doesn't work. The tiles are looking bad right now. Sellers are like “If you want it, here it is. If not, I have 10 more people behind you that are going to give me the price I want.”
Higher Home Prices
Home prices are accelerating at a high rate.
We produce a repeat sales index. It follows the same house through time, the resale value, the resell price. So that's showing you a big increase in the need for Dallas-Fort Worth — about 9%. We're seeing a really, really strong price appreciation home prices.
Now, is that going to continue forever? I think it's right now because of the bottlenecks, the pressures right now, when you have such strong demand and supply issues. But what's happening also is mortgage rates are increasing. Prices are increasing. All of these factors affect affordability. So you would start to see going forward some weakening of demand.
What Becomes Of Affordable Housing?
If you look at homes with a price tag below $200,000, you have an even lower inventory. Ten years ago, the majority of the home sales in Dallas-Fort Worth were for homes below $250,000. Now that market share has dropped considerably — it's around 10%. To find a home at that price range, you'll probably have to live outside of the metroplex.
It’s still a strong housing market, but I think it still should slow down because those levels of price growth are not sustainable.
RESOURCES:
Dallas Real Estate Market: Prices | Trends | Forecast 2021
The mind-blowing pace of the DFW housing market astonishes experts
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Interview highlights were lightly edited for clarity.
Got a tip? Email Sam Baker at sbaker@kera.org. You can follow Sam on Twitter @srbkera.
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