D-FW outsells the rest of the country when it comes to houses
Dallas-Fort Worth sold more houses last year than anyplace in the country, with more than 134,000 houses changing hands.
North Texas accounted for almost a third of the state’s total preowned home purchases — more than 102,000 properties. And builders sold almost 32,000 new homes.
So far, even record prices haven’t put a lid on D-FW’s home buys.
One of the country’s top housing analysts I talked with this week expects the hot home market to keep going as long as our economy stays on track.
“The Dallas metro area is doing really well,” said Frank Nothaft, chief economist with CoreLogic. “That supports all the homebuilding and home sales.
“Of course, that means home prices are up.”
As of January, CoreLogic estimates, local home prices were about 6.7 percent ahead of a year ago.
“Dallas prices are up 60 percent from the bottom of this cycle and up about 38 percent from the 2006 peak,” Nothaft said. “A lot of markets haven’t gotten back to that 2006 peak and Dallas blew right through it.”
Nothaft said the housing recovery that started in North Texas almost eight years ago probably has more room.
“I think this cycle has a couple more years to run,” he said. “We’ve got good job growth and income growth.
Frank Nothaft is the chief economist for CoreLogic
“I don’t see that stopping any time soon — particularly with the stimulus coming from tax reform,” Nothaft said. “That will help support job creation and additional purchases of houses.”
What could eventually slow the number of home purchases is higher interest rates.
“With mortgage rates going up, that usually puts a damper on housing demand,” Nothaft said. “I don’t see that happening this year.”
CoreLogic is forecasting that average interest rates for 30-year home loans will stay below 5 percent this year. But if the cost of financing a house moves significantly higher in 2019, it could affect the home market by slowing price increases, he said.
“As we see mortgage rates move higher, it’s more of a stretch for first-time buyers,” Nothaft said.
Higher mortgage rates could also reduce the number of houses on the market.
“It’s what we call the lock-in effect because so many homeowners refinanced or purchased with a cheap mortgage,” Nothaft said. “Even if they might have thought about selling and moving, they look at a 4.5 percent mortgage and think they are OK where they are right now with their cheap mortgage.”
CoreLogic counts D-FW among the almost half of U.S. home markets it considers “overvalued.” Instead of a speculative bubble, Nothaft said those markets are places where home price growth is far outstripping the rise in average wages.
Last year, prices on moderate-value homes around the country jumped 9 percent, according to CoreLogic. “That’s where we see the real affordability crisis because the inventory is low,” Nothaft said.
With wages starting to increase, the spread between percentage home price increases and income growth will narrow, he said.
Nothaft was in North Texas to visit with CoreLogic’s staff. The firm, which provides services to mortgage, financial and real estate companies, has about 1,800 people at its new headquarters in the Cypress Waters development near LBJ Freeway and Belt Line Road.
D-FW is ground zero for the U.S. home loan industry, with some of the largest mortgage firms and industry service providers employing thousands and thousands of workers in the area.
“The whole Dallas area is attracting a lot of tech people, and more and more tech people are going into loan services,” Nothaft said. “They are looking at all different types of ways to infuse technology into real estate.”