Steve Brown jumped on Tuesday’s Case-Shiller report like a kid with a shiny new bike (pay wall? not sure). The report showed Dallas-area home prices up by the largest percentage in more than a decade
Dallas home prices rose 5.7 percent in November from the same period a year ago in the monthly Standard & Poor’s/Case-Shiller Home Price Index. I will caution you, these are sales from November because by now, end of January, all paperwork is in. And it was the ninth month in a row that local prices were up from 2011. Our Dallas-area increase was slightly higher than the 5.5 percent average price rise in the other 20 major cities that Case-Shiller tracks, so yes, I would say that it is time to be very happy indeed. Get on a new bike and hit the Katy Trail!
But from what I see of the flurry of business agents are up to eyeballs in this month, I say we ain’t seen nothing yet when it comes to price increases.
There is so little on the market: local home inventory levels are at the lowest point since the early 2000s, and the analysts Steve interviewed say North Texas could see even bigger price increases in 2013 because there is, quite simply, less to choose from:
“If the inventory doesn’t improve, we are going to see remarkable price increases this year,” said Dr. James Gaines, an economist at the Real Estate Center at Texas A&M University. “If you own a house and want to sell, it’s probably the best time in years.”
Steve says “the number of pre-owned homes on the market in North Texas last year was down about 20 percent. And inventories of new homes are at the lowest point in more than a decade.” Well, what if everyone reads this and decides to put their house on the market? Herd mentality. Folks back in 2008/2009 pulled back, re-grouped, and got a bad taste for real estate. Now, they start hearing about a few good deals, they will get back in.
And Gaines estimates “that Dallas-area pre-owned home prices were up 7.6 percent in 2012 from 2011.” 2011, if you recall, was the first year of median price increases since before the Great Recession. We were probably the least affected state in the Union during the housing crash, but our values still took a 15 percent hit, which we are making up this year.
If the economy continues to chug along and Washington doesn’t do anything stupid…
The big boys confirm that housing is contributing to the nation’s economic growth, which is so interesting because housing is what spurred the crash.
Who is benefitting the most? Phoenix, prices up 22.8 percent, and San Francisco, prices up 12.7 percent from November 2011. Tell me about it: my son is trying to buy a house there.
You know who’s really happy in Dallas right now: home builders. Steve says home construction is still down here and not expected to return to pre-recession levels for years. Actually, Steve, it never will — there are not that many builders out there and banks still have a tight leash.
Steve talked to Dallas real estate appraiser Chuck Dannis, who said he wouldn’t bet on North Texas home prices rising at double-digit rates in 2013:
“but the laws of supply and demand suggest it could happen. If it does, it will just shock people,” Dannis said. “When we had double-digit inflation in housing prices around here, it was always tied to inflation and not necessarily supply and demand.”
Dannis told Steve that appraisers “will be reluctant to sign off on big price increases unless they can support the figures with data from closed home sales.”
Why? Because lenders won’t lend without appraisals that are as tight as Fort Knox security.
I also think that when buyers see billionaires putting their homes on the market, like the $130 million home of Tom and Cinda Hicks, it encourages more people to stick a toe in the water and make a move. In fact, that’s exactly how the herd mentality starts!