Sales of homes priced at $1 million and up are surging in North Texas as affluent buyers decide it’s time to hunt for new digs

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Published March 21, 2014

A tight supply of homes on the market and tougher mortgage standards have kept Dallas-Fort Worth home sales in check so far in 2014. But that hasn’t put the brakes on high-end home purchases, which have surged in the first two months of the year.

Sales of homes priced at $1 million and more have exploded – up 53 percent in North Texas from a year ago, according to the latest real estate data.

At the same time, sales of modestly priced houses in the area have slowed – down by more than a quarter from a year ago. Overall pre-owned home sales by real estate agents are flat this year.

More than 100 North Texas houses priced at $1 million have changed hands since the start of 2014.

And there are another 857 homes in that price range still on the market, according to data from the Real Estate Center at Texas A&M University and the North Texas Real Estate Information Systems.

Home Sale Index

The surge in high-priced home sales has caught the attention of economists and kept real estate agents busy.

“We seeing the same thing in Houston as in Dallas – million-dollar home sales are way up,” said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M. “We are in a housing recovery, and people with money recover faster than people without money.”

Favorable conditions

Gaines said there is now demand for super luxury homes following the recession.

“They are taking money out of the stock market or they are simply people who have capital and don’t know what else to do with it,” he said. “Putting it into a luxury home is not a bad proposition.”

While many of these deluxe property buyers pay cash or finance only a percentage of the purchase, for buyers who need a mortgage, high-end home financing is now more plentiful and affordable, Gaines said.

“Jumbo mortgage rates are now at or slightly below conventional loan rates,” he said. “And lenders aren’t as risk adverse as they have been.”

If mortgage companies are loosening up on high-end home loans, then they have become more stringent when it comes to financing low-cost housing for some moderate income buyers. People must meet tougher debt to income ratios and have higher incomes and credit ratings to buy a house than in the period before the recession.
“That’s the end of the market where the new mortgage regulations have hit the hardest,” Gaines said. “These are the people who have the most trouble qualifying for loans – generally young people and first-time buyers.

“Otherwise, this lower-end market would be doing better than it is.”

Some loan requirements may be up, but real estate agents aren’t complaining – particularly those who sell exclusive properties.

“Last year was unprecedented — the biggest year I have ever had,” said luxury home agent Erin Mathews. “And this year has seen that continue.”

Mathews said many affluent home buyers sat on the fence during the recession, and they are now ready to make a deal.

“People feel like that if they are going to make a move to upgrade, the time is now,” she said. “We are also getting an influx of relocation buyers, and that’s a nice segment of the market now.”

The tightest home inventory in probably 20 years has made it more challenging for home shoppers, agents say. But that doesn’t mean another price bubble is happening.

“You have to be fast on your feet to make a buy,” Mathews said. “But nobody is being crazy with prices.

“Even though prices are inflated from where they were in 2008, buyers want to see what else has sold and at what prices in this boomlet we are in.”

Nowhere to go

Million dollar home sales would probably be even higher this year if there were more properties to purchase.

1That’s keeping some owners of luxury houses from selling, too.

“I had two properties under contract where I could not find another house for either seller,” said top Dallas real estate agent Allie Beth Allman. “They backed off the sales.

“They said they couldn’t find anywhere to go.”

Allman said the demand is strongest in one segment of the luxury market. “The $1 million to $3 million market is going crazy,” she said. “There are multiple offers for properties at that end of the market.”

Allman said there’s also been a shift toward new construction in the higher price ranges.

“They want new houses that they don’t have to do anything to,” she said. “People that can afford the upper end want brand new construction.”

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