In spite of last year’s decline in oil prices, the Texas housing market, specifically Dallas, is hot with price increases at about twice the national rate. So what’s important for property purchasers – both investors and private buyers – to know about the Texas housing market?
Even though falling oil prices have caused some job cuts and employment growth slowdown, it seems Texas is diversified enough to survive the downturn.
Existing Home Sales
Buyers are coming back and although there are strong home price gains in many markets, experts don’t believe there’s a price bubble. Even with house prices nationally reaching back to 2006 levels, before the recession, home sales are still about 25% below where they were in 2006.
The Realtors’ association is estimating about a 5% rise in nationwide preowned home sales this year – about 5.3 million transactions. Compared to the almost 7 million homes sold around the country in 2007, there’s still a way to go.
Eight facts about the pre-owned home property market in North Texas:
Home sales in North Texas are running on average 4% higher compared with 2014.
New records are being set for both purchases and prices
Prices in all of Texas’ big cities are still rising.
In Dallas-Fort Worth, average home sales prices are growing around twice the national rate.
The Texas housing market is seeing a double-digit property price appreciation.
Prices could reach a new high this year
Lean inventory can be prompting higher price gains
Some owners are carrying too much debt on their properties to sell
New Home Sales
Although buyers are coming back, homebuilders have a long way to go to get back to the pre-recession construction levels the industry saw a decade ago. In the Texas housing market , new-home construction is 40% below where it was in 2006.
This time, builders aren’t building with national, single-family home starts in 2014 about half what they are normally. The single-family market has struggled and is only halfway back, with a gradual rise in new home sales.
Traditionally builders targeted first-time and mid-income buyers but now are mainly serving the higher end of the housing market; a complete reversal from previous years.
Some key factors in the North Texas, new-build homes, property market:
The homebuilders’ association is forecasting a 12% increase in home starts
Vacant land for building sites is in short supply
Labor shortages continue to dog the industry
Higher prices for land and labor are causing a profit squeeze.
Stagnating home construction levels and strong demand in the Texas housing market are keeping home supplies low. The demand for new housing and the lack of inventory is pushing up prices. With home financing costs remaining low enough not to affect sales, the new home market should be booming.
Booming Rental Market
It’s no secret that across the country, rental markets are booming. In the Texas housing market, for example; Dallas, the number of rental houses has grown by as much as 50% or 60% since the recession.
With millions of young Americans trapped in the rental market as a result of high student debt loads, the rental market holds particular appeal to investors. Nationwide, around 3 million U.S. houses have been purchased by investors to switch from owner-occupied homes to rentals. These single-family homes account for about 40% of the rental stock in the U.S.