North Texas’ real estate market is on fire. According to DallasNews.com, North Texas real estate agents sold a record number of houses in June, while area prices also hit a peak.
In June, 11,638 preowned homes were sold to new owners in the North Texas area. This is 13 percent more activity than a year ago and is the largest number ever recorded in a single month.
In North Texas, the median sales price for a single-family home was $256,000 – 8 percent higher than June 2016. This is backed up by data from the Real Estate Center at Texas A&M University and the North Texas Real Estate Information System.
“I think Dallas will set another record for all of 2017,” said Dr. James Gaines, the chief economist for the Real Estate Center in a statement to DallasNews.com. “The market is still very strong and it isn’t backing off much if anything.”
Despite the market’s apparent strength, Gaines noted that rising mortgage costs may be adding urgency to the summer home buying market and therefore the record-setting figures may not indicate a sustainable growth.
“It could be the talk of interest rates increasing by the Fed is spurring people to come into the market and bringing demand forward,” he told Steve Brown, real estate editor for DallasNews.com. “If you believe the cost of financing is going up, it spurs you to action.”
Gaines added that, in the long run, higher rates would cause demand to decrease.
While this may be true, it’s also evident that a growing economy and improved jobs market has also helped boost the local real estate scene. Plus, a rate increase by the Fed is likely to be small, due to central banks around the globe still offering low rates.
“Even though the U.S. economy is really looking pretty strong right now, particularly in the job market, the rest of the world is lagging behind,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association in a statement to USA Today. “So central banks elsewhere are still aggressively stimulating their economies and keeping their rates low, and that’s acting as a bit of an anchor on longer-term rates.”
Nevertheless, taking heed of certain signs (namely the under-supply of homes for sale in the Dallas-Fort Worth area) is probably wise.
According to DallasNews.com, by the end of June there were 11 percent more homes listed for sale with agents in North Texas than a year earlier. Nearly 22,000 homes were on the market. However, that provides a 2.6-month supply of existing homes for sale. By industry standards, anything less than a 6-month supply of homes for sale indicates a seller’s market, where demand outpaces supply. With North Texas showing slightly more than a 2 and a half-month supply, it’s no wonder prices have seen significant growth. What’s more, the homes that are on the market are typically higher-priced properties that are not affordable to first-time buyers or buyers in the low- to moderate-income brackets.
Nearly 13,000 of the homes listed for sale in June were priced above $300,000. Sales of homes priced at $1 million or more have increased the most in 2017. According to DallasNews.com, 874 million-dollar properties have been bought and sold – that’s 37 percent more than in the first half of 2016.
Sales figures for North Texas homes priced less than $180,000 have dwindled, thanks to a shortage of properties in that price point. It doesn’t help that the biggest price gains have happened in the low and moderate sections of the market. According to Brown, appreciation of high-end homes has slowed since the spring, while demand for moderately priced properties has gone up.
“If you are looking at a house less than $250,000 there is a real shortage,” said Gaines.
Nevertheless, Gaines remains confident in the market.
“Dallas-Forth Worth and really all of Texas has been a bellweather market around the country,” he said. “Until the economy slows down considerably the housing market will stay strong.”
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