Is Dallas Real Estate Overvalued? New Report From Fitch Ratings Says Yes

Home For Sale Sign Dallas

Let’s just say that my eyes widened a little without the help of coffee when I read this story from Steve Brown. According to Fitch Ratings, Texas home prices are way overvalued, by 11 percent they say, and there could be a reckoning coming thanks to falling oil prices.

The financial analysts at Fitch are concerned about the year-over-year growth in Houston, Austin, and Dallas, which posted home price increases of 20 percent since 2011.


Reports Show Dallas-Area Home Prices Are Up, But Sales Are Down

Home prices in North Texas are up year-over-year, though sales volume is sluggish.

Home prices in North Texas are up year-over-year, though sales volume is sluggish.

Word comes that for the month of August, Dallas-area home prices posted a fantastic little bump at 7.3 percent year-over-year. Case-Shiller’s Home Price Index report shows enough of an increase in prices to warrant continued optimism among sellers in our burg, where a shortage of inventory and slow-to-catch-up new home builders has made the market for homes in most price ranges very competitive.

That’s one of the highest increases nationwide, and over the national average, too, which is 5.5 percent. According to the report, the median price of a pre-owned, single-family home in North Texas in August is up 7 percent from the same period last year.

But according to a recent report from the Real Estate Center at Texas A&M University, total sales are down 2 percent over a year ago. Of course, as sales volume decreases, it’s only natural for the competition over those homes on the market to heat up.

I guess, though, we’re in a fortuitous spot considering that our price increase puts us at 12 percent higher than pre-recession levels, and with inventory as short as it is and job growth still on pace for expansion, there’s no bubble in sight.

What’s your outlook on home prices and inventory?

Home For Sale Sign Dallas

With Texas and Dallas clocking in a small uptick in inventory, everyone’s wondering if we the market is poised to stabilize soon and if our time of scarcity and rising prices is over.

According to the latest report from CoreLogic, not so much.

“Home prices are continuing to rise fueled by ongoing tight supply, low rates, and aggressive investor buying on the East and West Coast,” said President and CEO of CoreLogic Anand Nallathambi. “The expected surge in the number of homes for sale has not materialized to date as many homeowners are staying put and waiting for better economic times and higher prices in the future.”


Inventory Chart TAR q1 2014

Slow growing inventory is choking sales growth and driving prices up in the Dallas real estate market, with only 2.4 months of inventory in the Dallas market — an increase of 0.2 months from last quarter — according to the latest quarterly report from the Texas Association of Realtors and the Real Estate Center at Texas A&M University.

As a result the median home price in Dallas is up 9.81 percent from the first quarter of 2014, an increase of 6.81 percent from the same time a year ago and the second consecutive quarter our city has seen an increase in home prices. Statewide, inventory grew for the first time in three years, up to 3.6 in the second quarter of 2014 from an all-time low of 3.4 months in the first quarter of this year. Still, inventory is tighter than a pair of skinny jeans after Thanksgiving and continues to pose problems for our market.


Home For Sale Sign Dallas

Maybe so, or maybe the market is just taking a breather while the summer heat is on before it grows legs again. According to Standard & Poor’s/Case-Shiller’s Home Price Index, Dallas has seen the smallest increase in home prices since August of last year. Still, prices are growing, at an albeit slower rate. In fact, all of the MSAs Case-Shiller surveys saw growth from April to May of this year, even beleaguered Detroit.

Regionally, home prices increased 8.6 percent in Dallas from May 2013 to May 2014, and between April and May of this year, the increase was 1.3 percent. That’s a decrease from March to April 2014, during which Dallas saw a 1.6 percent price growth. Nationally, housing prices are up 9.4 percent from May 2013, with a flat month-over-month HPI.



I managed to pry myself away from the USA vs. Belgium World Cup match for long enough to tell you about the CoreLogic May 2014 HPI Report. Taking time out to write this was more difficult than scoring a goal on Tim Howard. But, this is news you can use, y’all, much like a stiff drink after the first extra time period.


Dallas Home Prices Are up 10.4 percent YOY, But Are We Getting Bubbly Again?

(Graphic: Courtesy of CoreLogic)

(Graphic: Courtesy of CoreLogic)

Lots of conflicting reports are circulating lately, some of them say our region’s real estate market, along with the U.S. at large, is poised for unprecedented growth in prices. Others claim that relying on the real estate market to support our nation’s financial comeback is a huge mistake.

CoreLogic’s most recent HPI shows a 10.4 percent year-over-year increase in Dallas-area home prices, with national figures coming in at 10.5 percent year-over-year. The April 2014 HPI report shows Dallas among eight other U.S. metros that posted double-digit growth over the previous year ending in April, with Riverside, Calif., posting a gargantuan 19.7 percent increase in first, Houston coming in third at 14.7 percent YOY, and Dallas coming in seventh.

“Home prices are continuing to rise as we head into the summer months,” said Anand Nallathambi, president and CEO of CoreLogic, in a June 3 press release. “The purchase market continues to suffer from a dearth of inventory which we expect will continue to drive prices up over the year.”

But is that necessarily a good thing? Is our new normal a shortage of available housing in key sectors? And how do we stave off another recession?


Case-Shiller Report Shows Double-Digit Increases in Dallas Home Prices

After 22 months of growth, are Dallas home prices about to hit a plateau? Could be.

The Standard & Poor’s Case-Shiller home price index showed a 10.2 percent year-over-year increase in Dallas home prices according to their most recent 20-city composite report. Dallas now ranks with 13 of the top 20 cities measured by Case-Shiller’s HPI with double digits. Nationally, the home price index is up 13.4 percent year-over-year.

But are we about to peak? Perhaps, as analysts with S&P say home price increases are slowing quite a bit. That break in momentum could be good news for buyers who are having a rough time find a home in Dallas with tight inventory and bidding wars around every corner. Case-Shiller’s HPI showed Dallas prices up only 0.2 percent from November to December, and a 0.1 percent increase from October to November.

“Only six cities – Dallas, Las Vegas, Miami, San Francisco, Tampa and Washington – posted gains for the month of December,” the report stated. “Miami held its leadership position with an increase of 0.9% followed by Las Vegas at +0.4%. Atlanta, Detroit and Los Angeles remained relatively unchanged – Detroit remains the only city below its January 2000 level.”

According to Steve Brown’s DMN story, S&P’s David Blitzer thinks the rebound period of the housing recovery may be behind us:

“Gains are slowing from month-to-month and the strongest part of the recovery in home values may be over,” said S&P’s David Blitzer. “Recent economic reports suggest a bleaker picture for housing.

“Existing home sales fell 5.1 percent in January from December to the slowest pace in over a year,” Blitzer said. “Permits for new residential construction and housing starts were both down and below expectations.”

Still, Blitzer points out that the Case-Shiller index in 2013 had it’s largest gain since 2005.

And Dallas-area home prices have been up from the previous year for 22 straight months. Local home prices are up by more than 5 percent from where they were before the recession, according to Case-Shiller.

We’ll have to see what happens as the spring selling season hits, but steady prices and an uptick in inventory would be good news overall.

What’s your perspective? Will we see home prices continue to increase, or are we about to hit a plateau?