After a prolonged downturn, “For Sale” yard signs are emerging in greater abundance, a sign that a shift is occurring in the local housing market.
Home sales during the second quarter in the Dallas-Fort Worth area slipped nearly 0.8 percent compared to the same period in 2017. At the same time, the median price increased 4.9 percent, to $274,900, according to new data from the Real Estate Center at Texas A&M University.
While the change isn’t seismic, real estate industry insiders point to the data as an indication that the housing market is beginning to cool off.
“It’s cooling from being a red-hot lava market to being a strong market that is sustainable for the future,” said Paige Shipp, Dallas-Fort Worth regional director for Metrostudy, a housing research and analysis firm. “It’s just been so crazy here for about five years, we knew this was eventually going to happen.”
Some industry insiders also blame the slowing on pushback against rising home prices, particularly in the Dallas side of the market.
The Fort Worth side of the region continues to benefit from more affordable housing stock in the new and re-sale markets.
In the Fort Worth area, home sales rose 0.8 percent in August compared to the previous year. Across Tarrant County, sales slipped by 0.2 percent in August compared to 2017, according to the latest monthly data from the Greater Fort Worth Association of Realtors Texas and Texas A&M Real Estate Center data.
The median home price in Fort Worth rose 2.7 percent to $220,000 in August compared to a year ago. Across Tarrant County, the August median price was $231,500, up 3.4 percent compared to August 2017.
The Fort Worth area’s numbers speak to the affordability gap between the east and west sides of the DFW area, says Laila Assanie, senior business economist for the Dallas Federal Reserve.
“Dallas has been the hottest housing market in the state,” Assanie said.
Because that market, including Collin County, has been the bulls-eye for national corporate relocations, the demand for homes skyrocketed as newcomers piled in.
As a result, demand outstripped supply and prices rose, turning the Dallas market into the least affordable in the state, Assanie said.
“With interest rates rising, buyers can buy the same size home on the Fort Worth side as they can on the Dallas side for less,” she said.
Home re-sales and new homebuilding are rising due to strong employment growth that has brought an average of 100,000 newcomers to the area annually for the past few years.
A rebound in oil prices since the end of the latest bust in 2014-15 has prompted a resurgence in job growth in the oil and gas and manufacturing sectors that has boosted employment growth in the Fort Worth area to 2.5 percent in the Fort Worth area, edging out Dallas area growth at 2.3 percent in 2017, according to the U.S. Bureau of Labor Statistics.
Homebuilding has skyrocketed within the past year throughout the western side of the DFW area, including Tarrant, Parker and Johnson counties.
Through July, 22,770 new single-family permits were issued in the greater Fort Worth area compared to 20,173 during the same period in 2017, an increase of 12.9 percent, according to the Dallas Federal Reserve.
The greater Dallas area continues to be a hot homebuilding market with 62,593 single-family permits issued through July this compared to 61,017 in 2017. However, the increase was only 2.6 percent.
The Fort Worth City Council last week approved plans for hundreds of new homes in various parts of the city, including the Bailey Bowell Road and Boat Club Road area and in the Cleburne Crowley Road-Old Cleburne Road area. A new community of small cottage-style homes was approved for the south side of State Highway 114 east of the BNSF Railroad tracks.
“It’s part of the sprawling growth we can’t stop,” District 7 City Councilman Dennis Shingleton said of the new development in the Bailey Bowell Road/Boat Club Road area.
In the city of Cleburne in Johnson County, new homebuilding is surging because the of the affordability of lots and the convenience of getting to the employment centers in Fort Worth via the Chisholm Trail Parkway within a reasonable 30 minutes.
Cleburne-based Raintree Homes is building affordable custom homes ranging in price from $230,000 to $265,000.
“It’s 15 minutes longer from the Godley or Crowley area but you get a lot more for your money,” said Raintree Homes co-owner Jeff Patterson. “The biggest thing for buyers is the price. You can get more for your money in Cleburne.”
Don Allen, president of the Greater Fort Worth Builders Association and a development partner with Lackland Holdings, which is affiliated with Riverside Homebuilders, said rising new home prices are becoming troublesome in parts of the Fort Worth area although not to the extent of the Dallas area.
“Rising prices continue to erode affordability,” Allen said. “We’re seeing a slowdown in sales and houses at some price points are sitting vacant.
“We’re definitely seeing pushback in areas like Propser and Celina [in Collin County] and we are trying to make sure that doesn’t happen in the Fort Worth market,” Allen said.
Homebuilding is rampant across the Fort Worth area, including the North Fort Worth corridor, Aledo and eastern Parker County, southwest Fort Worth and southern cities such as Crowley, Burleson and Cleburne, Allen said.
But building a new home for $200,000 is becoming increasing difficult and the bottom of the market is edging closer to $250,000, he said.
“As our costs go up, prices go up,” Allen said, citing factors such as a tight labor market and increasing costs for materials and developed lots.
In the re-sale market, it is still possible to buy a home priced below $200,000 but that is also becoming rarer as prices creep up, industry officials say.
“Based on the numbers from the last few months, our market appears to be leveling,” said J.R. Martinez, president of the Greater Fort Worth Association of Realtors. “It’s still a strong market and a sellers’ market but it’s getting a little better for buyers with more inventory.”
There were 2,804 home lists on the market in August, 19.4 percent more than there were in August 2017, according to the Fort Worth association.
Because inventory in the Fort Worth market, as well as the entire DFW market, lags well behind the balanced-market benchmark of six months, demand will stay strong and sales will continue at record levels, according to industry officials.
In August, the Fort Worth area had an inventory of 2.6 months, up from 2.3 percent in August 2017. Tarrant County also had an August inventory of 2.6 percent, up from 2.2 percent the previous year.
The DFW market had an August inventory of three months compared to 2.6 percent in August 2017.