As 2019 draws to a close, the local housing market is on the upswing with sales increasing and prices rising at a reasonable rate.
“The market is really starting to stabilize,” said Moiri Brown, president of the Greater Fort Worth Association of Realtors and branch manager of Coldwell Banker Residential Brokerage in Fort Worth. “It’s where it needs to be.”
The picture is a lot different than a year ago, when sales were tumbled in the fourth quarter as buyers balked at the combination of high mortgage rates and high prices, according to several industry insiders.
“Mortgage rates have come down, and that’s really helped a lot,” said Paige Shipp, regional director of Metrostudy, a housing analysis firm, noting that rates hovering around 3.85 percent on a 30-year fixed rate mortgage makes home-buying attained to more prospective buyers than average rates of just below 5 percent a year ago.
“We’re also seeing better pricing than we were a year ago,” Shipp said. “Sellers have become more reasonable about the value of their homes.”
Nationally, sales of new homes dipped slightly in October compared with September but remain well above levels of a year ago, much of that attributable to the lower mortgage rates.
The annual rate of single-family new-home sales slipped 0.7% last month to a seasonally adjusted 733,000, the Commerce Department said Nov. 26. But that decline followed robust gains of 4.5% in September and 7% in August.
In the latest round of data from the North Texas Real Estate Information System (NTREIS) and the Real Estate Center at Texas A&M University, the median home price in the Dallas-Fort Worth was $270,918 in October, up 6 percent from 2018. Closed sales were up 10.9 percent with 8,619 homes sold compared to 7,772 in 2018.
In the Dallas market, the median price home was $299,999 in October, up 12.8 percent from a year ago. Closed sales during October rose 6 percent compared to the previous year, with 959 homes sold last month compared to 905 in October 2018.
In Fort Worth, the median home price of $230,000 in October was up 4.6 percent compared with the previous October. Closed sales rose 5 percent from 1,011 in October 2018 to 1,062 in October 2019, according to the data.
While the market is at a healthy point, affordability continues to be a problem that keeps middle-income, and especially prospective first-time homebuyers, out of the market.
The home-buying frenzy that rocked the housing market from 2014 to 2017, sent home prices skyrocketing, resulting in Texas leading the nation in 2018 with the most households priced out of the market.
Statewide, home prices appreciated 65 percent since 2010, Shipp said.
Housing affordability has improved in all five major metro areas in Texas in the third quarter, but continue to leave many hopeful homebuyers on the sidelines.
More than 58 percent of new and existing homes sold in the Dallas area were affordable for a median-income family, up from 46 percent in the fourth quarter of 2018, when affordability was at near record lows, from the according the National Association of Homebuilders/Wells Fargo Housing Opportunity Indexes.
Affordability in Dallas is the lowest among the five major metro areas and is below the national affordability level of 64 percent. In Fort Worth, 62 percent of new and existing homes were affordable for a median-income family – in lines with other Texas metro areas but below the national average, according to opportunity indexes.
Surprisingly, the data shows that Austin is more affordable than Dallas even though home prices are higher. Median income in Austin is higher than in the Dallas-Fort Worth area so more prospective buyers can afford homes, according to Shipp.
“Dallas-Fort Worth has a lot more people working in lower-wage jobs who are not fully employed than Austin does,” she said. “That makes it harder for these types of workers to be able to afford homes.
Affordability is based on a several factors, include mortgage rates, income and home prices, according to Laila Assanie, a senior business economist for the Dallas Federal Reserve.
Those employed in the “gig and sharing economy” as well as in low-paying service and part-time jobs are factored in the low unemployment rate but their inability to buy homes is a factor nationwide.
A new study by the National Association of Realtors shows that percent of first-time homebuyers remains at a historic low. About a third of these buyers received help from family or friends for a down-payment.
Yet, even with assistance, only 33 percent of all homes sold were bought by first-time buyers, according to the association’s 2019 Profile of Home Buyers and Sellers. The norm for first-buyers is 40 percent of the market.
“Pre-recession, the number of first-time buyers was higher, in part because buyers had more options,” said NAR President John Smaby. “However, over the past few years, we have unfortunately experienced a scarcity in housing inventory, especially at the middle- and lower-end of the market.”
Other findings from the report include:
–The median age of first-time buyers increased to a recorded high of 33.
–The median age of repeat buyers reached a historic high of 55 in 2018 and remained unchanged this year.
–Only 35 percent of all buyers had children under the age of 18 living at up home, up from 34 percent in 2018 but still below a historic high of 58 percent in 1985.
–As a result of demographic changes, 12 percent of homebuyers purchased home for multi-generational families, including parents, grandparents, children under age 18 and adult children.
–The share of new homes dropped to an all-time low of 13 percent.
In the Dallas-Fort Worth area, there were 34,000 home starts in 2018.
“If we could build 10,000 more homes below $200,000, they would be sold in no time,” Shipp said “It’s just really hard to get to the price. It’s hard to get below $250,000.”
But builders are making strides toward building affordable homes to meet pent-up demand.
Further out locations, where land is cheaper and more abundant, is one step.
Dallas-based PMB Capital Investments recently announced plans to build 10,000 new homes priced from the $200,000s to more than $500,000 on 3,400 acres of land near the intersection of State Highway 114 and State Highway 287 in Wise County.
It will be one of the largest master-planned residential communities in North Texas.
Although new home development is moving into rural areas in all directions from the of Dallas-Fort Worth area, the Fort Worth area stands to benefit the most because of the abundance of available land, Shipp said.
Besides cheaper land, smaller lot and home sizes as well as fewer premium features such as top-grade granite countertops are strategies builders are using to reduce costs.