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2020: Expecting Another Banner Year for the DFW Market

Experts are Expecting Another Banner Year for the DFW Market

Featured image: Ryan Michalesko / Staff Photographer for DMN

The Texas housing market had a “banner year” in 2019, and looks to be heading for another one, a top economist said at a recent seminar at the Federal Reserve Bank of Dallas.

Nine years after the housing market’s downturn, housing sales in Texas have returned to their pre-recession peak, said Jim Gaines, chief economist at the Real Estate Center at Texas A&M University.

“That prior peak was back right before the Great Recession,” Gaines said. “It was very artificial. It’s pretty easy to have a lot of home sales when anybody who could walk into a bank and fog a mirror got 110 percent financing.”

The Real Estate Center is predicting an increase in home sales in Texas of about 6 percent in 2020, which would beat the 4 percent increase in 2019, Gaines said. Home prices statewide are predicted to rise 5 percent to 6 percent in 2020, after increasing about 3 percent in 2019.

“We’ve had an outstanding decade, and the market is still really strong,” he said.

Population projections for the next 10 years call for the addition of 5.2 million Texans, including 1.6 million in Dallas-Fort Worth, 1.7 million in the Houston metro area, 622,000 in Austin and 563,000 in San Antonio, and the population and job growth are driving the housing market, Gaines said.

Last year, job growth weakened slightly in Texas, from 2.4 to 2.2 percent, as the energy industry declined and labor market constraints continued to suppress job growth, Gaines said. This year, less trade uncertainty is a positive, although the energy sector will remain a drag, he said. Election uncertainty may restrain business investment, he added.

Texas unemployment is at 3.5 percent, a tick lower than the 3.6 percent national rate, Keith Phillips of the Federal Reserve Bank of Dallas said at the seminar. The low national rate is making it harder for Texas companies to lure workers from other states, Phillips said.

“It’s a great time to be a worker,” Phillips said. “Not so much to be an employer.”

Article source: Dallas Business Journals

Experts Predict a Strong Housing Market for the Rest of 2019

We’re in the back half of the year, and with a decline in interest rates as well as home price and wage appreciation, many are wondering what the predictions are for the remainder of 2019.

Here’s what some of the experts have to say:

Ralph McLaughlin, Deputy Chief Economist for CoreLogic

“We see the cooldown flattening or even reversing course in the coming months and expect the housing market to continue coming into balance. In the meantime, buyers are likely claiming some ground from what has been seller’s territory over the past few years. If mortgage rates stay low, wages continue to grow, and inventory picks up, we can expect the U.S. housing market to further stabilize throughout the remainder of the year.”

Lawrence Yun, Chief Economist at NAR

“We expect the second half of year will be notably better than the first half in terms of home sales, mainly because of lower mortgage rates.”

Freddie Mac

“The drop in mortgage rates continues to stimulate the real estate market and the economy. Home purchase demand is up five percent from a year ago and has noticeably strengthened since the early summer months…The benefit of lower mortgage rates is not only shoring up home sales, but also providing support to homeowner balance sheets via higher monthly cash flow and steadily rising home equity.”

Bottom Line

The housing market will be strong for the rest of 2019. If you’d like to know more about our specific market, let’s get together to discuss what’s happening in our area.

Dallas Real Estate is Experiencing a Cool-Down

According to the WSJ: Dallas housing market is cooling

“Dallas’ once-vibrant housing market is sputtering,” reports today’s edition of the Wall Street Journal.

The paper reports builders in Frisco’s high-end neighborhoods are cutting new-home prices by up to $150,000. Earlier this month, one street had $4 million worth of unoccupied new homes.

“Even though the economy in [Dallas] has boomed, home prices have grown much faster than wages, and buyers have been straining to afford homes,” reported the Journal.

“We have this huge affordability crisis,” said Ted Wilson, principal at local consulting firm Residential Strategies. “With mortgage rates going higher, we’re hitting a ceiling.”

New and existing home sales in Dallas-Fort Worth fell 3.6 percent year over year in October, according to Real Estate Center data. Meanwhile, median home price growth slowed to less than half the pace of a year ago.

To find out what this fluctuating market means for you and your home investment, contact The Indigo Skye Group and let’s talk about your real estate goals personally!

Real Estate is Transforming and DFW Leads the Way

With appreciation slowing, there are faint indicators of a market shift steeping—but for agents and brokers, prospects are ripe, and will continue to be in 2019, according to a report by the Urban Land Institute (ULI).

“The notion that real estate is a people business has, thankfully, not dropped out of the conversation,” the authors of the report state. “Human capital has been very much a part of the driving forces in real estate demand.”

From affordability to disruptors to the inventory shortage, challenges have emerged in housing in the last 10 years—challenges expected to lead to a normalization in two or three years, along with a broader economic stabilizing. According to the report, breakthroughs come from embracing, not fighting, the shifting tide.

“The real estate market is experiencing more than just a transition from one stage of the typical real estate cycle to another—the market is dealing with transformation on multiple fronts,” the authors state. “While all the changes may seem daunting, and there are increased risks, there are also opportunities for those who are prepared to move forward in the transformed real estate market.”

The most critical issues, according to the report, are the costs of construction, which has been impacted more recently by tariffs, and land, which is scarce. When it comes to affordable housing, the margins, simply, are slim.

For brokers, builders and other constituents, adopting creative fixes is key. Areas like Boston, Dallas-Fort Worth—No. 1 for opportunity, according to the report—and Denver are attracting a diverse pool of talent; builders are developing in response, with future homeowners and their interests in mind.

“Success will emerge from those markets that tackle their problems innovatively—requiring precision in providing the right real estate in an increasingly specialized economy,” the authors state. “Success will elude those markets remaining passive or stubbornly applying 20th century approaches—real estate expansion to ride economic growth—to 21st century challenges.”

In Dallas-Fort Worth, there were a collective 37,000-plus newcomers over one year, according to Census estimates from 2016-2017. In Dallas, home prices are up 4.7 percent year-over-year, but the amount of listings on the market is perking up, as well—a help to the millennial workforce. For millennials, a DFW-area home is easier, relatively, to save for: According to a RealEstate.com report, they can accumulate enough for a down payment on an entry-level home in about three-and-a-half years.

Millennials are not the only ones with promising prospects. DFW was named one of 2019’s Best Places to Retire by U.S. News & World Report for its affordable housing, among other factors.

If you are thinking of buying or selling a home, contact The Indigo Skye Group to learn about your local market conditions and what options are available to you.

Is the Real Estate Market Getting Back to Normal?

Is the Real Estate Market Finally Getting Back to Normal?

The housing market has been anything but normal for the last eleven years. In a normal real estate market, home prices appreciate 3.7% annually. Below, however, are the price swings since 2007 according to the latest Home Price Expectation Survey:

After the bubble burst in June 2007, values depreciated 6.1% annually until February 2012. From March 2012 to today, the market has been recovering with values appreciating 6.2% annually.

These wild swings in values were caused by abnormal ratios between the available supply of inventory and buyer demand in the market. In a normal market, there would be a 6-month supply of housing inventory.

When the market hit its peak in 2007, homeowners and builders were trying to take advantage of a market that was fueled by an “irrational exuberance.”

Inventory levels grew to 7+ months. With that many homes available for sale, there weren’t enough buyers to satisfy the number of homeowners/builders trying to sell, so prices began to fall.

Then, foreclosures came to market. We eventually hit 11 months inventory which caused prices to crash until early 2012. By that time, inventory levels had fallen to 6.2 months and the market began its recovery.

Over the last five years, inventory levels have remained well below the 6-month supply needed for prices to continue to level off. As a result, home prices have increased over that time at percentages well above the appreciation levels seen in a more normal market.

That was the past. What about the future?

We currently have about 4.5-months inventory. This means prices should continue to appreciate at above-normal levels which most experts believe will happen for the next year. However, two things have just occurred that are pointing to the fact that we may be returning to a more normal market.

1. Listing Supply is Increasing

Both existing and new construction inventory is on the rise. The latest Existing Home Sales Report from the National Association of Realtors revealed that inventory has increased over the last two months after thirty-seven consecutive months of declining inventory. At the same time, building permits are also increasing which means more new construction is about to come to market.

2. Buyer Demand is Softening

Ivy Zelman, who is widely respected as an industry expert, reported in her latest ‘Z’ Report:

“While we continue to expect a resumption of growth in resale transactions on the back of easing inventory in 2019 and 2020, our real-time view into the market through our Real Estate Broker Survey does suggest that buyers have grown more discerning of late and a level of “pause” has taken hold in many large housing markets.

Indicative of this, our broker contacts rated buyer demand at 69 on a 0- 100 scale, still above average but down from 74 last year and representing the largest year-over-year decline in the two-year history of our survey.”

With supply increasing and demand waning, we may soon be back to a more normal real estate market. We will no longer be in a buyers’ market (like 2007-February 2012) or a sellers’ market (like March 2012- Today).

Prices won’t appreciate at the levels we’ve seen recently, nor will they depreciate. It will be a balanced market where prices remain steady, where buyers will be better able to afford a home, and where sellers will more easily be able to move-up or move-down to a home that better suits their current lifestyles.

Bottom Line

Returning to a normal market is a good thing. However, after the zaniness of the last eleven years, it might feel strange. If you are going 85 miles per hour on a road with a 60 MPH speed limit and you see a police car ahead, you’re going to slow down quickly. But, after going 85 MPH, 60 MPH will feel like you’re crawling. It is the normal speed limit, yet, it will feel strange.

That’s what is about to happen in real estate. The housing market is not falling apart. We are just returning to a more normal market which, in the long run, will be much healthier for you whether you are a buyer or a seller.

This Month in Real Estate: September 2018

Check out the national numbers for September!

The Indigo Skye Group is happy to bring you the Real Estate News update for September 2018. Each month we share on our blog and social media networks the latest information and market insights we have available. In this update you get a birds-eye view of home sales, home prices, inventory and the most popular mortgage types and rates.

Here are just a few of the national real estate numbers we’re tracking for you right now. Click to the image below to watch the video.

HOME SALES

According to the National Association of REALTORS®, existing-home sales subsided for the fourth straight month in July to their slowest pace in over two years. In many areas, potential buyers may be priced out or finding a limited amount of available homes for sale in their desired neighborhood.

HOME PRICES

The median home price increased to $269,600 in July, which was down 1.5 percent from June and up 4.5 percent from July of last year. The median home price has increased by approximately $11,500 in the past year alone.

INVENTORY – MONTH’S SUPPLY

There was a 4.3-month supply of housing inventory in July, which has been stable since June. The total number of available homes for sale has increased by 2.4 percent compared to July of last year.

MORTGAGE RATES

Thanks for stopping by the Indigo Skye Group blog! Be sure to check the blog weekly for more informational and educational articles about real estate.

Homeowners and Appraisers See Price Increases

In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 5% (or more) over the next twelve months. One major challenge in such a market is the bank appraisal.

Homeowners are seeing prices increase

When prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the same neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank.

Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity between what a homeowner who is seeking to refinance their home believes their house is worth and what an appraiser’s evaluation of that same home is.

March 2015 marked the first month of a three-year gap between what an appraiser and a homeowner believed a home was worth. That gap widened to 2.65% in September 2015 and had consistently hovered between 1.0% and 2.0% through November 2017.

The chart below illustrates the changes in home price estimates over the last three years:

In the latest release, the disparity was the narrowest it has been since March 2015. The gap between appraisers and homeowners was only -0.33%. This is important for homeowners to note as even a .33% difference in appraisal could equate to thousands of dollars that a buyer or seller has to come up with at closing (depending on the price of the home).

Bill Banfield, Executive VP of Capital Markets at Quicken Loans urges homeowners to find out how their local markets have been impacted by supply and demand:

“The appraisal is one of the most important, although sometimes least predictable, parts of the mortgage process. The Home Price Perception Index is a way to illustrate the differences of opinion. These differences affect everything from the type of mortgage a borrower can get to the expectations a seller has about the proceeds available upon sale of their home.”

Bottom Line

Every house on the market must be sold twice; once to a prospective buyer and then again to the bank (through the bank’s appraisal). With escalating prices, the second sale may be even more difficult than the first. If you are planning on entering the housing market this year, contact the Indigo Skye Group to discuss this and any other obstacles that may arise.

If you are thinking about selling your home, contact The Indigo Skye Group. Understand your options and to find out the true value of your home. To help prepare you, download our FREE printable guide “2o Tips for Preparing Your House for Sale.”

See more Real Estate market news here.

This Month in Real Estate: December 2017

HOME PRICES:

The median home price decreased to $245,100 in September, which was down 3.2 percent from August and up 4.2 percent from September of last year. The median home price has increased by approximately $9,900 in the past year alone.

HOMES SALES:

The National Association of REALTORS® reported home sales at a seasonally adjusted annual rate of approximately 5.4 million homes during the month of September. This was an increase of 0.7 percent from August and a decrease of 1.5 percent from September of last year.

Home Inventory:

There was a 4.2-month supply of housing inventory in September, which was flat from August. The total number of available homes for sale has decreased by 6.7 percent compared to September of last year.

Watch the video here:

The Indigo Skye Group has the proven strategies and systems to help you prepare your home, price it right, present it to the right buyers, and get it sold for the highest price possible. Our #1 goal is YOUR SUCCESS.

Schedule a consultation with us today!

The Right Realtor does make a difference. Expect MORE.

Home Prices Up 7% from Last Year

According to CoreLogic’s latest Home Price Index, national home prices have appreciated by 7.0% from October 2016 to October 2017. This marks the second month in a row with a 7.0% year-over-year increase.

A lack of supply of homes for sale has led to upward pressure on home prices across the country, especially in areas where both existing and new home inventory have not kept up with buyer demand.

CoreLogic’s Chief Economist Frank Nothaft elaborated on the significance of such a large year-over-year gain,

“Single-family residential sales and prices continued to heat up in October. On a year-over-year basis, home prices grew in excess of 6 percent for four consecutive months ending in October, the longest such streak since June 2014.

This escalation in home prices reflects both the acute lack of supply and the strengthening economy.”

This is great news for homeowners who have gained over $13,000 in equity in their home over the last year! Those homeowners who had been on the fence as to whether or not to sell will be pleasantly surprised to find out that they now have an even larger profit to help cover a down payment on their dream home.

CoreLogic’s President & CEO Frank Martell had this to say,

“The acceleration in home prices is good news for both homeowners and the economy because it leads to higher home equity balances that support consumer spending and is a cushion against mortgage risk. However, for entry-level renters and first-time homebuyers, it leads to tougher affordability challenges.”

Any time the price of a home goes up there will likely be concern about the affordability of that home, but there is good news. Mortgage interest rates remain at historic lows, allowing buyers to enter the housing market and lock in a low monthly housing cost.

Rents Are Also Rising

The report went on to mention that over the same 12-month period, median rental prices for a single-family home have also risen by 4.2%.

With rents and home prices rising at the same time, first-time buyers may find the task of saving for a down payment a little daunting. Low down payment programs are available and have been a very popular option for first-time buyers. The median down payment for first-time buyers in 2017 was only 5%!

Bottom Line

If you are looking to enter the housing market, as either a buyer or a seller, let’s get together to go over exactly what’s going on in our neighborhood and discuss your options!