Dallas-area home prices rose at the slowest rate in 10 months in the latest nationwide survey.

Dallas prices were up 8.6 percent in May from a year ago in the just-released Standard & Poor’s/Case-Shiller Home Price Index.

Nationwide prices rose 9.4 percent from May 2013 levels.

“Home prices rose at their slowest pace since February of last year,” S&P’s David M. Blitzer said in the report. “Housing has been turning in mixed economic numbers in the last few months.

“Prices and sales of existing homes have shown improvement while construction and sales of new homes continue to lag.”

The lower home price gains have been predicted by analysts who see some moderation after many months of double-digit price increases.

Eighteen of the 20 cities Case-Shiller survey’s had lower gains in May than in April.

Dallas’ increase was the smallest since July of last year. Earlier this year local home prices were growing at more than 10 percent from a year ago.

The largest annual gains in May were in Las Vegas, 16.9 percent, and San Francisco, 15.4 percent.

The smallest increase was in Cleveland, 2.4 percent.

Dallas-area home prices are now at a record level in the closely-watched Case-Shiller report – up more than 9 percent from where they were before the recession.

And prices here are almost 25 percent ahead of where they were at the worst of the economic downturn in 2009.

Dallas-area prices have been rising in the Case-Shiller study for more than 24 months.

2014 Aug 9 case_may

This spring’s North Texas housing market isn’t shaping up like the one last year.

A year ago, sales of preowned homes were up 23 percent and prices were rising at double-digit rates.

But last month, home sales in the area fell 1 percent from a year earlier. Prices rose, but by 6 percent from May 2013.

The moderation in the preowned home market growth is likely to continue in the months ahead because of a tight supply and consumer push-back against huge price increases, analysts say.

“Existing and new home price increases slowed somewhat this year as buyers are experiencing sticker shock from the higher home prices,” said David Brown of housing analyst Metrostudy Inc. “It is likely the market will have a slightly lower overall appreciation rate in 2014 than 2013.

“We still expect the prices to increase well above the region’s long-term trend,” Brown said.

In May, the median price of single-family homes sold through real estate agents’ multiple listing service was $189,900, a record high for North Texas.

Still, the price of housing in the area is growing at a significantly lower rate than a year earlier, according to the latest data from the Real Estate Center at Texas A&M University and the North Texas Real Estate Information Systems. Prices are up 7 percent for the first five months of 2014 compared with the same period last year.

So far this year, real estate agents have sold 3 percent fewer preowned homes in North Texas than during the first five months of 2013.

In May, 9,064 preowned single-family houses changed hands.

A shortage of properties on the market is blamed for the slight decline.

“Sales volumes will run about equal to last year. But remember, last year was the second-best year ever,” said Dr. James Gaines, an economist with the Real Estate Center.

Gaines said there is still a lot of upward pressure on home prices in North Texas because of the tight supply and the region’s booming economy.

“Prices will be up between 5 percent and 10 percent for the year but with lots — and I mean lots — of variability among and between neighborhoods and subdivisions,” he said. “The good and best neighborhoods probably will see prices up more than 10 percent.

“In the least desirable neighborhoods, prices may actually go down or stay flat at best.”

The number of houses listed for sale with real estate agents in the more than 24-county North Texas area was down 4 percent in May from a year ago.

On average, it took 47 days for a house in the multiple listing service to sell.

Lincoln Heritage Realty Home Closing 2014

The housing recovery is shifting into a lower gear thanks to affordability issues and unwillingness by many homeowners to give up their current low-cost mortgages to finance a new purchase.

Top housing economists predict continued declines in home sales and a moderation in home price growth this year in most U.S. markets.

“The mood about the housing market has gotten worse,” said Jed Kolko, top economist with online real estate marketing firm Trulia. “Now there are lots of worries about what has happened to the housing recovery. Is it real?

“We are shifting to a slower but more sustainable engine of recovery.”

Kolko said that cheap homes and buyers looking for bargains drove last year’s housing recovery.

“That fueled price growth – it fueled the volume of sales,” he said Friday at a meeting of the National Association of Real Estate Editors. “Prices can’t rise at a rate of 10 or 15 percent a year over year for ever.

“A market can’t recover forever based on cheap prices.”

Home prices in North Texas are no longer cheap. Over the last couple of years the median home sales price in the area has grown by more than 20 percent to a record high.

After rising at double-digit percentage rates in 2013, this year home prices in the D-FW area going up at about 7 percent.

And total home sales are actually down slightly this year after a more than 20 percent increase in 2013.

It’s the same trend in many markets across the country.

The National Association of Realtors is forecasting a slight retreat in total housing sales this year from 2013, chief economist Lawrence Yun said.

“The market has been soft somewhat for the last seven or eight months,” Yun said. “In recent months it’s beginning to move sideways, indicating maybe the recent slowdown is over.”

Yun said the housing market typically has multiyear recoveries.

“Is it the case that after a deep housing market bust we have had two years’ recovery and now it’s going to fizzle out?” He doesn’t think so.

But the housing market come back so far has been a “whimper” compared to previous bounce backs following an economic downturn, Yun said.

“The recent slowdown one can attributed to affordability – the miss match between income growth and home prices,” he said.

Rising mortgage rates are also limiting home sales by causing some homeowners to hold on to their current property financed at record low rates they got a year or tow ago, Yun said.

Almost half the long-term mortgages on lenders books are at 4.5 percent or less.

“People do not want to give up their 3.5 percent mortgage rates,” he said. “They will hold on to it unless they are forced to move.”

That reduces supply of houses for sale.

“The lack of inventory continues to be a constrained – it’s roughly half the level of where it was back in 2007, Yun said. “Inventory may not be rising as quickly as people anticipate.”

In North Texas and across the country, there’s only about a 3-month supply of preowned homes up for sale.

“There are not a lot of homes for sale out there,” said Mark Fleming, chief economist with CoreLogic Inc. “When you get months’ supply below six months, you have lots of upward price pressure.”

Fleming said there is huge disincentive for many current owners to sell who don’t want to finance at higher rates.

“That’s bad news for real estate agents,” he said. “My expectation is housing turnover will be down significantly in the future.

“And it will quickly get worse,” as mortgage rates rise, Fleming said.

The slowdown in home sales and smaller price increases – if they continue this year – should insure there’s not another housing bubble, economists say.

Are we in a housing bubble? Not yet,” Fleming said. “You cannot sustain 10 to 12 percent annualized price growth given that incomes aren’t rising,”

Economists are forecasting that average home finance costs will continue to drift higher and be close to 5 percent by next year.

“Interest rate increases are certainly coming,” said Stan Humphries, chief economist with Zillow Inc. “We are not going to be at 7 percent mortgage rates for a fairly long time. “We feel like we have plenty of headroom to let rates get back to normal and still have homes affordable in the U.S.

“We are still a little bit more than 13 percent off our peak levels in terms of home values,” Humphries said.

Rebound downtown has buyers scrambling for close-in Dallas housing

“We’re going to have a logjam this year,” in East Dallas and Oak Cliff. “Traffic is already huge.”
Russell Smith has rented an apartment since moving to Dallas in 2012. But the former Chicago resident recently decided it was time to buy a home.

After looking at properties in several close-in Dallas neighborhoods, Smith just signed a contract to buy a house in East Dallas.

Demand for housing in neighborhoods near downtown including Oak Cliff, Lakewood and the M Streets is so strong that prices are soaring and inventory of properties on the market has fallen to historic lows.

“I was warned about what was going on in the market, and it was true,” Smith said. “I ending up paying a lot more than I expected — I increased my budget by 25 percent.

“It’s definitely a busy market.”

The traditional spring housing market is just getting started, but 2014 is looking like another year of frustration for many would-be Dallas home buyers.

The inventory of houses for sale in North Texas is at a more than 20-year low. And prices are spiking as buyers compete for available properties.

In January, Dallas-area home prices jumped more than 12 percent from a year ago, according to researchers at CoreLogic Inc.

Boost in Oak Cliff

In some close-in Dallas neighborhoods, the price gains are even higher.

Home sales prices in the Oak Cliff area in January were up 53 percent from a year earlier, according to Realtor sales through their multiple listing service.

And in East Dallas, median sales prices rose 51 percent from January 2013.

Prices were up 49 percent in northwest Dallas and 65 percent in southeast Dallas.

The huge gains have as much to do with the types of homes selling this year as they do with overall prices.

Still, real estate agents say that with the big investments that have been made in the last decade in Dallas’ central city, more suburban residents and people being transferred to North Texas want to live in close-in neighborhoods.

But first, they have to find a property.

“We’re going to have a logjam this year,” said real estate agent Robert Kucharski of David Griffin Realtors, who sells properties in East Dallas and Oak Cliff. “Traffic is already huge.

“On the M Streets, I can average 25 couples at an open house,” he said. “Homes there are selling for $40,000 or $50,000 more than last year.”

Brake on inventory

Kucharski said the number of houses on the market is being held down because potential sellers can’t find another home.

“Everyone is hesitant to sell their property,” he said. “They say what should I do, I don’t want to sell my house and be homeless.”

Real estate analysts had hoped that this year’s housing market in North Texas would see more properties up for grabs. But if anything, the supply is tighter.

“I’m representing a couple of buyers, and we have been in bidding wars for houses,” said agent Lydia Player of Ebby Halliday Realtors. “On one yesterday there were seven offers.

“We bid over the asking price and lost out.”

Even with those pressures, Player says that overall Dallas home prices aren’t up by as much as the statistics indicate.

Tougher mortgage standards are keeping many first-time and moderate-income buyers out of the housing market, agents say.

In 2013, the average Texas home buyer had a household income of almost $92,000.

Wealthy buyers are taking money out of the stock market and from other investments to move up in the housing market.

“We have more of these million-dollar homes selling, and that’s raising the average sales price,” Player said. “It doesn’t mean your home is worth 40 percent more.”

Bidding up values

In East Dallas, homebuilders are bidding up the residential values as they acquire older properties, tear them down and build much more expensive homes.

“I’m selling a lot of properties to builders for new houses,” said agent Scott Carlson. “The neighborhoods are changing to more new construction.”

Typically those new houses sell for at least two or three times as much as the previous home.

Carlson said buyers are willing to pay more to live in some of Dallas’ close-in neighborhoods because they have a lifestyle you can’t find in many suburbs.

“People want to be in the city,” he said. “In Lakewood, it’s about White Rock Lake and the schools.

“You are close to downtown and have a great neighborhood,” Carlson said. “We finally have a great downtown in Dallas — it took a long time.”

New homeowner Smith said he shopped properties in Oak Cliff before deciding on his new house near Dallas’ historic Swiss Avenue.

“I used to live in Oak Cliff back in the ’90s and liked the area,” he said. “But there was very little on the market there.

“I ended up with a great house, and I like the proximity to downtown.”

U.S. millionaires see real estate as the top alternative-asset class to own this year, according to Morgan Stanley. (MS)

About 77 percent of investors with at least $1 million in assets own real estate, according to a survey released today by the New York-based investment bank’s wealth-management unit. Direct ownership of residential and commercial properties was the No. 1 alternative-investment pick for 2014, with a third of millionaires surveyed saying they plan to buy this year. Twenty-three percent said they expect to invest in real estate investment trusts, the second-most popular choice.

Wealthy investors are turning to a rebounding real estate market as fixed-income yields remain historically low and equities surge. U.S. commercial-property values rose 8 percent in the 12 months ended Jan. 31, and have jumped 71 percent since hitting their post-recession bottom in 2009, research firm Green Street Advisors Inc. reported today. The S&P/Case-Shiller index of home prices in 20 cities is up 24 percent from its 2012 low.

“After a year where the Standard & Poor’s Index rose 30 percent, some millionaires are moving money out of traditional, long-only strategies to find out performance, and turning toward alternatives such as real estate and private equity,” said Gary Kaminsky, a vice chairman at Morgan Stanley Wealth Management in New York. “Sophisticated, high-net-worth investors are much more concerned about losses.”

Collectibles ranked as the third-most-popular alternative-investment choice this year, with 20 percent of millionaires saying they planned to buy, followed by private equity at 19 percent and precious metals at 16 percent.

The Dallas area is one of only two major U.S. markets where home prices have surpassed pre-recession levels.

Prices of pre-owned homes in Dallas and the Denver area are now 4 percent greater than where they were in 2007 before the housing crash, according to the latest Standard & Poor’s/Case-Shiller report. And Dallas prices are 17 percent higher than they were during the worst of the recession in early 2009.

The rest of the country is still down more than 20 percent in home prices.

Dallas-area home prices were up a record 8.5 percent in July from a year earlier in the latest Case-Shiller report, released Tuesday.

Nationwide home prices rose 12.4 percent in the closely watched comparison.

“Home prices gains are holding their 12 percent annual rate of gain,” S&P’s David M. Blitzer said in the report. “The Southwest continues to lead the housing recovery.”

The biggest July price gains were in Las Vegas, up 27.5 percent; San Francisco, up 24.8 percent; and Los Angeles, up 20.8 percent.

While not as large as in many markets, Dallas’ price increases are double historic averages.

“We are still going up by a much greater rate than our long-term norm,” said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M University. “Normally, Dallas doesn’t see that.”

And Gaines, like other economists, doesn’t expect the rate of home price growth in North Texas to remain at current levels.

“I don’t think 8 percent and 8.5 percent increases are sustainable for very long,” he said.

With mortgage rates moving up, most economists agree that this summer’s huge home price jumps won’t last.

“More cities are experiencing slower gains each month than the previous month, suggesting that the rate of increase may have peaked,” Blitzer said.

So far in 2013, median prices of pre-owned single-family homes are up 11 percent in North Texas, according to data from real estate agents.

Case-Shiller’s index is different. It tracks over time the prices of specific single-family homes in each metropolitan area. And the index does not include condominiums and townhouses.

The increases in North Texas home prices is being driven by strong demand for housing and a short supply.

Through the first eight months of 2013, pre-owned home sales are 20 percent higher than they were in the same period last year. And the number of houses available for purchase in August was 14 percent below where it was a year earlier.

stairway to havenSix financial steps to take after buying a home

YOU’VE SIGNED THE paperwork, moved in and had a toast to celebrate the purchase of your new home. What’s next?
“Settling into a house can be daunting, especially when it comes to finances,” says Thomas Fox, community outreach director at Cambridge Credit Counseling, a national nonprofit credit and housing counseling agency based in Massachusetts. Mortgage payments, furnishings and upkeep can add up quickly – and that’s before preparing for unexpected repairs, like a new roof.
Fortunately, with a little planning, managing the costs of your new home can be a smooth process. Here’s how.

1. Set goals. “Budgeting is the number-one way to manage finances, pay bills and save after a move,”.
To develop a budget that fits your home, he says, use goals as a starting point. Think about what you want for the house, such as backyard landscaping, a remodeled kitchen or new windows. Then, incorporate those goals into your budget. For instance, perhaps you’ll decide to save for a year and then pay cash to redesign the backyard.
2. Factor in maintenance. To cover maintenance costs, “plan to spend approximately 1 percent of the home’s purchase price each year,” says Gallegos. So if your home cost $200,000, you’ll want to budget about $2,000 for annual upkeep. This amount could be used to cover the cost of replacing air filters, repairing a furnace or fixing the sprinkler system.
3. Understand your policies. “Once you’ve moved in, review your homeowners insurance policy,” says Scott Why tock, principal at August Wealth Management, LLC, in Portland, Maine. Make sure the coverage you have is adequate. For instance, if a tree falls during a storm and takes out the shed in the yard, will your policy cover it? If you have questions, contact your insurance agent to go over them.
Also check that you have enough life insurance coverage for your current situation. If your spouse passes away and leaves you with a sizable mortgage, benefits from the policy could be used to make monthly house payments or pay off the mortgage entirely.

4. Decorate step by step. There’s no need to rush to the store for fur¬nishings. “Live in the house for a while to get a feel of the place,” suggests Pablo Solomon, an artist and designer who lives north of Austin, Texas. Then develop a plan for home and yard decor, and prioritize the items you want to get.

Before shopping, set up a decorating budget to guide how much you spend. “As you make purchases, watch for sales on art, paint, appliances and lawn furnishings,” says Solomon. Consider leaving a room or two sparsely furnished until you’re able to buy more furniture.

5. Set up automatic payments. For monthly household bills, ask to have the payments automatically with¬drawn from your checking account or charged to your credit card. In addition to saving time, you won’t have to worry about missing a mort¬gage payment or electricity bill.
When signing up for automatic pay¬ments, ask about special offers. Some compa¬nies, such as those providing utility services, offer a discount for paying automatically.

6. Build an emergency fund. To prepare for the unexpected, “aim to have eight months to a year’s worth of living expenses in savings,” advises Fox. This would include what you spend on your mortgage payment, utilities, cable, phone bills and other regular bills.
If putting together such a large amount seems overwhelming, focus on building it slowly. Start by setting aside a small amount each month. You’ll be thankful for the extra cushion of cash down the road, such as the day you find out you need to replace the roof.

With Dallas-area home prices in many neighborhoods up by 10 percent or more so far this year, 2013 is shaping up to be one of the best years for the local housing market in decades.

Local pre-owned home sales in the first half of this year are running more than 20 percent higher than in the same period of 2012. They’ve set a North Texas sales record for a six-month period.

Some Dallas-area residential districts are experiencing the largest home price gains this area has seen since the 1980s.

Housing analysts and real estate agents predict that North Texas home sales and prices will continue to rise during the rest of this year, even with the recent increases in mortgage costs.

Concerns about the home market getting overheated are overblown, they say.

“The increase of sales we are seeing is a pure function of economics,” said Ted Jones, chief economist for Stewart Title Co. “This is not false hopes.

“It’s all about the jobs.”

With the Dallas-Fort Worth area among the top five employment growth centers in the country, Jones said, it’s only natural that demand for housing is so strong.

“In the last 12 months, the D-FW area created 104,600 net new jobs — that’s a lot of jobs,” Jones said. “In that same period, the total residential permits issued in this area were 34,720.

“We could have built twice as many homes and apartments and not overbuilt this market.”

A shortage of homes on the market is driving big price increases in many neighborhoods.

At midyear, some neighborhoods including Far North Dallas, Coppell, Richardson and Grapevine had less than a 11/2-month supply of homes listed for sale with real estate agents, according to data from the Real Estate Center at Texas A&M University and North Texas Real Estate Information Systems.

A six-month housing inventory is considered a balanced market.

Real estate agents say competition is still fierce for prime properties.

“You write offers on five different houses and pray one gets accepted,” said Scott Schueler, an agent with Keller Williams Realty. “We have frustrated buyers and really happy sellers.”

So far the increases in both home costs and higher interest rates haven’t dampened demand.

“Texas enjoys a comparative housing advantage to other high-growth states,” said James Gaines, an economist with the Real Estate Center at Texas A&M University. “Prices here are significantly below those in other states that people are now leaving.”

But for the Dallas-area, home prices have never been this high. The median pre-owned sales price is now close to $186,000.

While no one expects any kind of a downturn, most economists predict that housing activity in North Texas and across the country will moderate in 2014.

“My short-term outlook is for more of the same,” Jones said. “But I expect that housing values may not go up as much next year as in 2013.

“Supply and demand says values are going to rise.”

Lincoln Heritage Realty Steven Jeffers LHR The Honest Solutions Company foreclosure-filings-down 2013North Texas home foreclosures have been tapering off for the last couple of years.

But Dallas-Fort Worth foreclosure postings for January have fallen at an even sharper rate.

Just under 2,400 area homes are threatened with forced sale by lenders next month. That’s a 42 percent decline from January 2012, according to data from Addison-based Foreclosure Listing Service.

Monthly foreclosure filings haven’t been so low in North Texas since mid-2005, according to records.

The all-time high for monthly foreclosures was in April 2010, when 6,168 filings were recorded by Foreclosure Listing Service.

Annual home foreclosure postings in the D-FW area peaked in 2010 with almost 64,000 residential filings.

For 2012, foreclosure postings fell to less than 49,000, according to Foreclosure Listing Service.

The reduced number of foreclosures in North Texas has come as the local economy has improved and the housing market has gained strength.

“With the upward movement in house prices, the number of households underwater on their mortgages is waning in D-FW,” said Ted Wilson, a principal with Dallas-based housing analyst Residential Strategies Inc. “Moreover, with the improving housing picture, the attitude of helplessness, so pervasive two years ago, is evaporating as well.”

The number of D-FW homeowners who are behind with their mortgage payments has dropped to the lowest level in almost three years, according to recent reports.

Foreclosures have also decreased because of an increase in the number of short sales of distressed homes, real estate agents say.

For January’s foreclosure filings, the largest declines were in Collin County, where postings are down 44 percent from a year earlier.

Dallas County postings dropped by 43 percent from January 2012.

The average home now posted for foreclosure in the D-FW area has a $146,101 loan that was made in 2005. The average unpaid balance on these mortgages is $124,646.

The largest numbers of January foreclosure filings were in Fort Worth (335), Dallas (311), Arlington (173) and Grand Prairie (120).

 

Scheduled for auction
Residential properties scheduled for foreclosure auction in January for each of the area’s counties, and change from a year ago:
Dallas County 1,026 -43%
Tarrant County 810 -39%
Collin County 293 -44%
Denton County 269 -37%
D-FW area 2,398 -42%
SOURCE: Foreclosure Listing Service

Real estate agents attribute home price gains to a decline in foreclosures in North Texas and a sharp drop in the number of houses on the market.

There’s no doubt that home prices in North Texas will head higher this year.

The only question, real estate agents and housing analysts say, is how large the price increases will be.

“I definitely think we are going to see some appreciation, and we are ready for it,” said Virginia Cook, founder of Dallas-based Virginia Cook Realtors. “Prices are going to move up.”

Pre-owned home prices were already heading higher in 2012, according to data from properties sold in the Realtors’ multiple listing service.

Dallas-area prices increased an average of 6 percent, according to a year-end study of 45 residential districts tracked by the Real Estate Center at Texas A&M University.

It’s the first such rise since the recession. And that compares with a 5 percent decline for the same areas in 2011.

Eight of the residential districts included in the comparison saw double-digit percentage price increases last year. Some of the largest gains were in Oak Cliff (17 percent), Irving (16 percent) and Westlake-Trophy Club (13 percent).

Real estate agents attribute the home price gains to a decline in foreclosures in North Texas and a sharp drop in the number of houses on the market.

“I have been at this for over 35 years, and I have never seen inventory as low as it is today in some neighborhoods,” Cook said. “We recently had listings on three homes priced at over $1 million and had contracts on all three of them within three days.”

Last year, it took just less than 10 weeks on average to sell a pre-owned house through the MLS in the Dallas area. In 2011, the average days on market were more than 83 days for the area.

A growing number of Dallas-area neighborhoods have less than a three-month supply of houses for sale. A balanced market is considered a six-month supply of listings.

“The shortage of inventory is the biggest issue today and getting worse by the hour,” said Jim Fite, president of Dallas-based Century 21 Judge Fite Realtors. “We don’t have anything to sell in some areas.

“And if you don’t have the supply, the price goes up.”

Real estate agents also know they don’t make any commissions unless there are houses to sell.

Fite said some potential sellers have refinanced their houses at historic low mortgage rates and are planning to stay put.

Others are waiting to see whether their home values will return to pre-recession levels.

Unless listings rise this spring, real estate agents will be hard-pressed to get the kind of sales increase that the Dallas area saw in 2012, when pre-owned single-family home sales grew 18 percent from 2011.

“The complaint I hear from Realtors is they have buyers but no product to show them,” said David Brown, who heads the Dallas office of housing analyst Metrostudy Inc. “I expected, as we started to see the market improve and prices come up, that sellers would come up off the sidelines.

“But it hasn’t happened yet,” Brown said. “We could see some pretty strong appreciation in 2013 if the supply stays this tight.”