Local home prices are about 5 percent higher than they were at the peak of the market in June 2007 before the recession, according to the Standard & Poor’s/Case-Shiller Home Price Index.
Dallas-area home shoppers, get ready for some sticker shock in this spring’s housing market.
Two years of significant gains in local home sales prices will combine with higher mortgage rates to make North Texas housing more expensive than ever this year.
Dallas-area home prices rose by a record 9.94 percent in the latest Standard & Poor’s/Case-Shiller Home Price Index.
November was the 21st month in a row that local home prices were higher than a year ago in the closely watched survey of residential values in some of the country’s largest metropolitan areas.
Dallas-area home prices have risen by more than 20 percent from where they were at the worst of the recession in February 2009. And local home prices are about 5 percent higher than they were at the peak of the market in June 2007 before the downturn, according to Case-Shiller.
Last year’s pace of North Texas home price gains was more than twice the area’s average residential appreciation and has far outpaced the median income growth in the area.
If the cost of homes continues to inflate at a greater rate than local wages, that will spell trouble for the home market, analysts agree.
“Affordability is going to get hit real hard this year for that very reason — the spread between prices and income,” said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M University.
Gaines said some of the increase in home prices during the last two years has just been the market playing catch-up from when things stalled during the recession.
“The general affordability issue will catch up to the market at some point — maybe by year-end or next year — if incomes don’t show more strength,” he said.
For all of 2013, North Texas pre-owned home prices rose about 10 percent from 2012 levels, based on data from sales by real estate agents.
That’s about the same price hike that Case-Shiller reported for November vs. November 2012.
But it’s still less than the 13.7 percent year-over-year average residential value rise Case-Shiller reported for all the 20 major U.S. cities it tracks.
“Beginning June 2012, we saw a steady rise in year-over-year increases,” S&P’s David M. Blitzer said in the report. “November continued that trend with another strong month although the rate of increase slowed.”
November’s Dallas-area Case-Shiller home price index increase was a tad above the 9.7 percent increase recorded in October, the previous record high.
The largest annual home price increases for the month were in Las Vegas, 27.3 percent, and San Francisco, 23.2 percent.
Case-Shiller’s index tracks the prices of specific single-family homes in each metropolitan area. The index survey does not include condominiums and townhouses. It only covers pre-owned properties.
While Dallas’ price gains aren’t as high as those in some Western markets, those cities suffered severe price declines during the recession while Texas residential values saw only marginal decreases.
Some real estate agents and homebuilders are worried what the recent pace of housing cost rises will mean to consumers.
“The builders have already felt some pushback on pricing,” said Ted Wilson, a principal at Dallas housing analyst Residential Strategies Inc. “With the shortage of inventory, it’s pushing prices up.
“And the higher mortgage rates are making it more expensive,” Wilson said. “A lot of people need to buy housing and are scratching their heads.”
Source: Dallas Morning News