Tight Dallas-area housing market will continue to keep prices rising, sales down
After two years of fast-paced selling, Dallas’ housing market shows no sign that supply is catching up with demand.
The inventory of preowned homes on the market is at a two-month supply or less in about half of the area neighborhoods The Dallas Morning News tracks.
A normal supply of houses listed for sale with real estate agents is about six months.
“The inventory is horrendously low,” said longtime Dallas residential sales firm executive Virginia Cook. “I’ve never seen a market like this one.
“If a house is priced right, it’s half sold before it goes up for sale.”
So far this year, the inventory of houses for sale has been tightest in The Colony, Richardson, Bedford, Carrollton and Farmers Branch. There’s less than a 1.5-month supply in those areas, according to the Real Estate Center at Texas A&M University.
While real estate agents hoped that higher home prices would cause more owners to put their houses on the market, it just hasn’t happened.
David Brown, who heads the Dallas office of housing analyst MetroStudy Inc., predicts that homes will remain scarce in North Texas.
“I’m not expecting the inventory to grow substantially anytime soon,” Brown said. “The existing home inventory continues to be at or near record low levels.”
Since the Dallas-Fort Worth area is one of the top metro areas in the country for job and population growth and move-ins by out-of-state workers, there’s a strain on the local housing market, he said.
“With people moving to our area because of the job market, we are not building homes fast enough,” Brown said. “We can’t add supply fast enough — especially at the more affordable price points.”
Brown said constraints on homebuilders have kept them from adding enough new houses to the market.
The strong housing demand and pinched supply have caused home prices in the Dallas area to rise sharply for the second year in a row.
About three-fourths of the Dallas-area neighborhoods The News compares have had double-digit median home price gains so far this year over the same period in 2013.
More than 20 percent of the biggest year-over-year gains have come in southern Dallas County, including Wilmer-Hutchins, Southeast Dallas, Lancaster and parts of Oak Cliff.
“We should continue to see prices increase above long-term averages,” Brown said. “Housing is going to be under pressure until something changes.”
Home prices will further increase in the Dallas area faster than normal until the supply rises or higher mortgage rates slow purchases, said James Gaines, an economist with the Real Estate Center at A&M.
“When you are less than three months’ inventory, you have no inventory,” Gaines said.
He worries about affordability in the home market.
“Look at the big jump in the last two years — you do start getting concerned,” Gaines said.
The short supply is holding down home sales in many local markets.
Through the first nine months of this year, preowned home sales are down in more than two dozen Dallas-area residential districts, according to data from the real estate agents’ multiple listing service.
Some of the sharpest declines have been in popular neighborhoods in North Dallas, Far North Dallas and East Dallas. Sales in those areas are off 10 percent or more from last year.
Residential sales firms say that home purchases should be much higher because of growth in the area.
“Never, never, never have I seen inventory this tight,” said Mary Frances Burleson, CEO of Dallas’ Ebby Halliday Realtors. “We have major companies moving in and there is a need for housing.