The North Texas housing market is booming, with record-setting monthly home sales and prices, but the blazing pace may be leaving buyers looking for affordable homes in the dust.
The median single-family home price in May 2018 was $266,500, the highest on record for the North Texas region, according to Real Estate Center at Texas A&M University and the North Texas Real Estate Information Systems. And the number of homes sold at $180,000 or less fell off significantly last month compared to the same time in 2017.
On Monday, there were just shy of 1,200 single-family Dallas County homes for sale at or below the median price, according to Realtor.com — and only 415 homes were listed at or below $180,000. There were at least 3,617 homes listed for sale at or above the median price.
The increase in the median price is much less severe than last year, when prices rose 10 percent year-over-year. But this could be an indicator of weakening buyer demand at higher price points, Bill Head, spokesman for MetroTex, a Realtors’ association in North Texas.
“Overall prices of homes are going up so significantly, or have over the past several years. What three years ago was an $190,000 house is now a $270,000 house,” Head said.
It’s showing in the number of homes sold at lower price points. For example, Head said, sales at the sub-$190,000 range in North Texas are down 16 percent compared with this time last year. This means that more houses are fetching higher price tags.
And, with construction costs increasing, inventory at the lower end isn’t growing.
Between the cost of materials — especially in the face of recently implemented tariffs — shortages of construction workers and various impact, subdivision and inspection fees, it’s more difficult to build new homes below the median price, experts say.
And, that median price may be far higher than what a typical Dallasite can afford without putting a strain on his or her budget.
Median annual household income in the Dallas area is $51,411, according to most recent census data. That typical Dallasite can afford a house that costs as much as $151,700 — assuming a 30-year fixed-rate mortgage at 4.7 percent and a $30,000 down payment — according to Realtor.com. They’d need to shell out at least $100,000 more to be able to afford the typical home sold in North Texas.
The few houses that do appear on the market for that low are usually snapped up by cash-paying investors, said Kaki Lybbert, a realtor with Century 21 Judge Fite in Denton and the chair of the Texas Association of Realtors.
“Once it hits the market, it’s gone,” she said. “If there were homes being built in that (lower) price range, then that’s one thing — but they’re not.”
Lower priced houses are often snapped up by buyers — often corporate investors — who sometimes rehab and flip the houses at a markup. But more likely, they rent it out, contributing to a booming rental market. The owner-occupied housing rate in Dallas County was just below 51 percent from 2012 to 2016, according to the American Community Survey.
This makes sense for many of Dallas’ newer residents, especially young professionals who may be able to afford $1,400 or $1,500 a month to rent an Uptown apartment but who couldn’t afford a house in the same area, or just about anywhere else in Dallas, Lybbert said. It’s a vicious cycle, as property companies are more inclined to rent their houses than sell them because it’s so profitable.
And the price increases reverberate to far below market-rate properties as well. Homes that are “junk” that most buyers wouldn’t touch not long ago are selling for $150,000, she said.