D-FW home prices get better grades from ratings firm

Fitch Ratings revises its outlook for North Texas home costs.

Home For Sale Real Estate Sign in Front of New House.

After years of warning about North Texas’ overheated housing market, a top Wall Street ratings firm now says Dallas-Fort Worth’s home prices are more sustainable.

Fitch Ratings was one of the first analysts to warn a few years ago about D-FW’s soaring home costs. The D-FW area was once included on the list of major metro area’s Fitch said was the most overvalued in the country.

But now Fitch analysts say that housing prices in this area are only 5% to 9% overvalued.

Nationwide pries are more than 10% overvalued.

Fitch is forecasting much slower home price appreciation for 2022.

U.S. home price increases moderated starting in the third quarter of last year, “marking the first quarter the rate of home price increase has slowed since the onset of the coronavirus pandemic,” Fitch analysts say in their latest report.

In 2022, Fitch researchers expect home prices across the country to rise by only 5% to 7%.

“Fitch estimates that home prices in 77% of the country’s metropolitan areas are more than 10% overvalued, compared to only 4% pre-pandemic,” Fitch researchers said in their fourth-quarter housing report. “Idaho and Florida remain the most overvalued states.”

Early in 2021, Fitch estimated that D-FW prices were more than 14% out of whack.

Looking around the country, metro areas with the greatest housing overvaluation include Boise, Idaho (31.8%), Phoenix (28%), Pensacola, Fla. (24.5%), and Austin (22.2%).

North Texas single-family home sales prices have shot up by more than 50% in the last five years. In 2021, the median price of homes sold by real estate agents was $335,000 — up 18%.

Fitch factors market economic fundamentals with home costs in each area to make its valuation determinations.

Information provided by Dallas News

Steve Brown, Real Estate Editor. Steve covers commercial and residential real estate in Dallas-Fort Worth.

stevebrown@dallasnews.com @SteveBrownDMN

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