Just the Facts: DFW Still Short of Homes

Report: DFW Still Short of Homes Despite Record Construction

Dallas-Fort Worth was still short over 40,000 home listings by the end of 2015, even as the number of single-family homes under construction set a regional record, according to one housing research firm.  By the end of 2015, there were 14,180 single-family homes under construction, which represents a 7.2-month supply, but it wasn’t enough to counteract the North Texas’ home shortage, said Ted Wilson, principal at Dallas-based Residential Strategies, which tracks and analyzes Dallas-Fort Worth’s housing market.   “Shortages of construction labor continue to provide challenges for homebuilders,” Wilson said. “Unfortunately, there appears to be no near-term alleviation for this challenge.”  The record rains in spring 2015 also set back the number of completed homes. For 2015, builders started 27,672 new homes, which was an increase 6.6 percent year-over-year, according to Residential Strategies’ data.   By year=end 2015, builders closed $23,565 single-family homes, which increased 7.9 percent year-over-year.  

 

Builders’ estimated the number of closings were 15 percent to 20 percent below their business plan because of construction delays tied to weather and a tight labor supply, Wilson said. And, so far, there’s no end in sight, he said.  “Shortages of construction labor continue to provide challenges for homebuilders,” Wilson said.  Wilson said North Texas’ homebuilding industry outlook appears “quite bright” for the next few years as companies continue to relocate employees to the region.   “This steady influx of workers should help sustain housing demand,” he said.

–          Dallas Business Journal, January 8, 2016

 

North Texas Home Sales Surged in December to Set Record for 2015

North Texas home sales jumped 21 percent in December as homebuyers scrambled to get purchases closed before the end of the year.  December’s surge in sales was enough to push 2015 home purchases to a record 96,156 preowned homes, according to data from the Real Estate Center at Texas A&M University.  Almost $25 billion in houses were sold last year.  “We knew the market was very strong,” Russell Berry, president of the MetroTex Association of Realtors, said in a statement. “We astounded to see sales volume at nearly $25 billion for the year.”  Home sales in the area in 2015 were almost 15 percent greater than in 2006, the peak local housing year before the recession.  Real estate agents sold 8,543 preowned in December – the highest sales volume in three months. December usually sees declines in home purchases because of the holidays.  Median home sales prices in the final month of 2015 were $210,000 – 9 percent ahead of December 2014, according to data supply by the North Texas Real Estate Information System.

–          Dallas Morning News, January 8, 2016

 

January Pendings Are Up 28 Percent

Early indications show another strong month for home sales in January.  The number of pending home purchases – under contract but not yet completes – was 28 percent higher than a year ago.  The early start for 2016 no doubt ease fears of a housing sector cool down caused by the huge declines in oil prices and cutbacks in Texas’ energy industry.  Worries about rising interest rates may have helped fuel the dramatic rise in December home sales.  “The uptick in Federal Reserve rates pulled people off the sidelines,” said Ted Wilson, a housing analyst with Dallas’ Residential Strategies Inc. “They think it’s time to buy.”

–          Dallas Morning News, January 8, 2016


Why Texas Won’t Get Busted Again By Low Oil Prices

JTF - Tx Oil Prices 1This time is different, and not by accident.  Oil prices have fallen by more than half since last summer, prompting cuts in energy jobs and rig counts. That is stoking fears of a deep downturn in the state’s economy.  But Texas is less vulnerable to the kind of oil shock that derailed the state in the 1980s, and that’s by design.  Almost 30 years ago, when the oil industry collapse put the state in a fiscal crisis, political and business leaders set out to diversify the economy and its tax base.  They launched economic development programs and recruited a wide range of employers, an aggressive approach that’s been refined and copied elsewhere. They expanded the sales tax base to more products and business services. Licenses, fees and the lottery became more important contributors.  A rainy day fund was created to siphon off future gains from oil and gas and provide a safety net for the next emergency. Now, the fund has $8.5 billion, and the comptroller projects it will grow to $11 billion in two years.   All these initiatives helped diversify the Texas economy and make it less dependent on oil. In 1982, taxes on oil and gas production accounted for almost 18 percent of state revenue. Last year, the share was 5.5 percent.  Last week, the comptroller projected 3 percent growth for 2015. That’s down from a 3.7 percent gain in real gross state product last year. He cited the decline in oil prices and possibility of a slowdown in global growth.  While the energy business is under pressure, other sectors are growing fast. Local governments, which lost workers for almost two years, have been adding teachers, cops and firefighters at a rapid clip.  If he’s right, the state economy will roll on, even as the oil and gas industry pulls back. Decades ago, that’s exactly how Texas leaders envisioned it.

          – Dallas Morning News, January 19, 2015

 

Oil Patch Declines Won’t Stifle U.S. Housing Markets, Analysts Forecast

 JTF - Tx Oil Prices 2

Top housing economists don’t think an Oil Patch slowdown will result in a weaker national housing market.   Nationwide starts of single-family homes are expected to jump by 26 percent, according to the latest forecast from the National Association of Home Builders.  Dave Crowe, a top economist,  thinks the positive impact of lower energy costs will far outweigh any negatives that the drop in oil prices brings.  And even in Texas, the housing analysts predict that any cutbacks from the oil sector shakeout will be concentrated in specific markets.  “If the decline in energy values remains for a sustained period of time it will have effects on the Texas economy — not throughout Texas but in parts of Texas,” said Frank Nothaft, chief economist with mortgage giant Freddie Mac. “When you have a drop in energy price that’s sustained, it has the same beneficial impact as a tax cut would,” Nothaft said. “Your average person sees more cash in their pocket at the end of the day.”   He is forecasting that overall home sales across the country will rise about 4 percent in 2015.  “That will be the best year for home sales since 2007 — the best in eight years,” Nothaft said. “We are expecting home prices to continue to rise in 2015 maybe a nudge lower — 3.5 to 4 percent.”   Crowe said a stronger overall economy, more employment gains and an easing of mortgage requirements in 2015 will give the housing recovery more lift.

– Dallas Morning News, January 20, 2015

 

Texas Added More Residents Than Any Other State

Texas was the third-fastest growing state in the nation over the past year as a percentage but it added more people than any other, according to new state-level population data released by the U.S. Census Bureau Tuesday.  Texas grew by 1.7 percent from July 2013 to July 2014, behind Nevada, which grew by 1.71 percent and North Dakota, whose oilfield boom fueled a 2.16 percent growth in its population.  Texas remains the No. 2 most-populous state overall, with a population of 26.9 million. That’s behind California’s 38.8 million-strong population but ahead of Florida’s 19.8 million population. Florida surpassed New York to become the 3rd-most-populous state in America.  However, Texas did have the largest numeric increase in its population, which rose by 451,321 overall, ahead of California, which added 371,107 new residents last year.

– Austin Business Journal, December 23, 2015


Where will Mortgage Rates be Headed in 2015?

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We finished 2014 with the 30 year fixed mortgage rate at 3.87% as per Freddie Mac. This is very close to the historic lows in the spring of 2013.

However, the Mortgage Bankers Association projects mortgage rates to be about 5% by the end of 2015. The website Investopedia agrees and gives some perspective on the 5% rate:

“Barring another financial and housing market implosion, and if the economy continues to improve, expect interest rates to rise in the latter half of 2015. If they do jump to the 5% range it will be a modest hike when compared to historical averages. Rates will still be far below the approximately 8.5% 30-year fixed-rates mortgages have averaged since 1971 when Freddie Mac started tracking them. Rates averaged 6% in the years leading up to the recession.”

Here are the latest 2015 mortgage rate projections from Fannie Mae, Freddie Mac, the Mortgage Bankers’ Association and the National Association of Realtors:

Interest-Rates-2015

– Keeping Current Matters; January 6, 2014


Why Not Move to Texas!

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The new Toyota Corporate headquarters will be left of the new FedEx headquarters

in the new Legacy West development in far north Plano along 121 Tollway

 

Legacy West Strikes Again

Toyota, the world’s biggest automaker, is putting its North American headquarters in Legacy West on more than 70 acres at the corner of Legacy and Headquarters drives.  It’s right across the street from where FedEx Office will have its new headquarters.   Between Toyota and FedEx Office, more than 5,200 corporate office jobs will be coming to the project, which surrounds J.C. Penney’s headquarters.   The developer of Legacy West is Fehmi Karahan, the same developer of the Shops at legacy across the North Dallas Tollway.  Karahan Cos. is building the $2 billion Legacy West in partnership with developer KDC and apartment builder Columbus Realty.  “It’s going to happen very quick,” Karahan said. “Toyota is going to break ground before the end of the year.  There is unbelievable momentum.”     Karahan expects to announce soon other large corporates relocating to his development from across the nation.

–          Dallas Morning News, April 29, 2014

“Why Not Move to Texas!”

The business owner who employs over 1,000 next door to the Toyota corporate offices in Torrance, California summed the move up in a few sentences.  “Why not move to Texas!   The taxes are lower, the regulations are less, the climate is business-friendly, the politics are conservative and there is a true entrepreneur spirit.  In California, we have none of those qualities.    In fact, a report out today in the Dallas Morning News states that the tax savings for the average employee of Toyota if they decide to uproot from California and come to Dallas is huge.   The report finds that the tax savings for a mid-level 40-year old employee making $75,000 will be over $200,000 for the rest of his or her life.   For the corporate executive employees, their personal tax savings could be as high as $1 million for the rest of their career.     The move is about the cost of doing business in Texas.  And more moves are scheduled.

–          Dallas Morning News, April 30, 2014 (excerpts)

Corporate Giants Leaving California

In both 2012 and 2013, Texas was ranked the best state for business in a survey conducted by Chief Executive.  California ranked 50th both years.   Last year, CNBC ranked California 47th on the same measure while Texas was ranked 2nd.    And one of California’s most frequent visitors is Texas Governor Rick Perry, encouraging and persuading other businesses to move to Texas.  Toyota is just the latest move to Texas.    Others will follow.  Over the last several years, corporate giants such as Nissan, Campbell Soup, Chevron and Comcast have all left California due to high taxes.   In fact in 2012, California lost 5.2 percent of its businesses.  The unemployment rate for Texas is 5.5 percent while California’s rate is 8.1 percent.   

–          The Daily Caller, April 30, 2014