If you’re looking for an affordable house in the Dallas-Fort Worth area, experts offer two words of advice: good luck.
What was once a calling card for DFW — the relatively low cost of housing, compared to other, similar-sized markets — has quickly become a thing of the past because too many people have come calling.
“I never thought I would live to see the day that this would happen,” Rockwall-based Altura Homes president Donnie Evans said. “That kind of scares me quite honestly.”
As an example, Evans pointed to a 2,000 square foot-home his company is building in the community of Fate.
“We would build a house really similar to this probably in the low $120,000s,” he said. “Fast forward four years later, we’re at $220,000 to $240,000 for the same house.”
Evans and others in the industry point to many factors to explain the sharp uptick. Chief among them is an increase in the price of land on which to build a new home, as well as increased costs for labor and supplies.
According to the recently released S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, the leading measure of U.S. home prices, Dallas was among the top three markets in the country in terms of highest year-over-year gains; the price of the average home is up 8.6 percent from March 2016 to March 2017.
“Certainly we are bumping our head on that affordability ceiling,” said Ted Wilson, Principal at Residential Strategies, which performs housing market research in the Dallas-area. “The builders talk about [affordability] quite a bit, so there is concern.”
Wilson noted that the term “affordable home” in the Dallas-area has long been defined as $200,000 and below. But recent trends have shown the number of affordable homes is way down from years past.
For example, in 2007, according to Wilson, there were about 100,000 transactions in the year for homes priced below $200,000 in Dallas-Fort Worth. In 2017, Wilson said that number will be more like 50,000.
As further evidence of the lack of affordable homes on the market, Wilson added that, as recently as 2011, there would typically be 25,000 homes on the market at any given time priced at $200,000 or less. Today there are 5,000 to 6,000 homes available at that price point.
Wilson added that he does not see this trend changing anytime soon.
“When you start talking about [the possibility] of a bubble, the implication is it might burst,” Wilson said when asked if the current conditions are a real reflection of the market. “But when you look at just the shortage that we have with respect to listing inventory and the capacity issues with new construction, we do not see any near-term oversupply in housing.”
So for those who are looking for a deal, they might want to consider Evans' advice and broaden their search area.
“Crandall, Kaufman, Greenville, Fate. Those are the areas you need to come into right now,” he said. “There is good value and they are good cities to build in.”