The major news outlets frequently cover the hot housing markets in California. But what about Texas? While it doesn’t get as much coverage, there are some hot real estate markets in the Lone Star State as well.
Take Dallas for example. Home prices in the Dallas metro area rose significantly in 2014, by nearly 9% according to one source. They could continue rising at a strong pace through the end of 2015 as well. Here are the latest stats and trends for the bustling Dallas housing market.
Dallas Home Prices Rose 8.7% Last Year
According to CoreLogic, single-family home prices in the Dallas metro area rose by 8.7% during 2014. That was one of the largest year-over-year increases of any metro area.
In fact, out of the top 100 core-based statistical areas (CBSAs) included in the report, the Dallas-Plano-Irving CBSA was ranked #2 for home-price gains during 2014. Only Houston had a larger annual increase, with 10% appreciation last year. (Los Angeles, Riverside and Atlanta rounded out the top five.)
While home prices rose across most of Texas last year, the gains seen in Dallas were higher than the statewide average. According to CoreLogic, house values in Texas rose 7.8% last year, compared to the 8.7% increase seen in the Dallas-Plano-Irving CBSA.
Low Unemployment, Strong Demand for Housing
The standout performance of the Houston and Dallas real estate markets can partly be attributed to the strong energy markets and strong household growth seen in these metro areas over the past few years. Both areas have strong economies with high employment rates that attract residents from elsewhere in the state, and from across the country.
The unemployment rate for the Dallas metro area fell to a healthy 4.0% in December, according to the U.S. Bureau of Labor Statistics. That was notably lower than the national unemployment rate, which was measured at 5.6% in December.
Inventory shortages have also had a lot to do with the rising home prices in Dallas. Each month, Realtor.com publishes a housing summary for 200 or so metro areas across the U.S. According to their latest report, the total number of for-sale listings in Dallas dropped by 15.6% over the last year. This is another indicator that demand for housing is currently higher than supply.
That same report showed an 18% increase in the median list price for this market. In short, limited inventory and strong demand are enabling sellers to set higher asking prices for their homes. For now, at least.
Construction of new homes has also increased in the Dallas real estate market. This is another signal that demand for housing is strong across the metro area. New construction could slow home-price gains in 2015, by bringing a better balance of supply and demand. Over the last couple of years, demand has outpaced supply in the Dallas housing market. But this could begin to change in the coming months, as new homes continue to be built at a rapid pace.
Real Estate Outlook for 2015: Will Growing Supply Cool the Market?
What can we expect from the Dallas housing market in 2015? In a word, cooling. We expect to see further gains for this real estate market in 2015, but they probably won’t be as big as last year. This reflects the general consensus that home prices across the country will cool somewhat this year.
As mentioned earlier, new construction in the area has really ramped up over the last couple of years. This will make more homes available and will help to satisfy the high level of housing demand within the Dallas real estate market. Over time, this “normalization” of supply and demand could cool the market and slow down the home-price gains to some extent. Time will tell.
Disclaimer: This story contains forward-looking statements regarding home prices and other housing-related trends. Such statements are matters of opinion and should not be viewed as facts. We make no claims or guarantees about future real estate trends within the Dallas metro area.