The word "unprecedented" may have been a bit overused during the months since the pandemic began, but it definitely applies to the housing market across the United States.
A confluence of factors such as low mortgage rates, remote work, shortages of homes and building materials, along with wealth inequality exacerbated by the economic fallout from the pandemic led to a wild housing market in 2021, according to Redfin real estate brokerage's chief economist Daryl Fairweather. Redfin's real estate analysts reviewed housing statistics for 2021 and found the following 10 records that were broken:
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Current surge in home buying and price hikes continues......
North Texas home sales and prices have surged to record levels in the last three months – one bright spot during the pandemic. The boom in Dallas-Ft Worth's housing market is likely to continue through 2021 as the effects of COVID-19 slowly subside, says Dr James Gaines, chief economist with the Real Estate Center at Texas A&M University. "Dallas is still a robust market. Dallas is going to continue to do well – probably 2021 is looking similar to this year."
North Texas homes sales during the first nine months of 2020 are running 6% ahead of last year's record. And median sales prices in September were up 10% to near an all-time high of more than $290.000. "Employment is still high," Gaines said. "Population growth is still coming here. The demand for housing is still being created."
Construction of new homes surged in December to the highest level in 13 years, capping a year in which falling mortgage rates and a strong labor market helped lift the prospects of the housing industry. The Commerce Department reported Friday that builders started construction on 1.61 million homes at a seasonally adjusted annual rate in December, up 16.9% from the November pace of home building. Housing construction has been rising since July, helped by falling mortgage rates and increased demand as the unemployment rate approached a half-century low. For the year, builders started work on a total of 1.37 million homes, the best showing since 2007. The December building rate was the strongest number since December 2006 during the last housing boom.
Paige Shipp, regional director with housing analyst MetroStudy Inc. fears home sales might slow next year in the ramp up to presidential and congressional elections. "We typically have much slower selling seasons right before an election," she said. "After that happens, the flood gates open and people come out. It's not a matter of who wins." Worries about a recession may also impact the home market. "We spent the better part of the last decade still looking over our shoulder," said George Ratiu, senior economist with Realtor.com. "The last recession was so bad that we are still carrying some of the scars from that." However, Dr. James Gaines, chief economist with the Real Estate Center at Texas A&M University states that Texas economy is still expanding. "And we are extremely unlikely to be in a recession by the end of this calendar year," he said. "We are probably pretty safe through the first six months of next year."
No place builds more new houses than Dallas-Fort Worth. As of the third quarter of this year, D-FW was the solid leader in U.S. homebuilding with almost 35,000 single-family annual home starts, according to a new report by housing market analysts at Metrostudy Inc. Houston was second nationally with 29,370 home starts in the 12-month period ending in September. D-FW and Houston have topped the country in home construction for several years. And the two Texas titan building markets show no sign of a slowdown. D-FW starts were up 8.7 percent and Houston starts were 6 percent higher than a year ago, Transwestern found.
While D-FW builders are still busy, what they are building has changed, according to Metrostudy's Paige Shipp. "Over the past 12 months, builders and developers have been addressing the need for affordable new homes by developing in previously overlooked submarkets and building smaller, less amenitized homes," said Shipp, regional director of Metrostudy's D-FW market. "As such, the median price has dropped since last year.The decrease in price is not devaluation, rather it's an indication that buyers are purchasing smaller, more affordable homes."
Shipp said that homebuyer traffic has slowed in North Texas in recent months. "While this cooling may worry some, it should be viewed as a positive stabilization of an overheated, frenzied market," she said. "Builders and developers should use this opportunity to catch their breaths and return to the fundamentals of homebuilding including land acquisition and selling." Shipp said the inventory of vacant new homes in the D-FW has increased to the highest level since 2012.
Is the housing boom running out of gas? During the last few years, the home market has been on a tear in North Texas and in other parts of the country, with prices soaring and buyers lining up as soon as a sign hits the front yard. But there are growing signs that the fast-paced housing market is shifting gears, with a decline in sales in many markets and smaller price increases. In July, U.S. preowned home sales fell from a year ago for the fifth month in a row. And nationwide new home sales were down almost 2 percent in July, causing analysts at IHS Markit to question if the bull home market has turned bearish. "The economy is strong. Labor markets are solid. Yet, new home sales and single-family housing starts and permits have stalled. How can this be?" said Patrick Newport, executive director of the U.S. economics team at IHS.
Newport said rising home prices and higher mortgage rates have cooled the ardor for home buying. "This has choked off demand," he said. A slowdown in immigration and household formation could also be factors, Newport theorizes. In North Texas, year-over-year preowned home sales have fallen in many neighborhoods, and for the entire region, year-to-date sales were up a measly 2 percent as of July. At the same time, the double-digit percentage home price gains of the last few years have faded in Dallas-Fort Worth. Through the first seven months of 2018, median home sales prices were up only 6 percent from the same period last year, according to sales data from real estate agents.
Property agents say that some first-time buyers have given up after losing out to other buyers or all-cash investors who snapped up affordable homes. At midyear, the number of prospective U.S. homebuyers who said they planned to make a purchase in the next 12 months fell to just 14 percent — down from 24 percent in fourth quarter of 2017, according to the National Association of Home Builders. That's still another sign that the home market — while not in a traditional bubble — may be headed for slower sales in the year ahead. "It's clear that the winds that have boosted sellers over the past few years are ever-so-slightly starting to shift," said Zillow senior economist Aaron Terrazas.