Home price increases in North Texas will likely continue to decelerate in 2020 and fewer homes will sell for above list price as the residential market here, like in much of the nation, cools.
That’s the assessment of Cheryl Young, a senior economist with Zillow, who stopped by the Dallas Business Journal office for an interview Tuesday.
Here are some of her observations:
How is the national housing market looking?
Nationally we’ve been seeing a transition in the housing market for the last almost two years now. Things have been slowing down quite a bit, especially in terms of home sales. Sellers are not quite in the driver’s seat anymore. We’re seeing house prices slow down. We haven’t really seen a drop (in prices) anywhere, except in really, really hot markets like San Francisco.
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How is the North Texas residential market?
In North Texas it’s a very similar story. We’re starting to see things slow down a little bit. (Prices) are still going up, and I think we’re going to see some of that for a while, but the numbers (rate of growth) aren’t going to be quite as high as they have been. Looking at numbers from December, there was around a 2.6 percent increase in home values. So homes values grew a little less than what we’ve seen nationally, which was around 4 percent.
What’s driving the lower pace of growth in North Texas?
You guys had a lot of residential construction in 2018, which some markets were really starved for. Dallas has a strong job market as well. You still have a lot of demand but I think things are catching up. They slowed down last year around construction just because you’re seeing demand lighten up a little bit. People pulled back to more normal rates of construction.
A couple of years ago, many homes were selling above list price. Is that no longer the case?
That’s definitely what we’re seeing. That’s true nationally, but it’s dropped more here. Homes selling above listing price was really the norm back in 2016, 2017. In 2019, we saw the share of homes selling above listing price about 18 percent in the Dallas-Fort Worth area. That’s down from the peak in 2016, which was around 30 percent. In 2018, it was 24 percent, so it’s been declining since 2016. That’s a little lower than we’ve seen nationally, but the jump down hasn’t been as big nationally.
Do you expect that downward trend to continue in the number of sales above list price in DFW?
We might see a little bit of that kind of frenzy as we get into the spring home-buying season, but it’s still going to be down from last year. We’ve been forecasting what’s going on with home values, and that’s about 2.5 percent right now (in DFW). We’re thinking it might go down to even 1 percent or 1-point-something, so slowing down even further. The general slowdown is consistent with the rest of the country, but the numbers are just a little lower (in DFW).
To read the rest of this interview, click here.
