Case-Shiller: Dallas home prices are up 53% from previous low, and are now 35.5% above their previous high. (Austin: apartments, mortgage)

[Walter Benjamin]

New Case-Shiller home price index published; Dallas and Denver are at the top in terms of "price relative to pre-2012 peak."

https://t.co/oRc8o18Wzz "Rising Home Prices Raise Concerns of Overheating: Dearth of new construction and strong demand from buyers are pushing up prices"


The article quotes an analyst saying: the markets likeliest to experience trouble soon are those in which prices are too high but there aren’t significant supply shortages. Dallas, for example, is 10% overvalued but just 2.5% undersupplied.... jobs are still strong but prices are outpacing even the job market.

[UnfairPark]

Do you see prices going down some time soon? Obviously a war or a market crash can do serious damage but I'm talking self correction in local market.

[Walter Benjamin]

Oh man, I have no idea... I was hoping experts would chime in.

So let's say prices continue to outpace wages... Because more people are moving here, than houses are being built. Then what happens?

Any of the following?


* Fewer relocations here if the area becomes "less affordable."
* More building to meet the rising demand.
* More people gravitate to apartments, duplexes, etc. vs. single-family homes.
* Wages rise to attract workers more strongly.
* More gentrification of lower-income areas.

Or...

* a big crash.

Or all of the above?

[EDS_]

Just a point of reference and assuming the people who wrote the story didn't do per city historical research..... Case Shiller goes back to 1987 IIRC. The historical high mark for home pricing around here was set in around 1980. We may or may not have passed that by now. Regardless of that CS's pre-2012 peak isn't really Dallas' pre-2012 peak.

In a an area going through an economic re-birth especially among the professional set. I'd argue median income growth vs. home price growth isn't a great metric. It's the professional set's "ability to pay" (after tax incomes/various levels of discretionary incomes, cash and near cash savings etc.) which are all very high around here.

[whiteoceanElizabeth]

I've been watching this for a while. And I often use Austin as a comparison. It has been booming since the mid-90s and hasn't stopped. Prices just keep going up.

I think Dallas is going to do the same. My feeling is that, in 20 years, Texas (the major cities anyway) will be the new California in terms of home prices. Yes, there is more land to build on. But the jobs just don't pay enough right now to match the cost of the houses that are near them, and at some point people won't want to commute 1 1/2 - 2 hours to work just to get a decently priced house. The congestion is just getting too bad. I think Dallas will be the new LA in 20 years.

[Laminate7]

Originally Posted by whiteoceanElizabeth

I think Dallas will be the new LA in 20 years.

More like less than 5 years...

[Ishad]

Current Case Shiller Comparison
LA:255
SF:232
Tampa:190
Dallas: 173
Phoenix: 165

Not seeing Dallas being out of whack.

[UnfairPark]

I want current boom to last but employers are moving here to attract employees with affordable new housing. With increasing congestion, crazy traffic, rising prices and shortage of land to build new homes near jobs, people may start noticing scorching summers and lack of natural beauty. All these shiny homes are going to look dated and people wouldn't want to drive hours to get there. I hope it's just a gloomy scenario but seems plausible.

[EDS_]

Originally Posted by Ishad

Current Case Shiller Comparison
LA:255
SF:232
Tampa:190
Dallas: 173
Phoenix: 165

Not seeing Dallas being out of whack.

CS compares each city to itself over time. It's of nearly no value across cities. Shiller, a Yale guy and gloom and doomer always, believes that cities should be measured against themselves across history versus long term national pricing norms not other cities - sort of like the Caste system in India. It's probably the most overrated econometric number out there. Like U3 unemployment it works well on the 5:30 news and pretty much nowhere else.

[lakeside15]

Prices are higher but change in affordability is not as high.

For reference, interest rates in 2009 for a 30 yr fixed mortgage were around 6% and today they're around 4%. For the same monthly payment, you could afford a $300,000 mortgage back then or a $380,000 mortgage today - an increase in purchasing power of 26.67%.


Absent a sudden spike in interest rates or an economic recession, there will not be a bust anytime soon.