Dallas is losing its competitive edge against the rest of the nation as more builders refuse to build houses that will be sold for less than a quarter of a million dollars.
In fact, Dallas is noticeably absent from Freddie Mac’s list of top Texas housing markets.
“For years, one of Dallas’ competitive advantages, specifically, was that it could build houses in that average price bracket,” said Jim Gaines, research economist with the Real Estate Center at Texas A&M University, who is in regular contact with local homebuilders.
But this is no longer the case. “The market is being dominated by the upper end priced homes, which means affordability is an issue,” Gaines said.
Gaines said homebuilders told him a year ago they had a cancellation rate of 40% since borrowers would sign a contract and then proceed to buy a bunch of other stuff, ruining their debt-to-income ratio before closing the loan.
If they wanted to, builders could build thousands of affordable houses in the market, but they are not confident they could sell them.
However, the revelation is, so far, having a minimal impact on DFW’s overall housing market.
“All of the markets are doing very well, and in our research over the years, we have found the DFW metropolis tends to mirror the national economy more than any other place in Texas,” he explained.
HousingWire published an article on Tuesday noting that not all markets are struggling to survive, with luxury home sales skyrocketing and on pace to beat last year’s numbers.