First, the good news: The Federal Reserve has kicked off its program (first announced in November) to buy $500 billion in mortgage backed securities and debt issued by Fannie Mae, Freddie Mac and Ginnie Mae. Just the promise of this program drove mortgage interest rates down to the vicinity of 5%, the lowest level in decades. We should see rates go down even lower as the Fed spends its $500 billion during the next six months.
All the financial pundits agree mortgage rates have been too high compared to the rates on U.S. Treasury Bills. With lower rates on the way, more buyers will be able to qualify for a home loan and more homeowners will be able to qualify for refinancing. This should particularly help our market in Dallas because our local economy is strong enough to drive more home sales if more favorable financing is made available.
If you are a potential homebuyer who is out there on the sidelines, start talking to your lender again! You don't want to miss the opportunity of a lifetime. (If you haven't formed a relationship with a mortgage lender yet, I can recommend some highly qualified loan officers.)
The Dallas housing market is still being cited in national studies as one of the strongest housing markets in the United States. That's "damning by faint praise." But it does suggest that any decline in home prices will be shallow and short-lived in Dallas.
The Standard & Poors/Case-Shiller 20-Metro Area Price Index was released in late December. According to the report, single family home prices in Dallas declined by 3% between October of 2007 and October of 2008.
I'd rather see an increase than a decline, but it it is worth noting that Dallas had the best performance of all twenty metropolitan areas in the study. By comparison, the second-best and third-best metro areas were a 4.4% decline in Charlotte and a 5.2% decline in Denver.
The largest price declines were 32.7% in Phoenix, 31.7% in Las Vegas, 31% in San Francisco, and 29% in Miami.
I'd have to say we're not doing too badly, wouldn't you?
(It should be noted that the Case/Shiller methodology does not rely on averages of all home sales. The main variable used for index calculation is the price change between two arms-length sales of the same home. The Case/Shiller Index is calculated monthly, using a three-month moving average algorithm. By comparison, price changes reported by the local Multiple Listing Service are simple arithmetic averages of all monthly sales.)
Many homebuyers in Dallas took a wait-and-see attitude in the last quarter of 2008 because of all the turmoil in the financial industry and the stock market. As a result the normal Holiday Season slowdown in sales was even slower than normal.
For home buyers who have the nerve to shop when others have gone to the sideline, the next few months present a rare opportunity to buy for less. There will be some price reductions during the next few months by homesellers who have been a long, long time on the market. This creates an ideal climate for decisive buyers who like to drive a hard bargain.
A final note: The Multiple Listing Service has released November, 2008 statistics for East Dallas (MLS Area 12) home sales: There were 112 homes sold in November, 2008 (compared to 176 homes sold in November, 2007). Average sales price in was $231,300 (compared to $267,400 in November, 2007). Median sales price was $220,000 (compared to $205,000 in November, 2007). Sales Price Per Square Foot was $124 (compared to $134 in November, 2007). Sales Prices averaged 96% of list price (compared to 97% of list price in November, 2007). Days On Market averaged 75 days (compared to 73 days in November, 2007).
ZIP Codes: 75206, 75214, 75223, 75246 Approximate Location Boundaries: Approximate boundaries are Central Expressway, Northwest Highway, White Rock Lake, and Interstate 30.
Location Characteristics: The neighborhoods within zip codes 75206, 75214, 75223, and 75246 are northeast of the Dallas Central Business District. The center of these neighborhoods is about 3 miles from downtown.
Most homes in these neighborhoods were built between 1905 and 1960. The sought-after neighborhoods of Lakewood and the M-Streets, Swiss Avenue Historic District, Munger Place Historic District, and Hollywood/Santa Monica are all located within these boundaries.
In the most desirable neighborhoods some old homes are being torn down, one-by-one, and new "McMansions" are replacing them. There is also strong demand for vintage homes with extensive renovations and/or additions.
About Ken Lampton:
Ken Lampton is an award-winning RealtorŪ known for his diligence in looking out for the best interests of his buyer and seller clients. A RealtorŪ since 1985, Ken deals mostly in neighborhoods located between downtown Dallas and the "northern loop" of LBJ Freeway, with a particular emphasis on the M-Streets, Lakewood, and East Dallas. Ken was selected by D Magazine as one of the Best Residential RealtorsŪ in Dallas for 2007 and 2008.
These reports reflect the views and opinions of their authors and are not necessarily the views and opinions of Realty Times.
