Dallas homeowners are between a rock and a hard place.

The city is adding jobs, yet real estate is softening.

According to the Department of Labor, Dallas/Fort Worth added 66,800 jobs between April '07 and April '08, the second largest gain of any MSA in the U.S. Abut 47,400 of those jobs were in Dallas.

Yet, in May, only 5,088 homes were sold in Dallas, a 14.0 percent decrease over last year. The median price was $164,700, a 0.1 percent decrease.

The city is moving into a buyer's market with 6.7-months inventory on hand.

The question is why? How can real estate be worth less in a city that's adding jobs?

In its Beige Book report, the Dallas Fed said the following: "Partly reflecting reduced credit availability at nonbank lenders, loan demand at banks is growing faster than deposits, and banks have tightened standards to increase interest-rate spreads."

Banks know that fewer loans mean that the risks to the marketplace are higher, creating a self-fulfilling prophecy - a riskier market in which to buy homes.

Explains Mike Eli of Homesmartreports.com, "Value is based on three things: price, trend and risk factors. Risks are rising in Dallas because of hidden undercurrents, like foreclosure activity."

"The real estate community focus is on sales data," he says, "but there's a lot of mortgage fraud manipulation and that's part of what led to the big refinance boom and loans not performing. You get an element that will try to buy people out at those prices and lenders dump inventories. That drives prices down and as equity erodes, foreclosures go up."

In other words, if banks are dealing with foreclosures, they're looking for other ways to reduce risk yet still make money. The only way to do that in the short term is to increase their interest-rate spreads by making it harder for borrowers to get approved for a loan. If there are any credit blemishes, the borrower pays a higher interest rate.

Even in Dallas.

"There is a silver lining," says Eli. Dallas' risk number is almost a 15, out of a possible 100. That's an extremely low risk, considering Detroit's risk assessment is in the 40s.

Published: July 1, 2008

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.