This year, Dallas-Fort Worth could hit a housing threshold housing analyst and leader of research firm Dallas-based Residential Strategies hasn't seen in a decade: Builders starting construction on more than 30,000 homes.
The number of new homes built in 2016 rose 5.2 percent year-over-year to 29,337, nearly reaching a milestone North Texas hasn't hit since the fourth quarter of 2007.
But the housing market is gaining momentum and is projected to breach the milestone, said Ted Wilson, principal of Residential Strategies, a firm that analyzes the North Texas homebuilding market.
"Builders want to start more units, but lack the construction workers to get them built and closed — but in 2017, we are expecting to see some big numbers," Wilson told the Dallas Business Journal.
" We have seen some classifications of trades see some alleviation with hiring and training and our forecast is that we will see the start rate climb," Wilson told me. "We believe the start rate will climb up to 32,000 in 2017."
Even though rising mortgage rates and housing affordability are important issues to builders, Wilson said the biggest constraint to home development is the lack of skilled workers, such as bricklayers and municipal employees that approve projects.
In turn, those labor shortages are causing construction costs to rise steadily as developers clamor for talented workers and "everyone is overworked," he said.
No one knows how much the Federal Reserve plans to raise mortgage rates this year, but Wilson said those in the industry expect as many as three rate hikes at 25 basis points a pop which could push the 30-year mortgage rate towards 5 percent.
"We could see rates be a full point higher than where they were pre-election, but, right now, as long as we stay under 4.5 percent — we'll be in good shape," Wilson said.
"Every time the rate goes up, the buyer has to adjust to the realities of what they can afford," he added.
In North Texas, builders are moving to more affordable submarkets in an effort to offer homes priced from $200,000 to $400,000. Builders are also offering "value engineering," to keep the costs of building a home in check, he said.
Those pricey North Texas cities are catering to relocating residents shopping for homes from more expensive coastal markets. About 20 percent of the home buying market is tied to buyers relocating to the region, Wilson said.
That's because Toyota North America plans to open its new U.S. headquarters in Plano this year, with Liberty Mutual Insurance beginning to staff up its North Texas hub, which is slated for completion later this year.
"These companies have already made a strong impact on the market and we'll see this continue to unfold in the next few years," said Wilson, adding that he expects to see a big spring market beginning after the Super Bowl.
"A lot of builders are excited about it," he said. "We are going to see some big first quarter numbers.
Author:Josiah Ford Phone: 214-425-3525 Dated: February 20th 2017 Views: 117 About Josiah: Josiah is the founder of JFI Brokerage. He is a very driven individual with over 12 years’ experie...
Hello, I am Josiah Ford, and my wife is LaFronda Ford. Together we make up Team Ford of JFI Real Estate Brokerage. We have over 11 years experience in real estate. Our passion is assisting buyers, sellers, and renters with all their home needs. We service all of Dallas/Fort Worth and surrounding suburbs.