D-FW is in a housing slump, but experts say it’s nothing like 2008

Real estate experts expect the Dallas-Fort Worth housing market to continue to cool. What they’re not anticipating is a 2008-style real estate crash.

“If you’ve read the national press and so on, they’ll tell you the sky is falling,” Jim Gaines, an economist at Texas A&M University’s Texas Real Estate Research Center, told a crowd of officers. real estate Friday. the MetroTex Association of Realtors’ annual housing forecast. “Well, I’m here to tell you that the sky isn’t really falling; it is raining.”

August home sales fell 10% year over year in August, the third straight month of sales declines, according to data from the Texas Real Estate Research Center and North Texas Real Estate Information Systems.

Gaines said it’s debatable whether the economy is currently in a recession. The country has seen two straight quarters of negative gross domestic product growth, an indicator of a recession, but the country and especially Dallas-Fort Worth continue to add jobs. It predicts the D-FW metro area will see job growth of 6% in 2022, up from 4.7% in 2021.

He added that although it is a recession, Texas has weathered the last three US recessions.

Gaines said the US economy was struggling to get back to normal after an unhealthy level of inflation. In housing, he said, there won’t be a wave of foreclosures and problems unless millions of jobs are lost.

“We’re not going to go through another recession in 2008 because lenders didn’t go wild with lending,” Gaines said. “They still use fairly conservative and rigorous underwriting standards and don’t do crazy subprime loans.”

Jessica Lautz, vice president of demographics and behavioral insights for the National Association of Realtors, said at the event that the housing market has returned to some balance since March. Nationally, homes received an average of 2.5 offers in August, up from 3.8 offers a year earlier.

“The last few years have been really frenetic, they’ve been crazy,” she said. “They weren’t good, they weren’t healthy.”

This downturn is different from the Great Recession in three ways, according to Lautz: The U.S. housing market has been underdeveloped for 15 years, mortgages are much harder to get, and there are plenty of millennials wanting to buy as well as adults. older. stay in place.

Lautz said sales will be weaker over the next 18 months and mortgage rates will continue to rise, which will reduce the number of buyers. The lack of inventory of available homes will keep prices high, she said.

“Moving on to next year, yes, [we’ll see] slower sales activity, but home prices continue to rise,” Lautz said.

Phil Crone, executive director of the Dallas Builders Association, described the change in the market in his presentation as “the great normalization” as builders pull back from record levels of construction during the pandemic. He said builders had overcome supply chain challenges, labor shortages and allowed delays to deliver as many homes as possible when demand was very high, and now they are stuck with a large amount of inventory.

“A lot of them said, ‘You know what, forget it, we just gotta get out there and do this thing, and do whatever it takes,'” Crone said. “Now the feeling is starting to change.”

Crone said that as supply chain and labor challenges continue and buyer demand has waned, builders are concerned about the completion and sale of the record number houses under construction in the area. He said anecdotally that he had heard that builders were seeing a contract cancellation rate of around 15% to 20%. Figures from housing market data firm Zonda show that windows, doors, garage doors, HVAC equipment and appliances are experiencing the most severe shortages.

“A lot of builders are very worried right now,” Crone said. “They pushed all their tokens to try and keep up with demand…and now there’s a whole bunch of inventory being built up there.”