An interesting article from the WSJ: Home-Price Surge Stymies First-Time Buyers
Home prices in the Dallas metro area, historically one of the nation’s most stable and affordable markets, have climbed at one of the fastest rates in the U.S. since 2014. Inventories of houses on the market are under two months’ supply, the lowest in 25 years.
“The demand is staggering,” said Ms. Durnal, an agent with real-estate brokerage firm Redfin.
The escalating prices and tightening availability of homes in Dallas point to the challenges facing many of the nation’s largest real-estate markets as the crucial spring selling season heats up.
With prices “escalating”, where is the supply? There are probably several reasons supply hasn’t picked up. As housing economist Tom Lawler noted several years, there has been a significant number of single family houses that have been converted to rentals. These properties are mostly still being rented, reducing the potential pool.
Another reason for low supply is that new home sales are still historically low – partly because builders have focused on higher priced homes (this is changing a little with more entry level homes coming on the market).
And low supply can be self-fulfilling for a period of time since people only want to list their home for sale if they know they can find one to buy.
There could be a demographic reason too: Baby boomers are mostly aging in place and waiting until they are older (maybe closer to 80) to downsize.
Eventually this will change, and more inventory will come on the market.
• Schedule for Week of April 24, 2016
• 10:00 AM ET, New Home Sales for March from the Census Bureau. The consensus is for an increase in sales to 522 thousand Seasonally Adjusted Annual Rate (SAAR) in March from 512 thousand in February.
• 10:30 AM, Dallas Fed Manufacturing Survey for April.
Oil prices were up over the last week with WTI futures at $43.49 per barrel and Brent at $45.11 per barrel. A year ago, WTI was at $56, and Brent was at $62 – so prices are down about 25% year-over-year.
Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.14 per gallon (down about $0.35 per gallon from a year ago).