Is Dallas Headed for a Home Price Bubble?
Not at all!
The growth in home prices the past two years in the Dallas area is unprecedented. “Given the long stretch of strong reports, it is no surprise that people are asking if we’re in a new home price bubble,” said David Blitzer of Standard & Poors / Case-Shiller. “I would describe this as a rebound in home prices, not bubble and not a reason to be fearful.” Dallas-area home prices are at a record high and about 15 percent ahead of where they were at the peak of the market before the recession, Case-Shiller says. Home prices are soaring thanks to strong economic growth in North Texas and a severe shortage of houses for sale, analysts say. Home prices are expected to rise at close to a 10 percent annual rate through the rest of this year and into 2016 in the Dallas-Fort Worth area. Unlike in some markets where speculation drove home prices higher than many consumers can afford, the rise in values in North Texas is driven by economic growth. “This is not too surprising, given State Farm Insurance, Toyota, Liberty Mutual and all support firms that will follow them to North Texas,” said Randall S. Guttery, real estate programs director at University of Texas at Dallas. “Demand simply exceeds supply. “To me, a bubble is an artificial price pressure on housing,” he said. “I see nothing artificial about our market locally.”
- Dallas Morning News, May 27, 2015