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DFW Housing Market Close to Bottom???

A few days ago, Dallas-Ft. Worth based market research and consulting firm, Residential Strategies, Inc., released their fourth quarter 2007 report. Although this report targets the new home market specifically, much of what is garnered can be applied to the existing home market as well.

Here’s a run down of what’s in the report

Compared to the rest of the nation, the DFW area is ahead by 15% in terms of new home starts. Actually, DFW is down 40% over the same period last year, while the rest of the country is down 55%. But, that means that homes in the DFW area are in higher demand than homes throughout the rest of the country as a whole. This could be, in part, because housing prices in DFW continue to remain fairly level. In fact, the average home price increased nearly $12,000 over the past year. The number of new jobs being created in the DFW area could also be a contributing factor.

At the current rate of new homes being closed each month, there is a 3 month supply of completed new homes. Lenders consider a 2.5 month supply the maximum acceptable. And, the industry strives to keep the supply down to 2 months. This means that builders will be motivated to sell until the supply is down to a lower rate. It’s a great opportunity for buyers, who qualify, to be able to negotiate a great deal.

One of the biggest problems facing new home builders and sellers in general is the number of cancellations. Many builders reported that their cancellations this past fall were double what they normally are. A lower number of contingency sales, more stringent mortgage qualification, and buyers shopping for another home after contracting due to many good deals being available are all cited as possible reasons for the abnormally high cancellation rate.

Ted Wilson, partner for Residential Strategies, concluded his report by stating, €œIf the growth (in terms of employment) continues at its current pace, the housing market should be able to find a bottom by Summer 2008. That’s great news for everyone concerned about selling their home. But, prior to that statement it was noted that job growth had slowed toward the end of 2007.

It’ll be interesting to see what future quarterly reports predict in terms of the bottom of the housing market in the DFW area. If you’re a buyer, have fun shopping it’s a great time to find a new home. If you’re a seller, keep your head up it could be worse.