Texas Home Prices Are Headed Higher This Year
A strong economy and pressures from thousands of people moving to the state will accelerate Texas home prices in 2020. But Dallas-area home cost gains could lag the statewide and national averages, economists expect. Median home prices in Texas this year could grow at twice the rate of 2019 increases, according to the latest forecast from the Real Estate Center at Texas A&M University.
“Last year, for the first time in Texas history, we exceeded $100 billion in housing sales,” Real Estate Center chief economist Dr. James Gaines said. “We are looking for prices to increase this year probably between 5% and 6% after 3% last year.”
The Texas housing market heads into 2020 with a surge in activity. “January and February have been really good,” Gaines said at a housing outlook session sponsored by the Real Estate Center and the Federal Reserve Bank of Dallas. “Generally these are not our best months of the year.” The decade that ended in 2019 was the best on record for housing across the state, he said. “Texas housing market has been so much stronger than the general market around the country,” Gaines said. “Every year since about 2015, we have been setting a record. “We are projecting that this year we will increase sales somewhere between 5% and 6% — the market is very strong.”
Since houses in markets across Texas are hitting new highs for median prices, overall property sales volumes are expected to grow by more than 7% in 2020 to $104 billion in sales.
“Home price growth in Texas way outpaces the states in the rest of the country,” Gaines said. “People in Texas are having to spend more to buy a house. “It is getting more expensive relative to our income.” Still, Gaines said, Texas’ major cities still have a home price advantage compared with many other major U.S. markets. “Our competitive advantage — one reason people come to Texas — is you can afford to buy a house here,” he said. “Particularly if you are coming from one of the areas of the country with high-priced houses.”
He said that despite a strong rebound, Texas homebuilders still haven’t caught up with where single-family home production was before the Great Recession. “We are building a lot, but we are still not building enough,” Gaines said.
In 2019, Dallas-Fort Worth and Houston were the top two single-family building markets in the country. “There were more houses built in the D-FW area last year than in all but about five states,” Gaines said...
