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Texas dominates list of 2021's best real estate markets

WASHINGTON (WalletHub) – The Lone Star State—specifically North Texas—dominated WalletHub's list of the best places to buy a house.

Five Texas cities were in the top ten, and four of them were in Dallas-Fort Worth-Arlington.

Frisco ranked first overall, leading in both the real estate market and affordability and economic environment metrics.

Other Texas cities in the top ten were:
• No. 2 Austin, 2nd in real estate market and 56th in affordability and economic environment;
• No. 4 McKinney, 5th in real estate market and 4th in affordability and economic environment;
• No. 5 Denton, 4th in real estate market and 93rd in affordability and economic environment; and
• No. 6 Allen, 7th in real estate market and 15th in affordability and economic environment.
Grand Prairie, which was 52nd overall, tied with several other U.S. cities for first in lowest foreclosure rate.

The rest of WalletHub's top ten cities were No. 3 Gilbert, Ariz.; No. 7 Durham, N.C.; No. 8 Reno, Nev.; No. 9 Roseville, Calif.; and Nashville Tenn.

To determine the rankings, WalletHub compared 300 cities across two key dimensions using 18 metrics.

Texas existing-home sales slow in June, inventory improves slightly

COLLEGE STATION (Texas Real Estate Research Center) – Texas’ existing-home sales were almost flat in June increasing just 1.6 percent over May to 27,000 transactions. Experts say the sales trend is slowing amid constrained inventories.

"Mortgage rates are still hovering around 3 percent, and ongoing demographic trends continue to support housing demand," said Dr. Luis Torres, research economist for the Texas Real Estate Research Center at Texas A&M University.

The average Texas home stayed on the market for just 26 days, the shortest time since the Center began keeping records in 1997.

According to the National Association of Realtors (NAR), national existing-home sales rose moderately in June, rebounding slightly from a four-month slide. Along with the 1.4 percent monthly increase, national sales were up 22.9 percent from last year.

"Standard year-over-year (YOY) calculations should be viewed cautiously due to the effects of the pandemic in June of last year," said Torres.

Along with a June increase in sales, a 9.2 percent increase in new listings pulled Texas’ months of inventory of existing homes to 1.3 months.

"It appears the persistent low level of inventory is easing as more homes hit the market," said Torres. "However, the limited inventory for homes priced less than $300,000 is particularly distressing and is putting pressure on home affordability."

While reaching an all-time high, Texas’ median existing home sales price fell 19.3 percent YOY to $298,000. NAR reported an annual national increase of 23.4 percent to $363,300.

Torres said a shift in the composition of sales toward higher-priced homes due to limited inventory at the bottom price cohorts explains some of the increase in the median sales price.

"Our Texas Repeat Sales Home Price Index accounts for this compositional bias and indicates annual home-price appreciation was closer to 15 percent in June. Although less extreme than the median price metric suggests, the rise in home prices is still impairing Texas housing affordability."

February 2, 2021
Homebuyer frenzy, limited supply push up Texas home prices

COLLEGE STATION (Texas Real Estate Research Center) – Before COVID-19, Texas’ home price growth was strong but declining to more sustainable rates. Texas Real Estate Research Center Senior Data Analyst Joshua Roberson said last year’s unpredictability led to growth estimates that could be mistaken for data flukes.

Fourth quarter price growth, based on the Center’s Home Price Index, is enough to cause alarm. In Austin, the index jumped over 10 percent above last year’s estimate. At what point will home prices eclipse interest rate savings? Is there a bubble brewing in the housing market?

"In a post-pandemic economy, nothing is really off the table," Roberson said, "but if anyone is waiting for another Great Recession-like housing crash, they may be disappointed.

"During the Great Recession, home demand plummeted along with consumer confidence while home supply was left high and dry. Today, it’s the exact opposite. Homebuyers are in a buying frenzy, but supply is nowhere in sight."

According to Roberson, the end result of that high demand and low supply has been price hikes like those experienced in the past two quarters, and future quarters are likely to follow this trend. Mortgage rates are expected to remain low, which will help sustain demand. Demand for more square footage is also not likely to fade soon.

On the supply side, existing homeowners are staying put, resulting in a massive shortage of listings while builders struggle to keep up with the surge in demand.

While price growth is likely to remain hot this year, the fourth quarter 2020 spike may be a one-time phenomenon.

"Normally during the winter months, the housing market cools and buyers are less aggressive, but this winter things were still heating up," said Roberson. "If 2021 returns to the normal summer-focused seasonality, then next winter may not be as impressive. But until COVID is managed, nothing should be taken for granted."