Finding a Dallas accommodation is a major challenge especially for new arrivals. Regardless of whether you’re looking to buy or rent, housing is in short supply in this city. The quality of Dallas houses and apartments is high and property costs reflect this.
While housing costs may not compare to cities such as Los Angeles, Dallas accommodation is more costly than elsewhere in Texas. Pre-owned home costs in this area ended last year with a 7.5% gain from 2013.
Furthermore, home prices in this area are now approximately 13% higher than they were prior to the recession and have risen over 30% since early 2012. The biggest gains in 2014 were in numerous southern Dallas districts including Lancaster where sales prices of single-family homes rose by over 20%.
Nevertheless, housing analysts don’t anticipate last year’s appreciation to persist indefinitely. In case you’re still wondering about price increases in this city, this post will guide you.
Why Dallas is experiencing an Increase in Home Prices
The high housing demand and short supply have caused a sharp rise in home prices in this city. A scarcity of homes for sale in this area has merged with robust financial growth to generate the present housing crunch.
People stopped property construction due to the economic downturn. During this time, demand for new housing was low. However, things have changed over the past few years, resulting in the dramatic increase of demand.
However, the rate of supply doesn’t match the demand rate, resulting in low inventory. This implies that the area has turned into a seller’s market. If you’re looking to relocate from the area, you can sell your property at a highly inflated price. While this situation favors the homeowners, homebuyers are likely to feel the pinch.
Positive Effects of Price Increases
House price can influence economic activity and aggregate demand in different ways.
- Optimistic expectations concerning property investment returns occur with the increasing house prices. Market demand in property associated sectors increases as builders begin new construction.
- There’s an increase in private consumption as homeowners feel richer. Rising prices persuade homeowners to spend and have increased confidence in the economy.
- Economic behavior of homeowners changes because of price hike, turning homeowners into home purchasers. In an economy like America, real estate is a significant investment asset. If property costs rise above the construction cost, the construction of new buildings becomes lucrative. Consequently, the construction boom boosts employment and demand in property-associated sectors.
Drawbacks of Price Hikes
- Rising prices imply that first-time buyers must take increasing risks to purchase a house. Furthermore, they must save more to pay higher mortgage payments and initial deposits. Therefore, their consumption drops during an increase in house prices.
- Increasing prices augment inter-generational wealth disparity. While homeowners perceive an increase in wealth, those incapable of buying experience higher renting costs. The high value of home prices implies the existence of greater inequality in wealth. The return rate of property ownership is higher than the economic growth rate hence inequality is likely to widen.
For more information on why home prices continue to rise in Dallas, contact Apartment Agents or leave a comment.
Image: Dallas Homes
