Why Demand for New Homes in the Dallas-Fort Worth Real Estate Market Grows

We’ve all become quite accustomed to hearing about the dismal real estate market and the countless homes that are sitting on the market, just waiting to be sold.

Don’t believe everything you hear; at least when it comes to the Dallas-Fort Worth area.

New Home Numbers Dwindling, Despite National Housing Slump

For three, consecutive years, Dallas-Fort Worth builders have sold more homes than they’ve built. It seems quite odd, but it’s true. As the recession took hold and the regional and national real estate started its downward spiral, many of the area’s builders simply stopped building.

As a result, new home numbers have steadily declined and, when the first of the year rolls around, there may be few, new homes from which to choose. Industry analysts expect that many of the area’s builders will need to increase their new home output by 30 to 40 percent just to keep up with their current sales pace.

New Construction Drops off as Demand Increases

Many of the region’s real estate agents have seen a steady demand for new homes, but new home construction has backed way off, creating quite a predicament for the better part of next year. In fact, during the last, two years, builders in North Texas have sold nearly 13,000 more homes than they have built.

As a result, the inventory of new homes in this area has fallen below 5,000; that’s just a short, three-month supply. Other areas across the country, in contrast, have about a seven-month supply of new homes.

Much of the discrepancy between new homes that have been sold versus built lies with the new homeowner tax credit. This tax credit has resulted in the sale of thousands of new homes, thereby leaving very few new homes still on the market.

Funding Requirements Remain an Issue

Many Dallas-Fort Worth area builders are still concerned about the funding requirements for new home construction.  In addition, many of the area’s builders, including Bill Darling, are not able to secure funding to build more homes. In fact, many of the area’s homebuilders know that they could sell new homes if they were just able to secure the capital to do so.

Unless a homebuilder has a strong relationship with a local lender, lines of credit are nearly impossible to come by.

Darling now estimates that nearly 70 percent of the homes he builds are already sold.

With credit lines cut for homebuilders and lower prices and tax incentives for buyers, it’s no wonder why the inventory has fallen to such a low level.

However, when the lending sector loosens its grip on lines of credit, many of the area’s builders may soon be experiencing an influx of new home sales. That’s great for homebuyers in the Dallas-Fort Worth area; and even better for the real estate sector and the economy as a whole.

Now, the question is: how fast can the area’s home builders keep up with the demand, especially as the new year quickly approaches?