By SANDRA BAKER
Star-Telegram Staff Writer
SPECIAL TO THE STAR-TELEGRAM/CLUFF BOSLER ILLUS.
Home prices in Fort Worth and Arlington are expected to remain steady even as the housing bubble bursts and prices plummet in many other cities nationwide, real estate experts say.
Phoenix, Boston and Orlando and Sarasota, Fla., have seen dips in median existing-home prices ranging from 2.4 percent to 11.25 percent in the 12-month period that ended in June. In Dallas-Fort Worth, prices have risen a modest 1.7 percent to $156,500.
A recent study of housing prices in the country's 50 largest metropolitan areas shows, on average, a 32.9 percent chance that home prices will decline in the next two years.
But in Fort Worth-Arlington, the chance of decline is 8.9 percent, putting the area next to the bottom among the 50 areas, according to PMI Mortgage Insurance, the U.S. subsidiary of the PMI Group. The chances of a decline in the Dallas-Plano-Irving area is 9.5 percent, also among the country's lowest.
The hardest-hit areas are likely to be in Nevada, California, Arizona and Florida, where the chances of home prices falling in the next two years are better than 50 percent, PMI found. In Riverside-San Bernardino, Calif., the chance that prices will fall is 60.8 percent, the country's highest, the study says. Part of the reason is that home prices have jumped in those areas in recent years: In Riverside-San Bernardino, for example, the median sale price rose 37.6 percent from 2004 to the third quarter of 2006, according to the National Association of Realtors.
In Texas, home prices have been gaining about 4 percent annually, experts said. So will they remain stable?
In North Texas in September, the median selling price of homes rose 3 percent to $147,500 from a year earlier, although selling a home is taking longer. Homes now stay on the market for an average of 74 days before closing.
Housing prices in Texas never became inflated like in other parts of the country, particularly California. Of the 11 metro areas where the risk of a price decline is greater than 50 percent, seven are in California, PMI said.
"We did not have the bubble," said Jim Gaines, a real estate economist at Texas A&M University's Real Estate Center. "We didn't have the inflated prices. Those high prices made no sense. People just couldn't afford to keep paying those kinds of prices. It's all coming home to roost now."
LaVaughn Henry, PMI's director of economic analysis, said the areas of Texas included in the study scored well because the state has low price volatility.
The study takes into consideration how prices have moved historically, homeowners' ability to pay for their mortgages and local job creation and employment numbers. Home prices in Fort Worth-Arlington, for example, have grown modestly, and the area has some of the country's most affordable prices, Henry said.
"Texas has more of a conservative mentality," Henry said. "When things are in balance, your market is stable."
Texas A&M researchers say home prices statewide could rise about 4 percent annually for the foreseeable future.
"There's nothing on the horizon to suggest that prices are coming down," Gaines said. "Right now, we're doing pretty good."
The national median price for an existing single-family home was $223,800 in the second quarter, down 1.5 percent from $227,100 in the second quarter of 2006, according to the Realtors' association.
Median second-quarter home prices ranged from $71,700 in Elmira, N.Y., to $865,000 in the San Jose-Sunnyvale-Santa Clara, Calif., area, the association reported.
In the Sarasota region, which includes the cities of Bradenton and Venice, median home prices fell more than 11 percent, to $311,400 in the second quarter of this year from $350,900 a year earlier. Prices dipped about 2.4 percent in Orlando and 2.7 percent in Phoenix.
The largest increase in median home price was in the Salt Lake City area: $233,100, up nearly 22 percent from a year earlier, the group said.
Ted Wilson, a partner with Dallas-based Residential Strategies, a market research firm, agrees that pricing will remain strong in North Texas and that many of the discounts on new homes are being offered by builders who want to reduce their inventory.
Builders are already building fewer speculative houses and will start to focus more on building to suit, he said.
In recent weeks, the country's largest home builders have announced plans to construct far fewer houses. Fort Worth-based D.R. Horton said it has already greatly improved its cash flow because of building reductions.
"I really don't see our inventories being that out of whack," Wilson said. "With the lack of new starts, we're hopeful the housing inventory gets mopped up. If anything, what we've seen in new home prices is that they're edging higher."
Sue Meyer, president and chief operating officer of Coldwell Banker Residential Brokerage Dallas/Fort Worth, who oversees about 1,100 real estate agents and brokers, agrees that prices in the Metroplex will remain steady. She said that the value of all the houses sold this year in the Metroplex should surpass $17 billion, placing 2007 among the top-producing years.
About 49,000 houses are on the market in the Metroplex, she said.
"We're still going to see some price appreciation," Meyer said. "The area keeps growing. If you want to sell, you have to be competitive. The majority of homeowners are pricing it right."
Lawrence Yun, a senior economist with the National Association of Realtors, is also upbeat about home prices nationwide.
"Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming-out in the fourth quarter of 2006," Yun said in a report. "The fundamental momentum clearly suggests stabilizing price trends in many local markets."
1.7 percent Increase in median existing home price in Dallas-Fort Worth in the second quarter of 2007 from the second quarter of 2006
1.5 percent Decrease in median existing home price nationwide in the second quarter of 2007; prices declined sharply in many markets
Risk of declines in value
Percentage risk of declines in value in areas of Texas that PMI studied.
Austin-Round Rock, 15.4 percent
San Antonio, 12.1 percent
Dallas-Plano-Irving, 9.5 percent
Houston-Sugar Land-Baytown, 9.4 percent
Fort Worth-Arlington, 8.9 percent
Riskiest areas
Top five markets for expected highest decline and percentage risk.
Riverside-San Bernardino-Ontario, Calif., 60.8 percent
Las Vegas-Paradise, Nev., 58.7 percent
Santa Ana-Anaheim-Irvine, Calif., 57.9 percent
Phoenix-Mesa-Scottsdale, Ariz., 57.5 percent
Los Angeles-Long Beach-Glendale, Calif., 53.6 percent
Source: PMI Mortgage Insurance
MARKET APPRECIATION
Average market value of single-family houses in selected Tarrant County cities, with percentage increase from 2005
Arlington up 4.6% $135,658
Bedford up 2% $153,555
Colleyville up 12.1% $379,399
Euless up 5.7% $137,080
Fort Worth up 12% $115,470
Hurst up 3.7% $134,606
Mansfield up 8.5% $179,152
Southlake up 13.5% $451,732
Source: Tarrant Appraisal District
Sandra Baker, 817-390-7727
sabaker@star-telegram.com