Dallas Foreclosed Homes: Mixed Impact on New Homes and Rent
October 9th, 2009 by 
Joseph Smith
Dallas foreclosed homes differed in impact on new home construction and on rents in the third quarter, based on data from Texas-based property research firms Residential Strategies and MPF Research.
While foreclosures slowed in their impact on new home construction, they pushed down rents in multifamily properties in the third quarter of this year.
In the Dallas metro area in the third quarter, housing starts grew by 32 percent to 4,194 units, compared to the previous quarter, but still below by almost 16 percent compared to the same quarter last year.
Housing starts in the third quarter also showed improvements over previous quarters as year-over-year declines since 2006 ranged from 2,000 to 3,000 units.
Residential Strategies partner Ted Wilson said that new homes priced below $200,000 are the ones having the fastest growth, increasing by 40 percent compared to last year. Home builders credit the federal tax credit as a major factor for the increase.
The median sales price for new homes still dropped, falling by nearly 2 percent to $204,031 compared to $208,033 in the third quarter last year.
The supply of developed lots for home building also dropped by almost 4,000 lots to 88,592, indicating that builders have been making a dent on the inventory of vacant developed home lots.
On the other hand, while Dallas foreclosed homes slightly slowed in their adverse impact on new home construction, they contributed to the drop in rents in the Dallas-Forth Worth area.
In the third quarter, effective rents dropped by 3.5 percent compared to rents during the same quarter last year. Throughout North Texas, the average monthly rent has fallen to $749, based on data from MPF Research.
Rental occupancy rates also dropped from 90 percent during the previous quarter to 89.8 percent, with total inventory of 578,600 rental units.
Housing analysts say that home affordability has been contributing to the drop in rents across the country, including North Texas. Renters have been moving from rental units to their own homes. Aside from affordable home prices, incentives such as the federal tax credit, have been helping renters achieve their home ownership goals.
To respond to the declining number of renters, landlords have been forced to lower their rents and to offer concessions. In the next 4 years, multifamily property owners in North Texas need to pay a total of $300 billion in commercial loans, so they need to maintain their occupancy levels and move their cash flows.
