The North Texas housing market has shifted into slower growth.

North Texas home market slows
Dallas-area sales, prices are still rising, but not as robustly as in the past

09:33 AM CST on Monday, October 30, 2006
By STEVE BROWN / The Dallas Morning News

While the Dallas-Fort Worth area isn't seeing the kind of slump some East and West Coast cities have suffered, the rates of home sales and price increases has dwindled this year.

Through the first nine months, home sales in the Dallas area are up about 2 percent from a year ago. Prices are up a scant 3 percent.

Some neighborhoods are bucking the trends. Home sales prices are up 15 percent this year in the Park Cities and up 10 percent in East Dallas. In Keller, prices are 11 percent higher than a year ago, and prices are up 10 percent in Southlake and 9 percent in McKinney.

While Dallas overall has had a "ho-hum appreciation rate," that's not bad, said Mark Dotzour, chief economist at Texas A&M University's real estate center.

"In most decades, people would be thrilled to death to have a 3 or 4 percent appreciation," Mr. Dotzour said. "In Dallas, the economic conditions for a strong housing market are still there – positive job growth, cheap mortgage rates and continued home price appreciation."

The biggest sales increases so far this year have been in Lancaster, 17 percent; Fairview, 15 percent; and Denton County, 10 percent.

Overall sales have trailed down in the last few months, but that may have more to do with attitudes than economics. Builders and real estate agents hear that some buyers are waiting to see if prices will fall as they have done elsewhere.

"It has affected the buyers' perception," said Ted Wilson of Residential Strategies Inc.

Housing is now a drag on the U.S. economy, after years of positive influence, he said. "If the consumer feels they are losing equity in their house, it can curb their spending habits," Mr. Wilson said.

Innovations aim to lure residents to downtown

Dallas: Forgivable loans for buyers, grants for developers on the table

05:19 AM CDT on Tuesday, October 17, 2006

By DAVE LEVINTHAL / The Dallas Morning News

Hoping to lure thousands more residents to downtown, Dallas city officials have begun crafting two incentive programs to that end that are unprecedented locally.

One, targeting prospective condominium buyers, would use a cocktail of public funding sources to offer forgivable loans of up to $40,000 to people earning less than the nation's median family income.

As conceived, qualifying individuals could use the loan toward purchasing downtown residences, many of which have become prohibitively expensive for lower- and middle-income Dallasites. If, however, a loan grantee sells his or her property within 10 years of purchasing it, the recipient would have to repay it in full.

"The idea is to fill the gap between sales price and the mortgage you can afford," said Jerry Killingsworth, director of Dallas' Housing Department.

Downtown developers are required to provide "affordable" units within apartment projects, but many choose to pay the city a fee to skirt the regulation. City officials say they hope to use these payments to help fund the loan program.

Several Dallas City Council members say they like the concept, which would address the city's desire to create 10,000 mixed-income housing units downtown but would avoid government "rent control" policies used by cities like New York.

"It is a new idea. You have to test it and see how it works in the marketplace," Office of Economic Development Director Karl Zavitkovsky said.

Dallas' second incentive plan aims to offer downtown housing developers as yet unspecified tax incentives if they agree to build two downtown projects at once – one on downtown's fringes and another within more developed sections. Developers agreeing to do so would be eligible to receive a public grant on the more remote building, according to city staff's preliminary plan.

The plan is an end-around a situation that has limited City Hall's ability to provide incentives for downtown development projects.

This year, Dallas agreed to stop offering property tax abatements and tax increment funding within a large swath of prime downtown real estate in the Downtown Connection Tax Increment Financing District. Developers working in the district potentially can recoup some property taxes to fund building demolition, environmental remediation, infrastructure improvements and the like.

The city did so in order to appease financiers of Main Street's Mercantile Bank complex redevelopment project, which includes nine downtown buildings slated for renovation into housing. The project is set to receive about $70 million in public incentives, the majority of which is funded by public revenue bonds.

Council member Mitchell Rasansky suggested also providing companies that choose to relocate downtown with cash for each employee who chooses to live within the center city.

City staff plans to brief the council with detailed versions of both plans later this year.