Macroeconomics Paper

Young 1

Pamela Young

Principles of Economics 2302 61501

Prof. Gray

September 6, 2016

Brown, Steve. Based on this time last year, Dallas home prices rising at blazing pace. 26 July 2016. http://www.dallasnews.com/business/headlines/20160726-dallas-home-prices-continue-to-rise-at-blazing-pace.ece

I. Article Summary

We learn quickly that the home prices in the Dallas area are on the rise. The opening sentence “area home prices are growing at one of the fastest rates in the country, according to the latest nationwide comparison” immediately lets us know what to expect. The article goes on to discuss that home prices are nine percent higher in Dallas than they were over a year ago according to a recent Standard & Poor's/Case-Shiller Home Price Index (S&P/Case-Shiller). This same report shares with us a comparison of home price increases in areas such as Portland, OR at 12.5%, Seattle, WA at 10.7% and Denver, CO at 9.5% ranking Dallas as 4th highest increase in the nation. Although, prices have risen it has not kept buyers from seeking a home to purchase but the low inventory of homes for sale has made it harder for buyers.

II. Primary Economic Elements

There has been a strong change in the real estate industry as agents are having to work harder and smarter to find available homes for sale within the buyer’s parameters especially when it comes to price. This requires the agent to spend more time over educating their clients about the current seller’s market. They must find a way the keep the client encouraged while at the same time telling the buyer they may have to come up with more money in order to secure a property. This is not always possible with all buyers as many are already at the maximum budget with just the down payment and closing cost.

III. Graphical Analysis

The graph depicts how home prices have dramatically changed in Dallas from the end of 2012 to May of 2016. You can see a steady increase in prices. According to David M. Blitzer at Standard & Poor's home prices are going to continue to rise but at a slower pace. The nine percent spike, as seen above, will begin to taper off as higher average home pricing becomes the norm. The information in the S&P index also shows how Dallas’ price increases compare to other major cities whose home prices have also risen over time. A nationwide percentage is also provided for a glimpse into the US market as a whole.

IV. Conclusions

The cost of homes in Dallas will not return to what they were in 2008 any time soon. Market trends in this article provide evidence that prices will normalize at a higher rate than previous years. Real Estate agents assisting clients who are purchasing homes will continue to battle availability of homes in a certain price range. Home buyers will have to be prepared to shell out more funds to get the property they desire.

Interviews

I interviewed to very different types of people. My first interview with Chanel is in her middle 30s and works as an admissions counselor for a college university. My second interview with Jaclyn is in her middle 20s and is a tax accountant for a major accounting firm.

Chanel’s Interview

Did you understand the article?  Yes. I understand the article is forecasting that the prices of homes for sale in the Dallas area will steadily increase. Did you understand my analysis?  Your analysis is that based on the article the housing prices will show a major increase, and that the prices will increase in the future at a slower pace. You have also determined based on the article that the homebuyers can expect to pay more for homes in Dallas than in prior years.  Did you find my analysis interesting?  I do find your analysis interesting as it gives insight into the future of the home buying market in Dallas.  Do you find the topic interesting?  Why or why not?   I find the topic interesting because I am looking to purchase a home in the Dallas area in the near future.  What are your opinions about the topic? The topic is important for those who are buying or selling homes. The Dallas/Fort Worth area is growing rapidly.

Jaclyn’s Interview

Did you understand the article?  The article was very understandable as it broke down the increase in home prices in Dallas as well as the rest of the country. Did you understand my analysis?  The analysis tied in really well with the article. It summarized just enough but made sure to give a point of view on the price increases and what that means for buyers and sellers. Did you find my analysis interesting? Why or why not? I find the analysis interesting and think that the conclusion at the end wrapped everything up well. I now know that waiting for prices to drop to what they were previously is unrealistic and unlikely. We must adjust to the new market.

Did you find my analysis interesting?  I find the topic interesting, because Dallas is known for having reasonably priced homes. The fact that they are less affordable is unfortunate but shows Dallas is growing. What are your opinions about the topic? My opinion is that something will need to be done soon in order to satisfy more buyers. I think building more homes would be a step in the right direction.

The Article

Reed Saxon/AP Dallas-area hone prices were 9 percent higher in May than a year ago, according to Case-Shiller.

Based on this time last year, Dallas home prices rising at blazing pace

By Steve BrownFollow @[email protected] Estate Editor

dallasnews.com | Published: 26 July 2016 08:31 AMUpdated: 27 July 2016 06:07 PM

Dallas-area home prices are growing at one of the fastest rates in the country, according to the latest nationwide comparison.

Dallas prices were 9 percent higher than a year ago in the latest Standard & Poor's/Case-Shiller Home Price Index. It was the greatest price gain since February.

Nationwide prices were up 5 percent from May 2015 in the just-released comparison.

Local prices have been rising by between 8 percent and 10 percent annually for more than a year in the closely watched housing market survey.

"Home prices continue to appreciate across the country," S&P's David M. Blitzer said in the report. "Overall, housing is doing quite well.

"In addition to strong prices, sales of existing homes reached the highest monthly level since 2007 as construction of new homes showed continuing gains."

Blitzer said the latest forecast is that "home prices to continue rising, though at a somewhat slower pace."

Dallas had the fourth largest annual home price gain in the country.

Portland prices were up 12.7 percent from a year ago. Home prices rose 10.7 percent in Seattle and 9.5 percent in Denver, according to Case-Shiller.

Dallas area prices are now at an all time high in the Case-Shiller index and are more than 25 percent greater than at the peak of the last housing boom in mid-2007.

In June North Texas median home sales prices were $237,500 - a record price for homes sold by real estate agents through their multiple listing service.

A shortage of homes for sale and record demand is pushing Dallas-Fort Worth home prices to unprecedented levels.

"Demand is sky high and the number of homes sold is rising, even as inventory of homes for sale keeps falling," Zillow Chief Economist Dr. Svenja Gudell said in response to the Case-Shiller report. "The tough buyers' market we've been experiencing shows few signs of letting up as we enter the dog days of August."

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