Almost every sector of the Dallas real estate market has rebounded to pre-recession levels — some properties even more. But homebuilding is not close to the volumes seen before the economic crash. Home starts in the Dallas-area are about 40 percent less than they were in 2005. And shortages of labor and rising construction costs have limited builders. The Dallas area has one of the largest shortages of new single-family homes on any market in the country, according to a new study by the National Association of Realtors.
Builders would have to start more than 132,000 additional houses to make up for the lack of supply, Realtor researchers say. Only New York City — with a 218,541 home start deficit — has a bigger shortfall of housing construction among major U.S. markets. "Inadequate single-family home construction since the Great Recession has had a detrimental impact on the housing market by accelerating price growth and making it very difficult for prospective buyers to find an affordable home — especially young adults," Realtors' chief economist Lawrence Yun said in the study. "Without the expected pickup in building as job gains rose in recent years, new and existing inventory has shrunk, prices have shot up and affordability has eroded despite mortgage rates at or near historic lows."
The Realtors' analysts looked at housing construction and demand for major U.S. markets in 2012-2015. NAR then estimated the amount of home construction needed in each metro area to get back to each market's historical average. New home construction in North Texas peaked in 2005 with almost 50,0000 starts. At the worst of the recession, housing starts fell to 13,625 in 2009. Even with strong demand for homes in the area and record prices, home starts are expected to reach only about 30,000 in 2016. Local analysts say that it's doubtful that single-family home building activity will return to the levels seen here 10 years ago because of multiple factors limiting construction. "Clearly we have a shortage of housing here," said Ted Wilson with Dallas-based housing analyst Residential Strategies. "The construction capacity issues are limiting what the builders can produce."
Wilson said typically there is demand for a new single-family home for every two new jobs created in a market. "Over the last five years here in D-FW we've created about 518,000 new jobs," he said. "Looking at that the math would suggest about 258,000 housing units would have been needed. "Over that 5-year period we've constructed almost 115,000."
Along with New York and Dallas, other major U.S. metro areas with a severe shortage of new home starts include San Francisco (127,412 permits required), Miami (118,937 permits required), Chicago (94,457 permits required) and Atlanta (93,627 permits required), according to the Realtors.
- Dallas Morning News, September 19, 2016