North Texas Housing Market: Bubble or Backed by Fundamentals?

Prices in the Dallas-Plano-Irving area of North Texas have increased about 8% (adjusted for inflation) since last year, just behind San Francisco and Denver. The supply of houses is at a low point; homes are getting multiple offers. The median new home price in North Texas is about $285,000. Sounds like a bubble; right? But wait, there may be some fundamental reasons that argue against a bubble. First, the hot market in North Texas does not seem to be driven by speculation, as it was in California, Las Vegas, and areas of Florida in the mid-2000's.

New employment provided by companies moving to the area, Toyota Motor Corp. and Liberty Mutual Insurance, supports housing growth and strong prices. Also, employees moving from the areas where Toyota (Southern California) and Liberty Mutual (Boston) are moving to an area with less expensive homes. We will have to wait and see how this plays out. According to Housing Price Trends, the highest levels of housing appreciation in the area was almost 4.5% in 2002.