Dallas housing market slouches toward somewhere

And it sure ain’t Bethlehem. Boosterish Dallas hand-wavers and hangers on (including one editor linked within this post), who for more than a year now have claimed now real problems were going to hit the Dallas-Fort Worth housing market, may need to start eating their words. DFW first-quarter foreclosures are up nearly 40 percent from a year ago. And, since foreclosures for all of 2007 were up 10 percent from 2006, the early 2008 news is definitely not good.

Yes, the idea that low housing costs here may lessen foreclosures sounds tempting, doesn’t it? But, wages in many sectors are low here, too. And, the problem goes beyond the original subprime fallout.

Rising gas prices, especially in a sprawl like the Metroplex, are also contributing toward the problem, as are other inflationary pressures linked to oil prices.

Of course, the DFW housing slump isn’t just hitting poor folks. Even in the ritzy Park Cities, where first-quarter pre-existing home sales slumped 25 percent, the problem is increasing.

“The price point between $1.5 million and $2 million is where a lot of the inventory is,” Bill Nichols said

In fact, sales of $1 million-plus homes dropped 19 percent.

In part, as this sidebar to the top story notes, tightening lending on jumbo loans, and the interest rate increase with that, is part of what’s affecting upper-end home sales. A 150-basis-point increase on a $500K-principal jumbo, from 6. to 7.5 percent, would cost an additional $180K over the life of a 30-year loan.

Don’t expect things to get better until they get worse, for at least the rest of this year.