Dallas Tx home prices continued to pusher higher this summer, but there is more to the story that you are not being told. Global central banks continue to levitate markets higher in a frenzied attempt to delay price discovery and push inflation higher. A recent report shows $1.96 trillion in asset purchases by central banks in 2017. Since the collapse of Lehman Brothers nearly a decade ago, central bank balance sheets have swelled to over $15 trillion.
Fed chair Janet Yellen continues to bark about a 2 percent inflation target that remains elusive, even while the velocity of money continues to crash. Meanwhile home prices in various U. S. housing markets are shooting through the roof. Listening to the tools running our various global central banks (members of the Federal Reserve FOMC included) one might get the impression that inflation is still subdued or even non-existent.
The Fed doesn’t talk about real inflation that Americans are experiencing in their day-to-day lives (like home prices and rent), because the people running the Fed don’t live in the real world. They are insulated from the lives of real working Americans while they pursue endless strategies and schemes to keep the banking sector and Wall Street afloat. If you really believe that empty rhetoric about 2 percent inflation and “full employment”, you are probably missing the boat, as millions of Americans surely are.
We are 9 plus years into the latest economic cycle. Unemployment is near record lows and yet the Fed can’t seem to generate any wage growth. Could it be the PhD’s in the Marriner Eccles building don’t really know what they are doing? Well, in a word, yes! The Fed continues to pursue flawed strategies based on flawed models, and the American people are the proverbial guinea pigs being sacrificed at the alter of central bank cronyism.
The Federal Reserve’s response to the last housing crash was a resounding success for existing holders of assets, including homeowners and stock market investors. For roughly 90 percent of the American population, the effects of $trillions in extra liquidity printed by the Fed have been absolutely punishing.
Anyone involved in the U.S. housing market has seen the distortions manifest in all sorts of ways. Dallas Tx home prices are a direct reflection of both local economic factors and the Fed’s glorious policy failures. Anyone suggesting that Dallas Tx home prices are based purely on organic supply and demand is either a fool or selling you something. The truth is that real price discovery went out the window the minute the Fed started printing money to mask the effects of the last housing crash. As you can see from the chart above, the extra $3.5 trillion-plus that the Fed printed out of thin air has made its way into the Dallas Texas housing market.
The latest reports on home prices in Denton County and Collin County, two of the fastest growing counties in the United States, show median home prices through June of 2017 hitting new highs. In Collin County the median price of an existing home rose 7.2 percent to $331,000. The median price of a new home in Collin County Tx rose 4.2% in June to $406,590. In Denton County Tx the median price for existing single-family homes rose 5.8 percent to $290,900 while the median price of a new home rose a whopping 15.9 percent to $400,000. That makes the Fed’s supposed 2 percent inflation target look like child’s play.
If you are buying or selling a home in Dallas Tx, Collin County or Denton County, it is important to remember that home prices may be local, but housing market distortions are widespread. The fine people at the Fed continue to talk about “normalizing” the Fed’s balance sheet and raising interest rates. That doesn’t mean they have ANY good solutions for extricating themselves from the new mess they have created.
If you are in the market to buy a home, it pays to be aware of ALL the factors affecting local real estate prices. There are some real estate practitioners who are stuck in a sell-side mentality and have absolutely no clue in terms of what is driving home prices. It is obvious that the current housing market is not your father’s housing market. We are living in extraordinary times, and Dallas Tx home prices deserve an extraordinary amount of scrutiny.
In case you weren’t paying attention, the U.S. debt ceiling was recently lifted again without so much as a passing glance. The end result being that as of Friday September 8th 2017, the public debt of the United States roared through the $20 Trillion mark. That has some serious ramifications in terms of the interest that has to be paid on the national debt. It also means that mortgage interest rates are going to be lower for longer than many people thought possible…unless of course the Fed decides it wants to halt credit growth in its tracks and continue hiking into a stagnant economy.
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