The Dallas Morning News real estate desk just floated an interesting piece on housing demand in the DFW real estate market. According to the regurgitated Zillow source, almost 40 percent of Dallas area homes sold for more than asking price last year, and the median amount buyers paid over asking price was 5.7 percent or $12,023. Fortunately we have data from the North Texas Real Estate Information System to do a quick fact-check on this story. As it turns out Zillow’s story doesn’t hold water.

Looking at the source of the Zillow story showing buyers chomping at the bit to overpay for homes, we can see that their source is their own data, “Zillow listing and transaction data”. This is important because Texas is s non-disclosure state. By default that means Zillow is likely not seeing all of the sales in the North Texas real estate system. It’s interesting that the Dallas Morning News real estate desk would even print the story considering this reality.

Looking at the local MLS price to list ratios for North Texas home sales, we can see that the percent to list numbers are rolling over in the Dallas Fort Worth housing market. This is not a surprise considering the impressive home price inflation seen during the last 5 years. The real price to list percentages for DFW home sales blow a giant gaping hole in Zillow’s story. Looking at Dallas, Tarrant, Collin and Denton County home sales, it is clear that home buyers are NOT rushing to pay more than original list price on DFW homes. Tarrant County is the strongest market of the four, no doubt due to the lower average selling prices seen in the Fort Worth market.

Zillow “senior economist”, Aaron Terrazas, paints a nice picture of a robust housing market and a strong U.S. employment sector…

“Low interest rates and strong labor markets with high-paying jobs have allowed home buyers in some of the country’s priciest housing markets to bid well over asking price.” 

The reality is that the “strong labor markets” fable is just that, a work of fiction. Average hourly earnings growth for U.S. workers is in the midst of one of the weakest recoveries in modern memory. The labor market is not nearly as tight as the headline numbers would suggest. December earnings growth registered at a measly 2.5 percent…

US Wage Growth Reality

For sure there are some DFW home buyers who are paying more than original list price. Even by Zillow’s own metrics there is a larger percentage of buyers who are paying LESS than list price. The real MLS data in the DFW housing market suggests that buyers are beginning to balk at paying higher and higher prices. There is still a much larger percentage of buyers paying less than original list price for DFW homes, and that cohort now appears to be growing.

The next time you see a story floated by another senior economist, be sure to hold on to your wallet!