By Steve Brown, The Dallas Morning News
Oct. 3--Wall Street gyrations and the mortgage market mess are hammering Dallas' high-end home market.
Sales of top-priced homes are falling, and the number of costly houses on the market is growing.
If the financial sector uncertainty wasn't enough to keep some wealthy buyers on the sideline, tougher lending standards on so-called jumbo loans have made it even harder to put a new mansion's roof over your head.
"The high-end market has been slowed down for the past year or more as the credit markets have priced those mortgages higher than normal," said Dr. James Gaines, an economist with Texas A&M University's Real Estate Center.
"And people who were stretching to buy the $1 million home instead of the $700,000 one they could really afford are now not able to make the stretch."
High-dollar home sales in North Texas had held up through the worst of the housing downturn until early this year.
After several consecutive years of record sales, million-dollar-plus home purchases are off by about 12 percent in the D-FW area through the first eight months of 2008.
And declines in other top price ranges have been even sharper -- down almost 25 percent for homes between $800,000 and $1 million, according to statistics from the North Texas Real Estate Information System and Texas A&M University's Real Estate Center.
Housing analysts say that lenders have significantly raised requirements for buying expensive homes, in some cases requiring a 20 percent down payment from buyers with "average" credit.
"Those tougher qualification standards have weeded out a lot of potential buyers and weakened the market," said Ted Wilson with Residential Strategies.
Indeed, in the Park Cities and North Dallas' most expensive neighborhoods, the proliferation of "for sale" signs is apparent.
The number of houses on the market in the Park Cities -- where a home fetches $1.2 million on average -- has swollen by almost 40 percent since last August, according to the most recent statistics. At the same time, sales have fallen by about 16 percent.
And in North Dallas, listings are up 30 percent while sales totals are down by almost the same amount.
Almost 1,500 million-dollar-plus homes are listed for sale in the Realtors' multiple listing service -- almost a 20-month supply.
Overall, home listings in North Texas equal just under seven months of inventory.
In the new-home market, about 1,500 vacant houses are priced at $500,000 and up, according to David Brown with MetroStudy Inc.
'That's been the price point where we've seen inventory grow the most in the past year," Mr. Brown said. "We saw builders pull back more at first at the lower price points.
"It will take a little bit for sales to catch up" with unsold home inventories at higher prices, he said. "And with the jumbo mortgage market difficulties, it will take awhile to work through."
Top-of-the-market homebuilders say that, for the most part, they no longer can borrow the money to build without a qualified buyer in tow.
"The banks are saying that because of the large inventories, they won't do any more until that lowers," said longtime Dallas-area custom builder Bill Long. "I feel like a dinosaur -- an endangered species -- being a spec builder."
Mr. Long said he's still getting buyer traffic from out-of-town transferees, but it's harder to get them to the closing table.
"They are taking a little bit longer to buy," he said. "Most of them in the upper price ranges have cash.
"They aren't really worried about the mortgages, but they don't like the higher costs in the jumbo market."
For loans above $417,000, it can cost at least a full percentage point more to finance a purchase.
Uncertainties over the financial market bailout are also hard to ignore by wealthy buyers making a purchase.
"Everybody is talking about it," said Doris Jacobs, one of the Dallas area's top exclusive-home agents with Allie Beth Allman & Associates. "So far, I haven't had any fallout.
"I had three closings on Friday," she said. "I hope it won't affect business that much."
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