Need a raise to buy a home?
Patti Sue Kirkey makes decent money with periodic raises, as a project manager for a mortgage company.
But her salary no longer provides the means necessary to keep living in Fort Worth's historic Fairmount neighborhood. Unable to find a home for under $200,000 in Fairmount, Kirkey has instead moved to east Fort Worth's Meadowbrook area, where a few weeks ago she bought a 1953 mid-century modern house for $167,000.
Kirkey's experience illustrates an unfortunate reality in North Texas. By and large, wages are not increasing fast enough for residents to keep pace with the cost of housing. Kirkey loves her new house and east Fort Worth neighborhood. But her experience in Fairmount, one of the city's oldest neighborhoods just southwest of downtown, didn't end well.
She had hoped to buy the home she rented for two years. But during that time her landlord, who was apparently eager to capitalize on fast-rising home prices in much of Fort Worth, raised the asking price beyond Kirkey's budget.
"The last house I was in for two years, I wanted to buy it, but the price went up $75,000 for no reason," Kirkey said. "There were no improvements. I would have thought there would be negotiations, but in her mind she was thinking, 'Housing prices are going up, it's a sellers market and everyone is moving here, so I'm going to get $205,000.' It's just the demand. You just don't find family-size homes for under $200,000 anymore."
Since 2011, wages in the Dallas-Fort Worth-Arlington area have increased about 9 percent, according to data from the Bureau of Labor Statistics. (The numbers are in a 2017 report, but are based on information gathered in 2016.)
Some occupations have risen in pay more than others. A middle school teacher who earned $55,090 in 2011 now earns $58,260 on average (a 5.8 percent increase), according to the data. A registered nurse who earned $63,790 now makes $72,360 (up 13.4 percent).
But during that same period, the cost of buying a home in the Metroplex has skyrocketed 66 percent. The median cost of a home in the Dallas-Fort Worth-Arlington area is now $249,000, up from $148,900 in 2011, according to the National Association of Realtors. The skyrocketing cost has led some North Texans to question whether buying a home is still a good investment.
In far north Fort Worth, DR Horton is building several hundred homes west of Interstate 35W and north of Heritage Trace Parkway, and houses with 1,869 square feet start at $259,900. Homes with 2,926 square feet start at $308,990.
In many instances, renting is no bargain either. The median cost of a two-bedroom apartment in Fort Worth is now $1,140 a month, compared to $970 less than four years ago.
But not everyone is intimidated by the higher home prices.
Thao Truong and her mother, Le Nguyen, recently visited the DR Horton homes, which are in a neighborhood known as Tehama Bluffs. Truong said her family is interested in selling their six-bedroom home In North Richland Hills' Iron Horse area and downsizing to a smaller home with more modern amenities.
Truong said one of her neighbors bought a home for $215,000 about four years ago and recently sold it for more than $300,000, and her family wishes to make a similar sale and use the proceeds for a smaller, higher-quality home.
"The prices are going to keep going up, so my advice is to buy now. Buy while you can," she said.
Although the rising cost of homes has caught many North Texans off guard, the situation is probably temporary, said Lawrence Yun, chief economist for the National Association of Realtors.
Economists have been puzzled that the current economic expansion hasn't led to higher wages. Wages in Dallas-Fort Worth increased a relatively modest 2.4 percent in the fourth quarter of last year, for example.
But they generally believe that higher wages are around the corner, as employers struggle to fill jobs in an era with historically low unemployment.
Also, the North Texas region has a shortage of homes to meet its explosive job growth. But builders are moving quickly to build new homes to meet that demand.
"I don't anticipate such a misalignment trend can continue for the next five years. It's just not possible," Yun said. "There needs to be ... a situation of home prices tamping to let wages have a chance to catch up."
The challenge is exacerbated by a large number of out-of-state residents relocating to North Texas from places such as California, Colorado and Illinois, where they are used to paying a larger share of their take-home pay for housing and don't mind the prices of homes in North Texas.
In the meantime, Yun said, "For residents of Fort Worth who have been living there a long time, they are scraping together enough money for a down payment on a home, but they can't compete."