In analyzing the 2012 & 2013 median home sale prices, the city of Heath is up 20% & Rockwall 15% in the last 12 months period. History tells us there is a point where a market must level off and follow an average growth rate. compiled data for the major real estate markets for the last 30 years, showing the projected annual growth, and actual growth. In analyzing this data, our market is merely correcting itself from the 2007 bubble and returning to its projected average. Eventually, the annual growth will level off and follow the linear average.

Where does the adjustment come from? Looking at corresponding data of building in the City of Heath and the Real Estate Trend Index graph above, in 1997 there were 52 building permits issued with an average permit amount of $269,600. When the actual index and linear average line crossed in 2000, the city issued 192 permits at an average of $397,400 per permit. Between the years 2001-2007, Heath issued an average of 105 permits at an average value of $469,000, with a high of $601,900. Between 2008 – 2011, Heath issued an average of only 32 permits at an average of $473,000. As the market has rebound, Heath issued 47 permits at $482,600 in 2012 and 67 permits at an average of $517,000 in 2013. This would be a 6 year high and just shy of the 2007 levels, which would be put the market on track for the linear growth average.

The trend should continue across the Rockwall/Heath area. Eventually existing lots will begin to be purchased and new developments, or expansion of existing, will be needed to continue our upward growth. The ground work is already being laid across the area. On the north side of town you have the expansion of Woodcreek (approx. 2,500 total lots), Unnamed Altura Development (approx. 60 lots) Lakeview Summit (97), Stonecreek (approx. 100 lots), Caruth Lake (approx. 150 lots), and Breezy Hill (approx. 691 lots). On the south side of town there is Rockwall Downs (86), Lakes of Somerset (276), Chamberlein Crossing (412), Williamsburg (approx. 1,500 lots), Chisholm Crossing (84), Kingsbridge (approx. 60 lots), Townsend Village (77), McCrummen Ranch (69), The Sanctuary (25), Sonoma Verde (188), Sonterra Estates (17), and Heath Golf & Yacht Club (1,227). That’s a proposed 7,619 new lots and more land is being proposed for development each month.

The development of these new lots should bolster the market back above the linear average, if demand remains, and at the same time, level off the rate of increase of home values with the additional supply of homes. Interest rates should also increase with the improving market trends. During the years 2001-2007, the national mortgage rate average was 6.25%. One would assume if other markets continue to improve and the job market also improves, more public confidence would allow for this average rate to return without hindering growth, stabilizing on the positive side of the growth scale. We could see rates for the next decade hover between 5.5%-7% on average if past trends remain true.

Our market didn’t quite take the hit other parts of the country did, which is allowing for a quicker recovery. This may allow our market to sustain a higher cap above the linear average. Sellers should still see more increase to property values, but there is a ceiling on the horizon. Now is a great time to take advantage of lower interest rates, a high number of buyers, low builder inventory, and increasing values.