Hello everybody and welcome to the North Texas! To the great land, with low level of unemployment, where there are the best real estate markets of the country.
So, friends, I can say that we really have good news – the Dallas real property market is now much better than ever! Yes, is true!
Just now Dallas is beating all records of real estate prices – if we compare it with the markets of rest of country. At the beginning of this year, Dallas was the third in the country for the low real estate prices, trailing only San Francisco and Denver, besting New York and Houston (according the CoreLogic). And the real estate firm Zillowes Group is saying that the prices in this area, in Dallas, will continue to rise in the 2016, exceeding 5,5%.
Comparing the prices with the last year, is easy to see that the 14,2% of prices have increased across the area of Dallas. Several companies said that there are ever more bigger gains if we compare with – 23% in Richardson, 22% The Colony and about 29% in the other part of Dallas.
And what about construction? Well, just now, in this year, are constructing more than 30,000 houses, and thanks to this data Dallas in now the number 1 in construction, exceeding with elevated number of homes in construction the long time leader – Houston.
If we start to talk about economic fundamentals, that are driving the housing market, we need to know that, in this moment, it’s popular and rising – how the Dallas construction. The unemployment rate of Dallas is more less than 4% and the level of work employment is considered by economists “full employment.” So, annually are opening about 100,000 new jobs, and every month more employers are working there. In Plano – in Toyota N. America – on almost 100-acre area are constructing the campus of 2-million-square-foot, while JPM Chase and Liberty M Insurance are donating about $3 billion to the development of Legacy West. State F and Raytheon (in Richardson) are helping with $1.5 billion to development of CityLine. In Southlake and in Westlake, TD Ameritrade and CS Corporation are building a campus.
Taken together all this data say us than now we are living the epoch of Dallas progress. This means that 2016 will be one other record year for the real estate of Dallas. But it’s not all about Dallas’s records.
But, of course, this means that Dallas has some drawbacks. The real estate markets in Dallas area are rising very fast and it menace to fundamentally change negatively the market. Developers are trying to keep pace and help their clients with all their demands. Buyers are trying to afford higher prices, cities try to add even more residents and do it more quickly, because they want to develop new forms of housing, and, of course, they want to do it fast.
From Midlothian to Celina (from the south to the north), and from Weatherford to Terrell (from the west to the east), is planned to start the building of about 30,000 new homes in this year. Of course, if today’s trends continue to hold. In this big area there are sufficient vacant ground plots to construct there those houses.
Maybe it can seem strange for J. Gaines, because it seems that we’re against the limits of today’s expansion. But he not was talking about the land we can develop. He was talking about the land that was ready for the good development – land served us by gas and sewer lines. Land that now is connected by a lot of roads with cities. This land is now in very short supply, so Gaines and his group of experts see the truth.
If they would want, North Texas cities really can make much more ready plots for developers. But they really do it? Or does Frisco and Plano want to be much denser to can answer the today’s demand for good real estates in Dallas? This is difficult question.
“Nowadays there a lot of difficult and long-term questions and issues that we have to resolve. This issues have to be addressed,” said us Gaines. “Now the pace of growth is really stretching the existent infrastructure. And we note it in Dallas, or in other communities, how Plano, Frisco, McKinney… The public sector can’t keep the pace. There haven’t enough hospitals or schools, or sewer and water lines or even jails. While, how we know, development helps the increasing of the tax base, we have a big lag in new services, that new residents really need. And for this reason now there are so many impact development fees, or there are a lot of plans to change the city. They intent to make up existent difference.”
We also know that that’s increase the costs of a lot of new homes development. And all those costs probably will be passed on to the buyer. So many new homes, that are building in this area can be priced about $400,000 or more. That’s so increment the today’s $210,000 prices for a homes in this plots, say the National Realtors Association. (And, of course, the median price we talks about is $67,000 higher comparing with prices of five or six years ago.) And, according to this, experts are fret that now too many new good homes are coming to the market with so elevated prices what many Dallasites can’t afford to buy these.
In Frisco, 3,500-acre plot is turned this summer in nearly the center of the city, and Shaddock Development in this same year probably will start the work of construction of 270 homes. But, of course, this is not a cheap work. Every home will cost about $400,000.
According Metrostudy, real estate market analysis firm, one big part of the recently builded houses, located in Dallas, probably will cost at $400,000 or more. This company says too that the majority of this new homes would cost from $250,000 to $400,000. Comparing with 2015, the cost of this home construction was incremented about 30%, said us the regional director of the Metrostudy, Paige Shipp.
“Now developers are bringing to the market a lot of new supplies, but I can’t say that we agree with the today’s demand.” said us Shipp. “We’re paying attention for the actual demand. And today’s situation is that now there are big pushback from a lot of buyers. Prices are rising, and many buyers are now not able to buy the necessary product that comes to the market.”
The same pushback with buyers is passing also in the questions of existing homes. Jeff Duffey, whose firm J. Duffey & Associates are working with existing and completely new Dallas’s homes, says to seller’s real estate market, that lately they’ve heard all about this question and at the same time nothing. “Now sellers think that they are setting the perfect bar on prices.” Duffey says. “In reality, this is buyer who are doing this, but no the seller. Today’s buyers are educated, they have lost a lot of selected by them homes in the past, and they obviously already know the price they need to pay in any neighborhood. So the sellers, who think that they can to put any price tag on houses, are defeated by buyers at the start.”
But it doesn’t mean that sellers now can’t propose record-elevated prices. It mean that the top of market now could be visible. Some are thinking that this process of price declines are now inevitable, because of economic fundamentals at the market. So, now homes for sale are rising in cost more faster than are rising the incomes. Fitch Ratings, representant of firm that analyse credits, says that the last 42 month the prices at real estate, located at Dallas’s area, were incremented faster than income growth. So, this is a problem. In the last two years, the prices for the incomes have grown just about 3.3%. Fitch says too that the prices of today’s market is now overpriced by about 10% to 15%. And Mortgage Arch Insurance says that this number need to be even higher, that the Dallas’s homes are overvalued at about 24%. According it, Dallas need to be in the top of markets that have risk of price declines, how San Antonio, Houston, Austin and others.
Several other numbers are talking about the same. In 2010, for example, the Dallas’s median income was about $58,025, while the median prices of homes were about $141,000. And today, according the Association of Realtors, the median price of homes is about $210,000, and median income is just $61,600.
So start to do math with this numbers, it’s not difficult. Now, when we have this real property price boom almost in all country, the Dallas’s rising of prices is the most big, comparing with other cities in this area. Our market is now a less than in Minneapolis, Atlanta, Kansas City and Oklahoma City, and others.
Supply, prices, fees, density… all this problems that come to the market with growth. And there are, obviously, really good problems that we can have.
But, even so, in this situation there’s difficult to talk about crisis brewing. Texas A&N Real Property Center and Z. Group, or any other important company in the real estate business now talks about the rising of prices, that we will have at the end of 2016 (comparing with the home prices at 2015). And most of this prices probably would continue to rise at the future.
“The Dallas real estate market is now slowing down,” said us Gaines. “It is going faster than 70 miles/hour, and probably, will slow down about at 75 miles/hour in this year.”
So, because of several “economic fundamentals ” or simply “jobs”, today’s Dallas’s job market it’s converted in the immune system to the declining of oil prices – that nearly have destroyed Houston’s housing market. But, when energy is declining, the other industries are remaining strong. In today’s housing run-up of prices, the Dallas’s area is continuing to post the results of their growth: that’s about 4%.
Well, it’s possible to say that this active job market is bringing to Dallas new residents, in big groups. About 105 companies, with Toyota N. America, have just moved to the area of Dallas since first months of 2010 – says analysis and the real property firm CBRE. It’s the first in Texas. And today Dallas is leading too, with almost of 3.5 million people living and working there.
At the last several years at the Dallas area have moved about 100,000 people, so everyday in this area are moving more than 300 people, and every one of them needs a place where to live. So, while people keep moving and working, and keep to draw the paychecks, the active real property market of Dallas will continue to keep the first place.