That’s the question everyone is asking. The DFW real estate market for both sales and rentals is at an all-time high right now. It’s a seller’s market which brings multiple offers above asking price. For those that lease, rentals are flying out the door as soon as they are listed. What gives?
As Steve Kaskovich disclosed in D CEO Magazine (May 17, 2017), “We don’t have mountains in North Texas, and we don’t have an ocean. But we’ve always had plenty of land and cheap housing to lure newcomers to our vibrant job scene.”
While DFW housing costs have dramatically increased over the past five years, driving home prices about 50 percent higher, area builders have been unable to keep up with demand from a fast-growing population, leaving a record low supply of homes on the market.
According to Jim Gaines, chief economist at the Texas A&M Real Estate Center, home prices could rise another 10 percent this year. The median home price in DFW metro area is now $232,000, up from $149,900 in 2011. While the region’s housing market is still less expensive than major cities on the coasts, some say our comparative advantage is slipping.
According to Ted Wilson, principal at Residential Strategies in Dallas, several factors changed the residential landscape since the housing crisis. Institutional investors showed up and bought foreclosed homes, turning them into rentals and quickly diminishing the for-sale inventory.
In addition, the tougher financial regulations, including the Dodd-Frank reform bill, discouraged banks from making development loans and restricted borrowers with damaged credit from refinancing.
During the housing crisis, a large portion of DFW’s home construction industry disappeared. Many construction workers left the business and never came back, creating a shortage of carpenters, brick masons, and other skilled trade workers. A home that used to take four months to complete now takes six or seven.
Skeptics doubt the increase in home prices is sustainable. In February, Fitch Ratings characterized the Dallas market as “over-heated,” estimating homes are 10 to 15 percent overvalued and “increasingly vulnerable to a slowdown or price correction.”
But there are believers. Count industry icon Donald Ray Horton among them. The 67-year-old head of D.R. Horton homes, has lived through several housing cycles since building his first home in Fort Worth in 1978. Horton says DFW, the company’s No. 1 market, remains “very affordable” compared to most other big cities. And he’s committed to keeping it that way. In 2014, Horton introduced a new Express brand of homes for entry-level buyers, which accounted for 26 percent of sales with an average price tag around $204,600 last year.
DFW is prime real estate for labor, growth, and housing. Whether you’re looking to buy, sell, invest, or lease, Efurd Properties can help. Give us a call – we’re easy to reach – that’s a promise!