Has Dallas Real estate bottomed out or is there another dip to come? (Fort Worth: foreclosure, rent)

[GreyDay]

A colleague was looking to buy a place (condo) Uptown, noted the prices were good and without thinking, I told him the prices were likely at their nadir and as well as interest rates- so buy and hold for at least 3-5 years and if prices hold he may not make money but he'd live in a nicer place than he would by simply renting.

Upon further thought I'm not sure about my advice.

The condo market is a little different granted.

But across all price ranges it seems like the bottom has been reached- or at least the bottom sellers will list or as much of a loss as those needing to sell now can take.

[Philip T]

So are you asking "In General?"

I do not do predictions, but we tend to do things a Best, Worse, and Change Case planning. More like risk management than "investment" per so.

If one is looking at Going Down as being the Worse Case (just saying what directions are on the map for a discussion basis), we are using a 10% down side risk per year for a couple years ahead -- some reasonable folks are saying the broader US will not really be into recovery until 2020.

So an application of managing the risk on the Down Side -- IF the place you are looking at had to be sold in say 2 years, and was down 20% at that time, would/could you sell at that then lower price and be okay? If so, it is an acceptable risk.

[TurtleCreek80]

Originally Posted by GreyDay

A colleague was looking to buy a place (condo) Uptown, noted the prices were good and without thinking, I told him the prices were likely at their nadir and as well as interest rates- so buy and hold for at least 3-5 years and if prices hold he may not make money but he'd live in a nicer place than he would by simply renting.

Upon further thought I'm not sure about my advice.

The condo market is a little different granted.

But across all price ranges it seems like the bottom has been reached- or at least the bottom sellers will list or as much of a loss as those needing to sell now can take.

I would wait the Uptown condo market out more. I dont know if it's hit bottom or if it has, how long we'll be dragging along there. A condo one cannot sell is an albatros, whether it's a nicer place (on a monthly basis, not in total) than one could rent for the money.

For houses in established neighborhoods (Lakewood & non-transitional East Dallas neighborhoods, Park Cities, Preston Hollow, Lake Highlands, Devonshire/Greenway Parks/ Bluffview/ etc), I'd say now is a good time to buy AS LONG AS you're able to commit for 5+ years. I think in 2020, people will look back at this market as one of the greatest "steals" of a generation. Even if property values don't jump up significantly, locking in a 3-4% interest rate on a well-priced home in a solid neighborhood is a long-term bargain.

[Twincam666]

I honestly think it's going to drop a lot more. Unemployment is still huge, big companies are having trouble making $$$$ and a lot of people will probably keep losing their homes....

And if all these protesors do any good maybe a few thousand corporate criminals will finally be put in prison for life!

[MckinneyOwnr]

For what it's worth, prices have actually been on an uptick in Plano/Frisco/Mckinney area. Even informal sources like Zillow have backed this up, however I'm talking about single family homes here.

I tend to believe the bottom has been found in my area. Uptown... hard to say. Friend of mine just bought a condo there for the same price I paid for my house... has no dedicated garage space, and 1/3 the space that I have. For me, downtown living just isn't worth that much, and I would guess I'm in the majority with that opinion. Living downtown, the buyers will primarily be young professionals, not too many families, and that drastically cuts down on demand if only certain segments of the population are looking to buy in an area.

[ggolf]

I just heard a financial "expert" on WBAP say that the DOW might drop to 3000 and housing prices nationally will drop 60%, or at least there is a worst case scenario risk of those. As far as DFW, we're in much better shape than the national average as far as having low housing prices, decent employment, etc. But still, I just don't see anything soon as far as a recovery, so I think prices will either drop more, or stay level for quite some time. Like anything else in life buying real estate now is a crap shoot.

[1957TabbyCat]

The Steals of 1990 were incredible and subject of warm fealings. Alot of the SL people were even issued Jumpsuits.

I would research Condo's very carefully because of all the shared responsibilties.

If you plan to live in a place yourself for an extended time, difficult to really loose if you buy right, esp below your means. This is a good time to buy, even if things get worse for a number of years if you either pay cash or keep the payments affordable even if times go a few notches lower.

I seriously wonder if inflation will break out with in the next 5 to 10 years.

I point this out to people who were dumb enough or unlucky enough to be upside down now. Your house payment could be a joke if this does happen, and it is not clear at this pointeflation, inflation or remain somewhat stable. The right deal takes them all into account.

[TurtleCreek80]

Originally Posted by Twincam666

I honestly think it's going to drop a lot more. Unemployment is still huge, big companies are having trouble making $$$$ and a lot of people will probably keep losing their homes....

And if all these protesors do any good maybe a few thousand corporate criminals will finally be put in prison for life!

1. Real estate is based largely on the local economy, not national news.

2. Unemployment is not "huge." Huge was 25% unemployment during the Depression or in the 1970's recession when it was in the teens. Unemployment is greater than we have enjoyed over the past 25 years of growth, but it is not historically "huge" right now. (It may feel worse because people had not practiced personal responsibility regarding savings and borrowing, but it's not "huge"). DFW's rate is .2% better than last year at 8.4%. It's below the national average and added 50,000 jobs in the last 12 months. Unemployment is under 4% for college graduates and in the teens for Hispanics and those without a high school diploma.
Metropolitan Area Employment and Unemployment Summary

3. Big companies are making TONS of money- not sure why you think otherwise. Many American companies are booming right now because they're expanding overseas (McDonalds, Yum, etc). They are controlling expenses and sitting on large cash reserves (nearly $2 trillion) which they want to spend on growth once they are confident they won't get pummeled by govenmenr policies (healthcare, regulations, etc).
Corporate Profits Boom In Second Quarter, While Jobs Remain A Bust

4. The amount of people losing their homes in DFW is falling, not growing. September foreclosure postings were down 19% to last year, the 7th straight month to decline.
12% of Dallas homes are worth less than owed, this is 50% less than the national average. These homes are only an issue when the owner can't pay and can't sell- or decides to shamelessly walk away. I'm underwater but still paying and will continue to keep paying, so that 12% isn't a 100% risk - ore even close to a 100% risk.
The amount of "shadow" inventory (homes delinquent on mortgage payments but not in foreclosure yet) continues to shrink at a pretty good clip. It was growing steadily from 2008 through early 2011 and the started shrinking. We're now at about 4 years vs closer to 6 at the height.

bizjournals mobile: Dallas: Report: Nearly 12 percent of Dallas area homes 'underwater'
S&P Report: Shadow inventory down | HomeFinder.com News
D-FW home foreclosure filings fall 19% | Dallas-Fort Worth Business News - News for Dallas, Texas - The Dallas Morning News


It's not all rosy out there, but as always, the DFW area has continued to move along without seeing the devastation this national/global economy had wreaked on Detroit, Ohio, Florida, Southern California, etc. Many of the things going well for us in DFW (below average unemployment, relatively low cost of living & home prices, new residents moving here every day, bountiful natural resources like the Barnett Shale, etc) will continue to help us plug along.

All bets are off if there's a true total global economic meltdown, but at that point people would be more concerned in putting food on the table than wondering if Uptown real estate is a good buy.

[ggolf]

Originally Posted by TurtleCreek80

All bets are off if there's a true total global economic meltdown, but at that point people would be more concerned in putting food on the table than wondering if Uptown real estate is a good buy.

That's one of the best perspective comments I've heard! Thanks, Turtle.

[GreyDay]

Racier thread- Are the Park Cities a good buy now, a safe buy or would you sit out and watch?