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1. DFW, crying and whining aside, is still and will remain a very important and growing wealth hub for a long time. I've been looking at some recent numbers, not dreams, not talking to friends, not observing neighbors but hard numbers...........DFW and especially Dallas and CoCo's discretionary income numbers are about the best in the country among peer cities.
2. The notion above that CoCo's growth is really about flat is asinine. The net migration numbers into Dallas are good and CoCo and Texas are stunning. The state demographer predicts CoCo's population will double within 15 years. The state is growing by about 250,000 net new people per year.
3. Further, the point foisted above that home prices+tolls and whatnot locally are broaching NYC and CA costs is again just asinine - pretty much incoherent. I say this as a homeowner in SF, NYC and Dallas.
4. The value proposition locally is "real" incomes especially among professionals (I'm misusing the term a bit, real in this case = nominal incomes adjusted to local cost of living metrics and aggregate tax burdens) in DFW are much higher than NYC, SF, LA, Boston etc. I realize many people don't want to believe that.........it takes 5 minutes of open minded research to prove my point.
5. Years ago I was lucky enough to hear a Noble winning economist give a lecture series at UT. A point he emphasized was that Texas was set to see explosive growth for 35 or 50 years for two key reasons.
A). A huge zone of business friendly cities including Austin, Dallas and Houston and ranging east to Tampa would slowly become its own megatrend of population growth, education, infrastructure, trade etc. taking talented young people people away from high cost, high tax areas. At least once he called the area "The New California". All of that is happening.
B). Texas cities through low taxes reasonable COL etc. are very attractive for the young professionals needed to work at all these new companies.Young native born Americans with educations are leaving high cost areas of The US in large numbers and to a lesser degree the cold belt. They are moving to Dallas, Atlanta, Houston, Nashville, The Research Triangle NC etc. This won't stop for many years.
These changes are going to be tough for some. Some people will be forced out. But the bottom line is CoCo. is going to grow like mad for decades and prices will, unevenly to be sure, inexorably go up over time and a lot.
Sorry for the garbled iPhone post.
Good points all around...Especially about discretionary income numbers.Collin County may have the highest in the country.No wonder why every retailer/eatery under the sun seems to be clammoring to open up shop in the DFW area...Soon Sprinkles (Shops at Legacy) ,Carlos Bakery (Frisco) and Hurts Donuts (Frisco) will all be located about 15 minutes form us in Prosper.
FYI...Hurts Donuts is worth the wait.Easily the best donuts I have ever had.They are open 24 hours a day and if you order 100 or more they will deliver them to you in their donut "ambulance"...Just what we all need LOL.
1. DFW, crying and whining aside, is still and will remain a very important and growing wealth hub for a long time. I've been looking at some recent numbers, not dreams, not talking to friends, not observing neighbors but hard numbers...........DFW and especially Dallas and CoCo's discretionary income numbers are about the best in the country among peer cities.
2. The notion above that CoCo's growth is really about flat is asinine. The net migration numbers into Dallas are good and CoCo and Texas are stunning. The state demographer predicts CoCo's population will double within 15 years. The state is growing by about 250,000 net new people per year.
3. Further, the point foisted above that home prices+tolls and whatnot locally are broaching NYC and CA costs is again just asinine - pretty much incoherent. I say this as a homeowner in SF, NYC and Dallas.
4. The value proposition locally is "real" incomes especially among professionals (I'm misusing the term a bit, real in this case = nominal incomes adjusted to local cost of living metrics and aggregate tax burdens) in DFW are much higher than NYC, SF, LA, Boston etc. I realize many people don't want to believe that.........it takes 5 minutes of open minded research to prove my point.
5. Years ago I was lucky enough to hear a Noble winning economist give a lecture series at UT. A point he emphasized was that Texas was set to see explosive growth for 35 or 50 years for two key reasons.
A). A huge zone of business friendly cities including Austin, Dallas and Houston and ranging east to Tampa would slowly become its own megatrend of population growth, education, infrastructure, trade etc. taking talented young people people away from high cost, high tax areas. At least once he called the area "The New California". All of that is happening.
B). Texas cities through low taxes reasonable COL etc. are very attractive for the young professionals needed to work at all these new companies.
Young native born Americans with educations are leaving high cost areas of The US in large numbers and to a lesser degree the cold belt. They are moving to Dallas, Atlanta, Houston, Nashville, The Research Triangle NC etc. This won't stop for many years.
These changes are going to be tough for some. Some people will be forced out. But the bottom line is CoCo. is going to grow like mad for decades and prices will, unevenly to be sure, inexorably go up over time and a lot.
We're not anywhere near a tipping point yet as far as housing/affordability are concerned. For every long time current resident who is stuck in their current home because their wages haven't risen fast enough to allow them to sell and trade up into a more expensive home, there are 2-3 incoming transplants to TX who can afford it.
Also, as far as property taxes being more onerous than state income taxes... Our property tax rates around here are ~2%.
Now take a state like California, where the highest marginal rate can top 13%, and there's really no justification to complain. I think the average of all states is something like 4% or so regarding a state income tax, so I'm perfectly happy paying 2% on my home in comparison.
We're not anywhere near a tipping point yet as far as housing/affordability are concerned. For every long time current resident who is stuck in their current home because their wages haven't risen fast enough to allow them to sell and trade up into a more expensive home, there are 2-3 incoming transplants to TX who can afford it.
Also, as far as property taxes being more onerous than state income taxes... Our property tax rates around here are ~2%.
Now take a state like California, where the highest marginal rate can top 13%, and there's really no justification to complain. I think the average of all states is something like 4% or so regarding a state income tax, so I'm perfectly happy paying 2% on my home in comparison.
Well, if you are paying 2% on a 500k home or 4% on a 200k income, you are still paying more for property tax per year. How many of the 500k home owners actually earn 200k per year?
Higher prices are here to stay, though the huge annual price gains that we've experienced recently will likely not last.
Home prices in DFW are still relatively affordable vs. incomes, and that is the primary factor in housing price. In many high cost areas, people pay 50% or more of their income on housing and DFW is nowhere near that. Absent a price shock like rapidly higher interest rates above 6% or an economic recession, prices will continue to appreciate, albeit at a slower pace.
That said, real estate has always had boom and bust cycles and it's a given that housing prices will decline at some point. No one can predict when or how this will happen. Even if a bust occurs, the historical national average decline is around 10% and nothing like the real estate collapse of 2009-10. So if prices go up 50% and then decline by 10%, it's still 35% higher than the baseline.
A big headwind as the OP mentioned is soaring property taxes. Property taxes for $300,000 house in Dallas will run you about $6,600 a year (more in some suburbs). If one makes $100k/yr, that would be equivalent to a 6.6% income tax. if that same person owned a $400k house, taxes would be $8,800, which would equate to a 8.8% income tax. Such large taxes do impact housing affordability, but so far not enough to cap price increases.
People always talking about how many people are moving in but fail to mention how many people are/have moved out and the more the prices go up, the more people who will be priced out because Texas is trying to be a NY & California.
Sorry but that makes no sense. The prices go up because more people move in than move out. If this scenario were of significant size, you would see a decline in prices. DFW is not land constrained. New subdivisions keep filling up in far remote exurbia targeting jobs in Plano.
Regarding the glut of new "luxury" apartments coming this yea: it's good for renters. I saw one old apartment complex near Addison having to renovate and invest in improvements because tenants were leaving for new units further up the tollway at not much more in cost.
Well, if you are paying 2% on a 500k home or 4% on a 200k income, you are still paying more for property tax per year. How many of the 500k home owners actually earn 200k per year?
That's not how it works... 4% is about the average range based on middle class incomes, because state income taxes are just like federal income taxes... the more you make, the more you are taxed. Someone with a $200k salary is paying more than 4%. They could be paying upwards of 10% in some places. California, New Jersey, etc... have very high rates. So it really just depends.
If you're asking "would you throw down the new normal for housing in DFW?" my response would be a very emphatic no. Outside of economic factors there's nothing about Dallas-Fort Worth that appeals to me. Of course I'm one of those "odd people" who doesn't live to work.
I about did a spit take when I saw the median list price in Phrisceaux at 500k.
More than 50,000 apartments are under construction in North Texas — more than any other metro area in the country.
"Dallas-Fort Worth has really had a tremendous run in this cycle," said John Sebree, national director with commercial real estate firm Marcus & Millichap.
"It seems like a lot, but you have had 130,000 new jobs in the last 12 months, so it' going to be OK," Sebree said. "I'm not seeing anything that leads us to believe we are getting out over our skis."
"There is a possibility that in 2018 we actually see a drop in new construction deliveries."
It's going to have to slow down because you can't keep building on the "future" when you don't know for sure if the demand is actually going to materialize or not. It's easy to look at the numbers and say what should happen in a few years but bottom line no one knows for sure especially given we're under a new government administration for the next 4 years. Where some people are already predicting a recession that of course may not actually happen but the fact of the matter is you don't know how fast things can change and drastically.
The same way DFW grew rapidly, it can deflate just as rapidly and a lot of decisions being made by the government will effect people in Texas due to the large number of immigrants. People that are considering moving in need to be very careful if they don't have a stable foundation already in place.
Well, if you are paying 2% on a 500k home or 4% on a 200k income, you are still paying more for property tax per year. How many of the 500k home owners actually earn 200k per year?
As an aside...wow, I would hope many (most?) of them. Although maybe a bunch of them purchased said homes when they were worth a lot less.
Quote:
Originally Posted by Katana49
That's not how it works... 4% is about the average range based on middle class incomes, because state income taxes are just like federal income taxes... the more you make, the more you are taxed. Someone with a $200k salary is paying more than 4%. They could be paying upwards of 10% in some places. California, New Jersey, etc... have very high rates. So it really just depends.
True, it varies, although many states have top marginal rates around 5-6%, so even at high incomes the effective rate may well be 4% or so. Obviously California (for example) is different. Illinois has a flat 3% income tax rate, IIRC, but it also has property tax rates that are similar to Texas. So, yeah, it depends.
I agree that DFW housing remains quite affordable compared to most major cities (and very affordable compared to SF or NYC. I love the Bay Area but oh my holy God on housing). I do think that the competition from smaller cities like NCs Research Triangle, Nashville, or Pittsburgh makes more sense, as those are cities that remain relatively inexpensive and are growing, but offer considerable scenic beauty.
Re: Pittsburgh, a friend compared it to Portland OR when he visited me in the latter city circa 1990. I was stunned but then read up on it and realized that the stereotype of big ugly steel mills didn't apply anymore. Not surprised that it is following in Portland's footsteps as a hipster draw.
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