Is inventory lower than expected right now? (Houston, Dallas: foreclosure, mortgage)

[Johnhw2]

To correlate national GDP with housing prices in DFW is comparing apples to cigars. Real estate markets are local and dependent on local GDP and demand (new jobs to area is the key one for us) and local supply (available land within reasonable commute to job growth).

Our local job situation is very different from the avg national one. Its not this time its different, its DFW is different from the average national market. The differences are fundaments that drive sustainable real estate ownership and demand. There is no local bubble in housing. EDS's post above cited the fundamentals of our market. I agree wit his and TC80s assessments.

[serger]

The median incomes have been pretty much stagnant, while in some areas home prices are about 50-60% more than during the downturn and the several years after. Now, since the home prices here were relatively low compared to many other parts of the country, short term, this has been sustainable. Is it sustainable long term - obviously no. Just wait for the affordability to decrease further.

And yes, the low interest rates help, but insurance, maintenance costs and so on, are sky high compared to just several years ago.


And all this bidding wars are happening typically on the low end of the price range for a particular area. I've said it before, there is plenty of inventory if you go up.

[EDS_]

Originally Posted by serger

The median incomes have been pretty much stagnant, while in some areas home prices are about 50-60% more than during the downturn and the several years after. Now, since the home prices here were relatively low compared to many other parts of the country, short term, this has been sustainable. Is it sustainable long term - obviously no. Just wait for the affordability to decrease further.

And yes, the low interest rates help, but insurance, maintenance costs and so on, are sky high compared to just several years ago.


And all this bidding wars are happening typically on the low end of the price range for a particular area. I've said it before, there is plenty of inventory if you go up.

The average home for sale in HP/UP and North Dallas, the 1 and 2 highest average sales price zones in the area, sells in 56 days. That's very short historically.

[numbersguy100]

Originally Posted by EDS_

The average home for sale in HP/UP and North Dallas, the 1 and 2 highest average sales price zones in the area, sells in 56 days. That's very short historically.

I'm guessing the comment was meant to imply that there's plenty of inventory in the highest price point on a relative basis. A $1.4mm house in UP is going to have offers the first day it lists (if it even does), but once you get into the $3-5mm price point, I'm guessing you have lots of options and won't need to get into a first day bidding war.

[EDS_]

Originally Posted by numbersguy100

I'm guessing the comment was meant to imply that there's plenty of inventory in the highest price point on a relative basis. A $1.4mm house in UP is going to have offers the first day it lists (if it even does), but once you get into the $3-5mm price point, I'm guessing you have lots of options and won't need to get into a first day bidding war.

Not really 56 days on the market in Greater Preston Hollow/North Dallas and HP/UP is very short by historical standards. More specifically my point is we have a generally tight housing market across most prices. The market above maybe $2.5/3.0 million as you indicated is its own deal and for all kinds of reasons functions by its own set of rules.

Across the street from us a tear down is being built, the builder owns the deal top to bottom. His plan 8mos. ago was to sell the place right at $1.7M the house isn't done yet and he's sitting on an offer over $1.9M. That's a long way of saying the higher priced areas seem to be doing just fine.


ETA - I get your point and Serger's as well. The top of the market isn't as tight as the middle and below.

[serger]

Originally Posted by numbersguy100

I'm guessing the comment was meant to imply that there's plenty of inventory in the highest price point on a relative basis. A $1.4mm house in UP is going to have offers the first day it lists (if it even does), but once you get into the $3-5mm price point, I'm guessing you have lots of options and won't need to get into a first day bidding war.

Yes, that's what I meant. thanks

[hbdwihdh378y9]

Originally Posted by LoveAussie

I was told the bubble of Dallas market was about to blow up since the day one I came to Dallas, and I kept seeing the prices goes higher and higher...

There is no Dallas-area bubble. There could be little bubbles in certain suburbs or neighborhoods, however.

[hbdwihdh378y9]

Originally Posted by turf3

Every real estate bubble (I have personally witnessed at least three; one in the 80s, one in the 90s and one in the 2000s) is accompanied by a chorus of cheerleaders saying "this time is different, this time it's not a bubble but rather based on fundamentals". And each time, it's not different. Remember the "new dot-com/internet economy" that was going to change all the rules? And yet it didn't.

But we're not saying this time's different. In DFW, it's the same as 2006-07 -- no bubble!

[MckinneyOwnr]

Originally Posted by turf3

Sounds just like what I heard ad infinitum in 2004-2006.

Interest rates are at an all time low; why? because US government securities, while a bad investment (near zero rates) are the least bad secure investment currently available (Euro bonds with negative interest rates). Massive deficit spending continues. All that extra money is destined for housing and stocks (since bond yields are also at all time lows).

All it takes is for interest rates to rise sharply because the demand for US bonds slackens, to kill housing demand.

Compare housing prices vs. income growth or GDP growth, in real terms (inflation factored out) and you will see especially the DFW market housing prices are growing far faster than those indicators of wealth.

I agree that mortgages based on fake income are likely to be less of a factor than the last time.

Every real estate bubble (I have personally witnessed at least three; one in the 80s, one in the 90s and one in the 2000s) is accompanied by a chorus of cheerleaders saying "this time is different, this time it's not a bubble but rather based on fundamentals". And each time, it's not different. Remember the "new dot-com/internet economy" that was going to change all the rules? And yet it didn't.

There is no predicting when it's going to pop, or whether it will be sharp and dramatic or slow stagnation, nor what will start the deflation of the bubble, but it will happen. Remember, if it walks like a duck, swims like a duck, and quacks like a duck, it's most likely a duck, and I see a lot of ducks lately.

By all means, continue to sit on the sidelines then. Don't come crying to us when you have to pay 20% more than you would today as you wait a few years for this bubble of yours to burst.

[BLDSoon]

Originally Posted by turf3

Sounds just like what I heard ad infinitum in 2004-2006.

Interest rates are at an all time low; why? because US government securities, while a bad investment (near zero rates) are the least bad secure investment currently available (Euro bonds with negative interest rates). Massive deficit spending continues. All that extra money is destined for housing and stocks (since bond yields are also at all time lows).

All it takes is for interest rates to rise sharply because the demand for US bonds slackens, to kill housing demand.

Compare housing prices vs. income growth or GDP growth, in real terms (inflation factored out) and you will see especially the DFW market housing prices are growing far faster than those indicators of wealth.

I agree that mortgages based on fake income are likely to be less of a factor than the last time.

Every real estate bubble (I have personally witnessed at least three; one in the 80s, one in the 90s and one in the 2000s) is accompanied by a chorus of cheerleaders saying "this time is different, this time it's not a bubble but rather based on fundamentals". And each time, it's not different. Remember the "new dot-com/internet economy" that was going to change all the rules? And yet it didn't.

There is no predicting when it's going to pop, or whether it will be sharp and dramatic or slow stagnation, nor what will start the deflation of the bubble, but it will happen. Remember, if it walks like a duck, swims like a duck, and quacks like a duck, it's most likely a duck, and I see a lot of ducks lately.

We must work in the same industry,
Unfortunately our warnings are typically not heeded until the sky ACTUALLY falls.