DFW Real-estate (Houston, Dallas, Combine: sales, real estate, 2015)

[20Hope20]

It’s difficult to say what’s next for DFW real estate scene. Newcomers are struggling to find properties in this market. Would you recommend keep renting until market settles down?

https://www.dmagazine.com/publicatio...pandemic-2020/

[citidata18]

The only issue with "renting until market settles down" is that there's no way to know when the market will settle down, if ever.

Historically, before the Great Recession, real estate prices never really fell. They would either increase rapidly, or only increase slowly/stabilize during economic downturns, in part because the reduced interest rates during recessions would attract more homebuyers to the market (thus increasing demand).

The circumstances that led to home prices collapsing during the Great Recession were very unique. As it was so ridiculously easy to get financing for homes, developers were working at a breakneck pace to build homes, which led to a massive oversupply of housing once the recession hit.

Today, we have the opposite problem happening. Lending standards are *MUCH* tighter than they were in the early/mid 2000s (so there's less of an incentive for builders to supply cheap starter homes). Also, because so many builders and laborers left the home construction business after the real estate collapse in 2008, there's a huge crunch in workers needed to build homes in a timely manner. On top of that, you have the recent geopolitical meddling by Washington D.C. into the price of materials used to build homes. Now, in effect, these factors have all combined to leave us with the severe housing shortage we face today.

And with population growth in Dallas showing no signs of slowing downs plus interest rates remaining low for the foreseeable future, I can't see things getting better with housing prices any time soon either.

So do you really want to risk sitting on the sideline for another 5-10 years in hopes of this elusive "settling down" with the market, and then discover you're going to be paying even more for housing by that time? Also, home prices will be cheapest in either far flung suburbs that are lacking in the amenities people seek, or suburbs with high crime rates / poor schools. So let's say you ultimately get priced out of the area you like. Is owning a home in Dallas *SO* important to you that you're willing to consider living in these undesirable areas?

[rtloucks]

I agree with the above comments. Especially since intrest rates are so low and there's no guarantee that they will stay low. Home prices have typically gone up gradually. DFW is unique like that. Some cities take huge hits but other METROS stay stable thru down turns like DFW, DC, Minneapolis, Denver, Houston, Seattle, etc. Because they have a strong diverse economy that continues to bring people to the areas even in tough times. Thus, creating a need for housing. Areas like Arizona, Florida, and other areas that bring people there for a "Better Life" usually take the hits because the workforce is not balanced. Usually they focus on hospitality or services or other areas that slow dramatically during a recession. Then it's a domino effect. I have not seen signs of that in DFW EVER....

On a personal note, I have to admit. We hope the market will slow for a bit too. We recently sold our house in Colorado to move back here to DFW. Decided to rent until we find a home we love. We may wait a year or even 2 but in reality, I know the longer we wait the high the purchase will be. There's no advantage to waiting now days. Dfw may be a hit market, but it always has been and probably will be for a long time to come.

* i am not a realtor....

[texstout]

I'd recommend renting if you are unfamiliar with the area and want to test out neighborhoods or want to find a dream house. Otherwise, I'd just bite the bullet and buy.

[ChristieP]

I agree that the DFW market won't likely "settle down" any time soon. It's been hot like this since at least 2015, and with all of the corporate relocations and people moving from higher-tax states, that's not likely to stop. I've heard that after January 1, there may be more foreclosures on the market due to job losses from COVID, but that's purely speculation at this point.

[Rakin]

I've lived in DFW all my life which is a long time. This market has only "Settled Down" maybe 3 times in the last 40 years I've owned houses. And that was only maybe a third of what the rest of the country did.

If you are waiting for another 2010, you may be waiting awhile since many people are leaving Blue States for the jobs in TX. Even in 2010 our market did not go down much compared to others.

Even in the worst of times, the TX market has been pretty good. I'd bet by 2035 DFW will have 12 Million residents and be the size of LA or larger.

[numbersguy100]

In theory, there will be an uptick in either sales or foreclosures next year when mortgage relief is gone. Normally people who have equity in a home they can't afford any more would sell to avoid losing that to the bank, but if they're out of work or have a reduced income due to Covid right now, they don't know when they'll be working again at full pay, so they're staying put for now and that inventory never hits the market. Having said that, I think the government is going to try and extend that relief (it has distorting effects on the market, as government intervention always does, but I get why it's going to be something the new administration is focused on). Even if most of those foreclosures came to market, it probably wouldn't bring the supply/demand back to being balanced, it would just ease pressure on price increases rather than leading to a price decline. Combine that dynamic with very low rates that are likely to persist, and betting against the broader Dallas housing market is a bad short or medium term bet (or long term for that matter).

The Dallas commercial property market is another story entirely. So far it's holding up well compared to markets like SF or NYC, but absolutely no one knows where that market is headed (here, or anywhere). Very few companies are extending leases right now. At best, they're doing short 1 year renewals on their existing footprint while they evaluate their long term needs (normal commercial leases are more like 5-10 years). Dallas is also overweight retail space. That market is in the toilet and is going nowhere fast. Even distressed investors won't touch it with a 10 foot pole.

[Katana49]

If you can buy in an area in demand, I would go ahead and do it. If you can wait a year before selling I think you'd probably be able to break even on any closing costs incurred. North TX just keeps growing and prices keep climbing steadily upward. Even with some financial pain on the horizon due to Covid, I don't think we're going to see a meaningful downturn in prices.

[20Hope20]

Unemployment rate is growing higher and lots of businesses are on the verge of filing bankruptcy. As home prices are all time high but mortgage rates are low, people are buying and selling but would it continue or it would be prudent to wait 6-12 months?

[Katana49]

Depends how secure your job is. For every person who is going through hard times in north TX and has to sell, there's 2 more people looking to move in.


If you're secure with your job situation, I would buy. I would say that prices are not going to take a huge dive next year, or the year after, and I'm willing to bet most people who are well versed in real estate in the area would agree with me.