Dallas Housing Market (Plano, McKinney, Allen: section 8, apartments, rental)

[Wittgenstein's Ghost]

I expect that many markets will likely see a series of months coming up with monthly decreases despite annual increases. This will erroneously lead some people to think prices are still going up, but they'll actually be dropping. I've already seen some people claiming prices are still going up because there's 11% yoy price gains, but that can exist even with significant monthly depreciation, particularly when coming off of 20%+ annual gains.

If the median price was $400k a year ago and spiked to $480k three months ago but sits at $450k right now, we'd have 12.5% annual appreciation yet still have experienced a $30k drop since the top.

[mastershake575]

Originally Posted by Rakin

If you are under $500k the market is still great. If you are over $800k not so great. But that all depends on location and schools.

Good point, price bracket matters a lot.

The popular 1st time homebuyer price range ($300-450k with good schools) the houses have barely dropped in price and still go quick. Now a 800k new build that builders where price gouging to low 1 million a year ago ? Yeah you could see a much more manageable price adjustment in that case

[Leonard123]

Originally Posted by mastershake575

Good point, price bracket matters a lot.

The popular 1st time homebuyer price range ($300-450k with good schools) the houses have barely dropped in price and still go quick. Now a 800k new build that builders where price gouging to low 1 million a year ago ? Yeah you could see a much more manageable price adjustment in that case

In McKinney, houses in the 300-450 range are sitting on the market forever and continuing to decline. It's probably the worst performing price range. It's a big city with lots of different schools, and it doesn't seem to have any impact like the subdivision itself and the city, but then no one here ever says how he or she evaluates "good schools." I just see that prices and days on the market vary drastically for the same schools across different subdivisions, and prices are consistent where there are different schools or school districts within a subdivision. I am just not buying that as a significant factor.

On an unrelated note, my real estate said that builders have not seen their prices go down much, and she thinks prices will likely hold steady across the board and that new construction will slow down even more as it will be harder to pass on those high prices. Steady prices would be a return to normal. Some people here may not remember, but prices were almost totally flat from the late 80s until the 2010s. People never talk about the market then.

[mastershake575]

Originally Posted by Leonard123

In McKinney, houses in the 300-450 range are sitting on the market forever and continuing to decline. It's probably the worst performing price range. It's a big city with lots of different schools, and it doesn't seem to have any impact like the subdivision itself and the city, but then no one here ever says how he or she evaluates "good schools." I just see that prices and days on the market vary drastically for the same schools across different subdivisions, and prices are consistent where there are different schools or school districts within a subdivision. I am just not buying that as a significant factor.

To be fair McKinney has been an outlier for pretty much the entire pandemic. I'll have to find the article but it's from last year and it was something insane like "of the 24 neighborhoods in Collin county that have only seen single-digit growth or lower 18 of them are in McKinney city limits".

McKinney hasn't followed any of the trends. That $300-450k range in pretty much every other semi desirable city (heb, Allen, Plano, Richardson, Grapevine) have seen very little price decreases and houses go quick. When you factor in that interest rates have actually raised faster than what these houses are currently price cutting to the current monthly payments are actually at an all-time high

[DFW_FTW]

Originally Posted by Rakin

Interest rates are now at 5.875% and will probably break 6% soon. To me, 6% is a normal interest rate. Try paying 12-17% like we did not so long ago. And if Inflation keeps up we may see that again one day.

1981 - 1985 rates were 17% - 12% and house prices were $60,000 - $90,000.

2022 rates are 5.75% while houses prices are between $500,000 - $600,000.

Total cost of ownership is much higher today and monthly payments are a larger part of a monthly budget compared to Back In My DAYZ wE UsE tO hAVE 12%-17%...HURRR DURRR DURRR.

Facts over armchair analysis BS


The average price of homes sold in Texas in 1980 was $61,300, close to the national average of $62,571

By 1984, the average Texas home price (AHP) climbed to $90,000, $16,200 higher than the U.S average (see
table). The subsequent recession in the Texas economy, spurred by falling West Texas intermediate crude oil prices (from $39.50 per barrel in June 1980 to $11.57 per barrel in July 1986) reduced the Texas AHP from $93,000 in 1985 to $88,700 in 1987. By that time, the U.S. economy was recovering, and the U.S.
AHP had risen to $88,600.


$80,000 house at 14%

Number of payments: 360
Monthly payment$948

Total interest paid
$261,243
Total cost of loan

$341,243


2022 Stats
Plano Housing Market
Homes for Sale
 | 
City guide
The Plano housing market is very competitive. Homes in Plano receive 7 offers on average and sell in around 18 days. The average sale price of a home in Plano was $530K last month, up 21.8% since last year. The average sale price per square foot in Plano is $221, up 17.6% since last year.

Allen Housing Market
Homes for Sale
 | 
City guide
The Allen housing market is very competitive. Homes in Allen receive 8 offers on average and sell in around 21 days. The average sale price of a home in Allen was $600K last month, up 34.8% since last year. The average sale price per square foot in Allen is $225, up 19.7% since last year


$550,000 @ 5.75% =

SUMMARYNumber of payments: 360
Monthly payment: $3,210
Total interest paid: $605,474
Total cost of loan: $1,155,474

[TurtleCreek80]

Originally Posted by DFW_FTW

1981 - 1985 rates were 17% - 12% and house prices were $60,000 - $90,000.

2022 rates are 5.75% while houses prices are between $500,000 - $600,000.

Total cost of ownership is much higher today and monthly payments are a larger part of a monthly budget compared to Back In My DAYZ wE UsE tO hAVE 12%-17%...HURRR DURRR DURRR.

Facts over armchair analysis BS


The average price of homes sold in Texas in 1980 was $61,300, close to the national average of $62,571

By 1984, the average Texas home price (AHP) climbed to $90,000, $16,200 higher than the U.S average (see
table). The subsequent recession in the Texas economy, spurred by falling West Texas intermediate crude oil prices (from $39.50 per barrel in June 1980 to $11.57 per barrel in July 1986) reduced the Texas AHP from $93,000 in 1985 to $88,700 in 1987. By that time, the U.S. economy was recovering, and the U.S.
AHP had risen to $88,600.


$80,000 house at 14%

Number of payments: 360
Monthly payment$948

Total interest paid
$261,243
Total cost of loan

$341,243


2022 Stats
Plano Housing Market
Homes for Sale
 | 
City guide
The Plano housing market is very competitive. Homes in Plano receive 7 offers on average and sell in around 18 days. The average sale price of a home in Plano was $530K last month, up 21.8% since last year. The average sale price per square foot in Plano is $221, up 17.6% since last year.

Allen Housing Market
Homes for Sale
 | 
City guide
The Allen housing market is very competitive. Homes in Allen receive 8 offers on average and sell in around 21 days. The average sale price of a home in Allen was $600K last month, up 34.8% since last year. The average sale price per square foot in Allen is $225, up 19.7% since last year


$550,000 @ 5.75% =

SUMMARYNumber of payments: 360
Monthly payment: $3,210
Total interest paid: $605,474
Total cost of loan: $1,155,474

Not so fast….


$1.00 in 1984 is worth $2.86 today.

$341,243 (your 1984 total home loan cost) x 2.86 = $975,954


Median HHI growth in adjusted dollars have well outpaced the cost of housing using your examples, a 24% increase in HHI vs your 18% example of housing cost increases (which is not even accurate as Allen is well above the median TX home value).


Median Texas HHI in 1984 = $54.786k (in today’s dollars)
Median Texas HHI in 2020 = $68.0k


So housing costs would still have to increase to be as expensive as they were in 1984….

Monthly payment on an $80k house in 1984 would take up 59% of gross median HHI.
Monthly payment on a $550k house today would take up 56.6% of gross median HHI.


*Yes, I know that the median HHI doesn’t purchase a $550k house now or an $80k house then as homeowners have above median HHI. But it’s an anchor point to compare housing costs vs income over time. And your example is comparing the average Texas home price in 1984 to a very expensive sub-market in 2022. The median Texas home price in 2022 is $325k as of June, a full $215k cheaper than your example….

Sources:
https://fred.stlouisfed.org/series/MEHOINUSTXA672N

[numbersguy100]

Originally Posted by Rakin

Interest rates are now at 5.875% and will probably break 6% soon. To me, 6% is a normal interest rate. Try paying 12-17% like we did not so long ago. And if Inflation keeps up we may see that again one day.

Your definition of "not so long ago" is tortured. The home market in the US has become reliant on very cheap financing for at least the last 14-15 years. And double digit rates on homes haven't been a thing since the administration of George Bush - the first one. I agree that we are better off transitioning to a real estate market that can handle average rates that fluctuate in the 4-8% context, but heading there after a decade of rates that never really broke 5% will be a reality check for a lot of people in and around the real estate market.

[Leonard123]

Originally Posted by mastershake575

To be fair McKinney has been an outlier for pretty much the entire pandemic. I'll have to find the article but it's from last year and it was something insane like "of the 24 neighborhoods in Collin county that have only seen single-digit growth or lower 18 of them are in McKinney city limits".

McKinney hasn't followed any of the trends.

Any guess as to why? I don't think anyone could fairly claim it to be the least desirable part of Collin County.

[NP78]

Originally Posted by TurtleCreek80

Not so fast….


$1.00 in 1984 is worth $2.86 today.

$341,243 (your 1984 total home loan cost) x 2.86 = $975,954


Median HHI growth in adjusted dollars have well outpaced the cost of housing using your examples, a 24% increase in HHI vs your 18% example of housing cost increases (which is not even accurate as Allen is well above the median TX home value).


Median Texas HHI in 1984 = $54.786k (in today’s dollars)
Median Texas HHI in 2020 = $68.0k


So housing costs would still have to increase to be as expensive as they were in 1984….

Monthly payment on an $80k house in 1984 would take up 59% of gross median HHI.
Monthly payment on a $550k house today would take up 56.6% of gross median HHI.


*Yes, I know that the median HHI doesn’t purchase a $550k house now or an $80k house then as homeowners have above median HHI. But it’s an anchor point to compare housing costs vs income over time. And your example is comparing the average Texas home price in 1984 to a very expensive sub-market in 2022. The median Texas home price in 2022 is $325k as of June, a full $215k cheaper than your example….

Sources:
https://fred.stlouisfed.org/series/MEHOINUSTXA672N

Great post. This doesn’t even take into account the average size of the median home on the market in 2022 compared to 1984.

[hbdwihdh378y9]

Originally Posted by Wittgenstein's Ghost

In my experience, real estate agents will always say it is both a great time to buy and a great time to sell.

LOL!!!!!