The Dallas home market is full swing as new buyers enter the market every day. What is the actual health of the market though? Are people being priced out? Is there an actual shortage of homes? It can seem like a madhouse out there as buyer after buyer is trying to get into his or her home choice only to see it go to another bidder who sometimes overbidding thousands of dollars.
To look at the chart below and to think quickly on the subject one may have the initial knee-jerk reaction of, “wow, great, my home will sell fast and for over asking price – what are we waiting for”!?!
You can certainly feel that way until you look at the big picture and that’s when the fear kicks in…
What happens when I buy?
This all looks great for you when you sell your house, sitting in the seat of power, and depending on your asking prices, the location of your home, the condition of your home and the agent you choose to work with – you may have a fast, lucrative sale.
Yet, when you enter the market as a buyer, aren’t you going to be in an opposite position, fighting off other buyers and paying over asking price for your next home.
You’ll be a buyer and yes you will be competing against other buyers, however, as long as you work with your Realtor to get yourself in the best position possible to write an offer on the home you choose, you should still be able to get a great property. Let us assuage your fears on home buying even though you may be asking yourself the following question…
Is buying in Dallas still a good investment?
Let’s face it ya’all. Texas isn’t like the rest of the country..we’re, well Texas! We’re the state that is going to see flying cars in 2020 (along with Dubai). We’ve just finished the $6 billion mile called Legacy West. We’ve become the headquarters for Toyota, Fed Ex, Sprinkles Cupcakes and soon Boeing. Our growth has been Texas sized and that growth will help protect our property values and housing market growth in way that the rest of the country may not see.
According to the Star telegram…
The cost of housing is rising dramatically, but the demand for housing for new residents moving into the state ensures that plenty of prospective buyers will always be around — at least for the foreseeable future.
“It’s still relatively affordable for a family to get into a big home,” said Javier Vivas, director of economic research at Realtor.com.
“We can only predict so far into the future, but if you look at the next 12 months you’ve got a good economic foundation, and employment growth twice as fast as the rest of the country,” he said. “If you look at an investment for young people, in particular, you’re really buying into the neighborhood, and if it’s a fast-growing neighborhood in Fort Worth or Arlington those will be good investments.”
See what we mean? Texas.
North Texas is projected to have the second-highest increase in home sales in the U.S. in 2018, behind only the Las Vegas area, according to a national housing forecast by Realtor.com. The Metroplex is projected to have a 6.02 percent increase in the number of residential retail sales and also a 5.57 percent spike in the price of homes for sale.
Nationwide, the forecast projects a more modest 2.5 percent growth in existing home sales as the supply of available houses for sale finally begins to catch up with demand.
The population is now 7.1 million in the 12-county metropolitan statistical area tracked by the North Central Texas Council of Governments, the region’s official planning body. That population is expected to grow to about 10.7 million people by 2040, according to the council of government forecasts.
Over the next few years, residents whose incomes don’t steadily rise could find themselves pinched if housing prices continue to go up.
How much a family should spend on a home depends upon many variables — including whether applicants have children, large amounts of outstanding debt, etc. But one rule of thumb is that mortgage lenders will typically approve applications for mortgages equal to 30 to 35 percent of their pre-tax income.
Personal finance experts differ about whether prospective homebuyers should borrow that much, with some arguing that about 30 percent of after-tax income is a better ratio for most households.
Fueled by job growth
North Texas will have to continue its current home-building binge to keep up with growth, as roughly 100,000 new residents move into the region each year, many seeking jobs in the Metroplex’s growing employment base.
Tarrant County and southern Denton County not only generate their own jobs, with employers such as Schwab and Lockheed Martin recently announcing hiring plans, but also benefit from a spillover effect of development in other growing areas such as Frisco, Vivas said.
The Dallas-Fort Worth region is the ninth fastest-growing metro area in the U.S. based on rising home ownership levels, he said.
Nationwide, the supply of available homes for sale are expected to increase next year for the first time since 2015, holding down the cost of home prices to an average of 3.2 percent higher than in 2017.
Also, the inventory of available homes for sale nationwide has hit its all-time low, with only about a three-month supply of housing available, according to the Wall Street Journal. That trend could continue to push the cost of buying a home further upward.
As recently as 2010, a nearly 12-month supply of homes for sale was available.
The lack of inventory is even more striking in Tarrant County, which only has a 1.8-month supply of homes for sale, according to North Texas Real Estate Information Systems. Homes for sale in Tarrant County are staying on the market an average of only 34 days.
New tax burdens
Lawrence Yun, chief economist for the National Association of Realtors, is one among many experts concerned that changes in federal tax law could put a damper on growth in home sales in Texas and across the country.
He said portions of the new federal tax law approved by Congress could limit homeowners’ income tax deduction for property taxes and mortgage interest paid on a home.
The most dramatic effect will be on prospective buyers of high-end homes. For example, the new law allows home buyers to deduct interest payments on mortgages up to $750,000.
The new law also caps the amount of property and state income taxes that can be deducted at $10,000. Since Texas doesn’t have a state income tax, the overwhelming majority of residents likely won’t hit this cap.
For example, the owner of a hypothetical home valued at $400,000 in the Keller school district with a homestead exemption would pay $9,784.76, according to a Tarrant County online calculator.
“The higher-end market is getting an additional burden. That’s where there is some softness,” Yun said.
But overall, Yun said, states such as Texas with no state income tax will still be a more attractive place to buy a home than places such as California or New York.
“If the 5 to 6 percent of home sales growth was calculated before the tax changes, you may have to shave it to 3 or 4 percent growth,” he said.
Now’s the Time
It all comes down to this, if your circumstances are such that you want/need to sell your home to get a new one. Now is a great time to do so and the very best first step you can take is to find the value of your home. The second is to schedule an appointment to sit down and review your personal circumstances in order to draft up your gameplan and implement it with your trusted Realtor together, as a team.