Florida Guy Says Dallas Housing Market is Like Miami, About to Take a Plunge: Nuts

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The One and Only, Miami Beach

Why in the world would you compare the Dallas housing market to Miami?

At first glance, I thought this may have been irresponsible real estate reporting on the part of WFAA-TV, but it is not. It’s basically taking a look at a nutcase in Florida who says our market is in for a 35% value decline, or crash as he likes to call it. That nutcase is Professor Ken Johnson of Florida Atlantic University. Dallas is 2008 all over again, he says:

“I can see no sign that prices will continue on like this for an indefinite period of time,” he told us.

Johnson helps to put together the Buy vs. Rent Index, which advises whether it’s more financially beneficial to lease or own in cities across the country.

Right now, the index strongly recommends renting over owning in North Texas, and suggests that renters would be much more likely to increase their wealth by investing in things like stocks and bonds instead of local real estate.

In fact, since last summer, every time we’ve checked in with Johnson, he has progressively warned that home prices in North Texas are poised to fall.

But then every time, home prices surge higher.

Now Johnson or his index apparently predicted the nationwide housing crash in 2006 and 2007.

“Dallas is where Miami was in 2005.  There are storm clouds all around,” he warned.

Johnson even advises homeowners in North Texas who might be considering moving away in the next one to three years to sell now and rent until they leave; he’s that certain that prices are about to go flat or go down.

Perhaps way down.

“We could see a doomsday scenario where we could see a 25 percent drop over the next one to three years,” he said.

Funny, that’s exactly what some agents tell me their clients are saying. But would a 25% drop in Dallas real estate prices be a doomsday scenario? Maybe for Andy Beal, but what does he care?  I think this guy is just looking for attention. Maybe he ought to try bashing Megyn Kelly?

Here’s the deal: Miami is a vastly different market than Dallas. Highly dense, limited land space, ocean, condos. Lots of condos. We saw the One and Only and a new Ritz Residences that starts at like $3 million. Buyers tend to come in from abroad and South America, in fact, Miami is practically a South American city in the U.S. We had NAREE there this past June, and I love the place. Would move there in a heartbeat. Back in 2008, I may remind Professor Johnson, the U.S. housing market was being fueled by ridiculously loose lending practices — remember when they were giving anyone who breathed into a mirror a loan? Nowadays you can get a mortgage with good credit, a steady job and a down payment.

To quote Britt Fair — who I think knows a lot more than Professor Johnson — “Miami is much more of a condo market (less land ownership than DFW). To compare Miami in 2005 to DFW today is mere hyperbole to grab headlines. The fundamentals of DFW economy are the best in the U.S., and all the people and jobs moving here are forming the solid base for our home prices.”

So a note to the good folks at WFAA and that cutie pie Jason Wheeler: it’s all about the jobs. When we see unemployment creep upwards, and when companies stop moving to Billion Dollar Mile in Plano, when companies pick up and leave the area, then I’m going to call my doctor for some Xanex. Do I think the market has gone as high as it’s going to go? We are close. Do I think it will come crashing down? Not likely unless conditions change very much, very rapidly. Dallas has grown, matured. Even oil prices take a few months to be noticed. Interest rates are still very low, and will keep a lot of people in their homes. Japan right now is battling negative inflation — the Bank of Japan has gone SUB ZERO.  And the last time I looked, our stock market had plopped.

An investment guy told me the other day to think about oil like this: it’s down now, but the demand is still there. As long as there is a demand for Dallas real estate, I’m cheering.

7 Comment

  • You’re right Candy. Plateau, sure. Backpedal a bit? Maybe. Crater? Not without something global happening. Florida also has a huge percentage of vacation home/condo ownership…versus No-Playa Dallas. If the economy goes south, that’s what gets sold first, not the primary residence.

  • Before one sells their single family home in DFW,, just see what one can rent first. There is just not much out there to rent as a single family home.

  • mm

    Another pearl of Johnson’s logic. “… over the traditional U.S. housing tenure period of eight years, renters in Dallas and Denver have an 85 percent probability of outperforming homeowners in terms of wealth creation. For renters in Houston, the probability of outperforming homeowners is 95 percent. These probabilities are based on the assumption that renters invest any amount that they otherwise would spend on down payment and other homeownership expenses in excess of their rent amount into a diversified portfolio of stocks and bonds.” Is that what the average renter does? Renting versus owning never changed my investment strategies.

  • Thank you for putting innuendo in its place.

  • Miami is all about rude South Americans these days that will walk over top of you rather than be polite.

  • My sister lives over in the Fort Worth area near TCU. Their property taxes are right at $15,000 per year. Good thing she’s a doctor, or I wouldn’t understand how she affords to live in her neighborhood!