Dallas Now One of Top Ten Overheated Real Estate Markets in the Country
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Well this is newsworthy: Dallas beat out LA and Fresno, California, to make it onto Realtor.com’s newest list of the country’s 10 “overheating real estate markets.” This despite the calls last year from experts who said the downturn in oil prices would do us in.
Of course the top winners are San Jose and San Francisco, poster child cities for overpriced housing. They head the list of cities that Realtor.com analysts said are on their “bubble watch,” as they have been for quite some time. I mean, one of these days, pop!
Why is it dangerous to buy homes in a bubble? Because you will pay top dollar that may not hold value if the market tanks or heads south. If your mortgage is larger than the home appraises for, you could be in hot water or rather, “underwater”, should you have to sell it. That was the basic lesson of the Greatest Recession.
Realtor.com examined the 50 largest U.S. home markets for risk factors such as rate of home price increases, inventory, median wages and new home construction.
“Although the local oil industry took a beating, prices in the Texas city still ballooned 9 percent last year,” the report said about Dallas. “That’s because more companies are moving and expanding into the area, such as Toyota relocating its North American headquarters from California to nearby Plano.”
When will it stop? Will it stop? Maybe home prices will just take a stairway to heaven forever?
Smoke is predicting that price increases in the 10 hot U.S. markets will slow or stop when buyers can no longer afford properties.
What he means is when there are no jobs or income to cover the properties.Already Realtors are seeing a slowing in the luxury home market. Homes below $500,000 — flying off the shelves. Homes about $2.5 million and up: sitting.
North Texas median home sales prices are now higher by 80 percent over where they were at the pits of the Great Recession. And that’s why you are seeing bidding wars and record high sales for moderate priced homes.
Steve Brown says the median price of a preowned single-family home sold in North Texas hit $237,000 in June, an all-time high for properties sold by real estate agents. The median is closer to $300,000 closer inside the loop.
“I did an exercise yesterday,” says one agent. “I pulled ALL sales in Highland Park from the last 365 days on homes between 5000 – 7000 square feet large. In all of last year, there were 30 sales in HP with this criteria. At the current time there are 34 active listings between 5000 – 7000 square feet! MORE THAN SOLD ALL LAST YEAR. There are only 3 properties in this category pending, and the average days on the market for those three homes are 233 days! But sellers are hearing and reading that real estate is hot and prices are up. How do we show the reality? “
Perhaps, she muses, there are so many listings because sellers have listened to the news and thought this is the best time to sell and cash out big.
“I don’t know how long it will take for this market to turn around.”
Or for those prices to come down, if the properties are not moving.
What is is your sense of the current market? Is it beginning to feel like a bubble? I have heard top agents say that last year was the year to sell, not this year, you agree? Inquiring minds want to know!
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Great article! When compared with other hot cities on this list, especially on the West Coast, Dallas is still extremely affordable overall, and with all of the new job opportunities with new companies moving into DFW, I think we have a long way to go before there is a bubble. The lower to middle priced homes are still flying off the shelf with multiple offers. It is definitely still a sellers market but is also a great time to buy as interest rates are still ridiculously low and at a 9% rate of appreciation currently (or higher in some areas), a $250,000 house today will cost $272,500 next year.
In an era in which North America is facing a shortage of talent with productive skills, one regions home prices as compared to a year hence is probably not relevant.
The best companies are moving to where the talent is available and where these elusive creative class wunderkinds can afford to live, burdened as they are with lower mid six figures in student loan indebtedness.
A company who absolutely has to recruit 100 exceptional software engineers to stay at the top of its niche might well chose Dallas as a headquarters site over Seattle, in which the furor to acquire any livable home is torrid, with there being 4,200 immediate and unfilled job openings for software engineers:
http://www.geekwire.com/2016/seattle-home-prices-may-redfin/
In Silicone Valley, the home prices have gotten so ridiculous that some lower echelon workers have taken to sleeping on the 24/7 buses that run routes throughout the area.
Every tech employer has showers for employees, as many prefer to bike to work, so they freshen up between shifts and the employer provided meals there.
Well maybe we could try that technique for homeless kids in Dallas.
As an Oak Cliff homeowner in a neighborhood with homes under $300,000, this is all fine to me. I have no sympathy for people who can afford 6,000 sq ft homes or their anxiety over when is a good time to sell. I mean, even if they suddenly became homeless they could slum it in their rich friends’ second homes for a while.
I want prices in my area to stay affordable to first-time homebuyers. I want Oak Cliff to be the go-to place for young, creative people to start a business and raise a family. That means more older homes in Elmwood and Kiest will need to be updated to a certain standard. Investors, take note.
Absolutely. We need affordable housing in Dallas!
Great info – thanks Candy!