Real Estate Still Waiting For Its Own Black Friday

Apocryphally, Black Friday is the day when retailers finally turn a profit on the year (not the color of your mother’s bruises getting you a Cabbage Patch doll).  Yes, the month between Thanksgiving and Christmas is the only profitable month and it’s so profitable it makes up for the losses of the remainder of the year.

Real estate is waiting for its own turn at profitability from the depth of the Recession.  You may be cowed into thinking that all of that is behind us. Nope.  You may think that Dallas has recovered.  Nope.

ATTOM Data Solutions just published their findings on the state of the market for third quarter 2017 and the Metroplex results may surprise you.  Let’s get my ZIP code out of the way first.  As seen above, in tony Preston Hollow — bounded by Walnut Hill, Lovers, the Dallas North Tollway and Central Expressway — there are 702 properties listed as having over 25 percent more mortgage owed than property value (Loan to Value ratio or LTV). That’s 13 percent of the housing stock in the ZIP code. Oh, and it’s grown seven percent, or 46 homes, from a year ago.

In the area just north of Galleria and Valley View Midtown Dallas in ZIP 75254, it’s 491 properties or 20.5 percent of properties with over 125 percent LTV, up 5 percent from a year ago. East of Central Expressway in ZIP code 75206 — from Fitzhugh to Northwest Highway — 8.5 percent or 485 homes, unchanged from a year ago.  In 75205, which includes parts of Park Cities from Fitzhugh to Lovers between the Dallas North Tollway and Central Expressway, it’s 799 homes or 16.2 percent of homes, growing at 8 percent this past year.

On the upside, the biggest gains have been made in Southern Dallas in ZIP codes 75216 and 75217, where the rates of seriously underwater homes dropped by 18 and 4 percent, respectively. Both still have between 8.6 and 7.4 percent of their homes in this category (1,197 homes combined), but they’re chunking through that more quickly than other area ZIP codes.

The biggest reason is what I’ve been pointing out in my Southern Dallas Buyer’s Guide series … it’s very close to downtown, decent light rail service, and really affordable. Couple that with minority areas still shaking off redlining, the outsized hit these areas took during the Recession, and a group of home buyers priced out of other areas, and you get an area poised for a renaissance. Fold in the coming 20-acre Smart District between the convention center and Farmer’s Market and ka-boom.  Heck, Smart District might even get the city off its ass on Fair Park.

The outer burbs fared better than close-in neighborhoods of Dallas, but a surprising number are still growing their underwater homes rather than shrinking them.

Just when you thought Dallas was the wunder-city, data offers a jolt no coffee can.

 

Remember:  High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement.  If you’re interested in hosting a Candysdirt.com Staff Meeting event, I’m your guy. In 2016 and 2017, the National Association of Real Estate Editors has recognized my writing with two Bronze (2016, 2017) and two Silver (2016, 2017) awards.  Have a story to tell or a marriage proposal to make?  Shoot me an email sharewithjon@candysdirt.com.

6 Comment

  • Interesting data Jon.
    The only thing I would disagree with you on are the boundaries of Preston Hollow.
    Everyone knows that the most valuable land and homes in Dallas are in what I call the “Golden Corridor.”
    This is the area 1 mile on either side (both East and West) of Inwood Road.
    The boundaries of Preston Hollow are: Hillcrest on the East, Midway on the West, Forest on the North, and NW Hwy on the South.
    Preston Hollow derives it’s name from the geological hollow created by Bachman Creek and it’s tributary creeks. It is an actual physical hollow created by the watershed into Bachman Lake.
    Thanks for the informative article and best wishes for the Holidays !

    • mm

      Happily, you’re not disagreeing with me per se. The data boundaries are set by zip code and so don’t follow specific neighborhood contours. It’s safe to say a majority of 75225 would be considered Preston Hollow but also include parts of UP and other neighborhoods.

      • Exactly – therein lies the problem – 75220 covers a very wide range of Preston Hollow Multi-Million Dollar Mansions and also neighborhoods immediately to the North end of the Love Field Runways
        inhabited by recent immigrants.
        But as you said because often times when data is aggregated by Zip Code and I concede a sliver
        of 75225 would fit that description.

        I was just amazed that you didn’t include the critical area WEST of the Tollway (the area that straddles Inwood between the Tollway and Midway) – which is the true “heart” of Preston Hollow.
        Best wishes for the Holidays !

        • mm

          75220’s numbers are 252 actual homes which are 7.1% of all homes in the ZIP and that percentage has declined -1% year over year.

  • Jon, how confident are you that these numbers are correct? Any idea how accurate this ATTOM group has been in the past?

    I’m highly skeptical of these findings. Who are the lenders on all these 125% LTV deals? Or were they 100% LTV deals where the value of the property has dropped 20% since loan inception. Regarding 75225, I know that high-end pricing has been weak for the last couple of years, but not THAT weak, and that weakness followed 3-4 years of significant price appreciation at the high end. I don’t get it.

    • mm

      ATTOM has been around 20 years and is behind RealtyTrac so I assume a credible source. However, I too was surprised by the uptick in some north Dallas neighborhoods. By association, what rings true is southern Dallas numbers declining because it was hit harder by the Recession and so had a deeper hole to dig out of when the market turned.