Far East Dallas is swarming teeming with work trucks as investors, eager to catch the wave of demand within inner-loop neighborhoods, remodel homes on these close-quartered blocks. But even with all of the flippers tacking up new drywall and painting these post-war ranches varying shades of gray, supply of move-in ready homes hasn’t kept up with demand. Because of these market dynamics — the Dallas-Fort Worth-Arlington metro area’s net population growth is at about 974,000 new residents since 2010 — prices are surging, breaking new records.
Of course, one can’t help but wonder if this breakaway price growth could mean that a bubble is about to burst …
According to statistics from NTREIS and the Real Estate Center at Texas A&M University, May 2018 pre-owned home sales reached 11,302 for the region, a 9 percent increase from May 2017. Additionally, year-over-year price growth came in at 5 percent, with a record-breaking median price of $266,500 and an average price of $323,216. The average price per square foot for existing single-family homes is at $137, a 4 percent increase over last year. And the average days on market is 39, a 4 percent increase from the same period in 2017.
The area of the market seeing the biggest changes, however, is the high-end. Luxury real estate, which generally includes homes priced at $1 million or more, is moving more slowly. Here’s what sources told Steve Brown in his report:
May’s price report followed a shift to more modest home appreciation in the area this year. Last month’s percentage home price gains were half what they were in May 2017 when prices were 10 percent higher year-over-year.
“The price appreciation for more expensive houses has really flattened out,” said Ted Wilson with Dallas housing analyst Residential Strategies Inc. “We have a very limited amount of inventory at the lower price points, and that’s were a lot of the price appreciation is taking place.”
Sales of North Texas homes price below $180,000 are down sharply in 2018 due to a lack of lower cost houses on the market.
“There is an ample amount of inventory at the higher price points – more than there has been,” Wilson said. “But the supply of affordable houses is very tight.
The biggest concern, of course, is long-term affordability, especially with reports showing that 7.7 percent of home sales in the Dallas-Fort Worth region were purchases by flippers, up 2 percent from last year. With investors, the purchases are typically cash sales, a tough standard for traditional home buyers to meet.
“The lack of houses for sale is probably why the rate is steady over last year even though demand for houses by other investors has never been higher,” said David Hicks, CEO of Homevestors, a real estate investment company with more than 900 local franchises across the country. Hicks added that more than half of homes purchased by Homevestors franchises are now flipped, compared to about one-third historically. “Our franchises have actually bought 33 percent more houses year-to-date over 2017. Sales are up 32 percent, so we are on track to have a banner year.”