So. It’s 2012 and we have been at this for what now, three years? Our market first started feeling the pinch about 2008. Texas is like the caboose on a long train: we are the last to fall off the cliff.
Foreclosures skyrocketed from 2008 to 2011. The folks at Standard & Poors are now saying that home prices are back to 2001 levels. Foreclosure rates in the Dallas-Plano-Irving area for September are slightly higher than 2010’s rate, according to a housing report released by CoreLogic. The same company also told us last month that the current residential shadow inventory as of October 2011 remained at 1.6 million units, or a supply of 5 months. This was better than October 2010, when shadow inventory stood at 1.9 million units, or 7-months’ supply, but approximately the same level as reported in July 2011. The flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (both short and real estate owned) sales.
In other words, we are crawling very, very slowly out of this mess. I almsot feel two steps ahead, one point five back.
Now comes a report from one of my fave real estate researchers, Local Market Monitor. I love these peeps. Looking at the economic conditions in Dallas-Plano and Irving, Texas, here’s what Local Market Monitor says we can expect: home prices are forecast to decrease by 2% over the next 12 months. (But! The nation can look forward to a 3.9% price dip.) After that, they are expected to increase 1% in 2013 and 4% in 2014. That’s a net gain of 1% by 2014. Good stuff: our population grew 2% while the nation’s grew by only 1%. Same old, same old; doesn’t mean home prices IN EVERY NEIGHBORHOOD will decrease by 2%, just that it will still be a buyer’s market. Sellers, more than ever, get real on pricing.
But here’s what kind of worries me: the rental market. LMM says our rents are projected to increase by 17% over the next three years in this market. Average rent to be $1037.
This is why today’s buyers are really in the drivers seat. If you can afford a home or investment property, you’re locking in at the lowest price and getting the BEST. RATES. EVER.
“Monthly rent on average is roughly 2% of local per capita income, but there is lots of variation,” says Carolyn Beggs of Local Market Monitor, Inc.
Rents, she tells me, are forecasted to increase by 4.74% over the next 12 months, then 5.60% over the following 12 months and then by another 5.82% after that.
“There is a strong rent forecast in this market,” she says.