Local Market Monitor February

The Local Market Monitor Report for the Dallas, Plano, and Irving areas calls the real estate market “Low Risk.” This is echoing what we’ve heard since November — prices are up, homes are on the market for a 30 to 60 days, inventory is low.

The report forecasts a 3 percent increase in home values over the next twelve months, and says the recession is pretty much over for our area, as jobs are growing, too, thanks to our large finance sector. So there are fewer homes on the market, more demand for homes, and a job growth rate that is almost twice the national rate …

 

That got me wondering. In some areas, I’m seeing the same signs in the same front yards that have been there for months. If the market has such awesome momentum, why aren’t some of these perfectly fine homes in an otherwise great area not selling?

Take this cute, well-preserved midcentury modern in the Ash Creek area of East Dallas. We’ve said (pretty much ad nauseum) that this area has amazing momentum and is growing like gangbusters. Still, this steal of a deal isn’t selling. I wonder why?

What do you think? Are buyers being more picky than normal despite the low inventory? What are you seeing buyers turn their noses up at?

 

 

Local Market Monitor February

The Local Market Monitor Report for the Dallas, Plano, and Irving areas calls the real estate market “Low Risk.” This is echoing what we’ve heard since November — prices are up, homes are on the market for a 30 to 60 days, inventory is low.

The report forecasts a 3 percent increase in home values over the next twelve months, and says the recession is pretty much over for our area, as jobs are growing, too, thanks to our large finance sector. So there are fewer homes on the market, more demand for homes, and a job growth rate that is almost twice the national rate …

 

That got me wondering. In some areas, I’m seeing the same signs in the same front yards that have been there for months. If the market has such awesome momentum, why aren’t some of these perfectly fine homes in an otherwise great area not selling?

Take this cute, well-preserved midcentury modern in the Ash Creek area of East Dallas. We’ve said (pretty much ad nauseum) that this area has amazing momentum and is growing like gangbusters. Still, this steal of a deal isn’t selling. I wonder why?

What do you think? Are buyers being more picky than normal despite the low inventory? What are you seeing buyers turn their noses up at?

 

 

Flyer Box 001A reader writes:

Dear Candy: Thinking about selling my house. I have been told that inventory is incredibly low on my type of house: 6600 square feet, built in 07, area 11 (North Dallas), price probably $1.45 – $1.49.

So the dilemma…. I really need to wait until this September so that I will have been it in two years and not have to worry about Capital Gains.

In your opinion…. do I strike while the iron is hot? Or wait the until September so I don’t have to worry about my Cap Gains and HOPE that the Congress and this sequester does not kill the market?

I know you will know the answer, you are after all the GURU of Dallas real estate….

Thanks — PJ

Dear PJ:

Thanks for elevating me from House Porn Queen to Guru! This is a toughie. There is no doubt segments of our market — areas 11, 12, 18 and 25 — are red hot. We are down to about 4 months of inventory. Perusing MLS, prices are firming but we are not yet at full asking price or over asking price. We have a lot of people moving to Dallas/Ft. Worth, and interest rates are so low I told my son he basically has a free loan at 3%. Banks still on the stingy side, but if your home is ready to show, this is the perfect time to sell.

Here’s your problem: most families will want to get in the home by fall to get settled for school. But then, if you wait, you will have more inventory competition. The million dollar question is how long this active market will be hot, which is dependent on so many elements, as you noted. Those of us who have lived through a couple busts tend to say strike while the iron is hot, before it freezes! We are very fortunate we are not Chicago, but like you say, those Bozos in D.C. are capable of just about anything.

I’d put it on the market late spring, see what happens, and check out the possibility of a delayed closing. The sale is official in the eyes of the IRS when it is closed and funded. You just never know just what might work for one particular buyer. But we will ask our REAL experts to chime in next!

Thanks for writing!

I know that with inventory so low, it is mighty hard to find homes out there. The new thing is to find a home BEFORE it hits the market! If you are looking in Preston Hollow, very close to St. Mark’s — we are talking roll out of bed and you are in your classroom — here is a 5900 square foot beauty with five bedrooms, five and a half baths, great pool and spa, one-third acre, newer than new, and only $1,250,000. Might be listed next week, unless you want to buy it first! I LOVE that master bath!

Really nice piece here in the New York Times explains why we are beginning to see home prices creep — I said CREEP — upwards,  even in markets like Phoenix and Las Vegas: lack of inventory. It’s a very similar situation here in parts of Dallas, mostly the Park Cities, Preston Hollow, and Lakewood: hip pocket is becoming a mainstream word, as agents clamor for listings. There’s just not enough to go around for several reasons:

-Builders credit died up, so builders are not building as many specs. Few specs, in fact.

-It still is much harder to get a mortgage, especially if you are self-employed.

-People pulled back from selling unless they had to.

-People leased in lieu of selling, holding out for rosier prices.

-In some cases, the foreclosure inventory has gone down or is being held back by the banks.

David Blitzer said it best:

 “Because of new buyers having difficulty getting mortgages and because of the still-large number of foreclosures hitting the market in some parts of the country, it’s hard to say that we’ve turned a corner,” David Blitzer, chairman of the index committee at Standard & Poor’s, said in an interview.”

Bottom line: don’t get too excited. The market is improving, but we are not out of the woods, yet. Still, that home pictured? Custom build by Tatum Brown Custom Homes. Glorious. Sold without even being on the market about two seconds after the owners decided they might want to sell.

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.