Dallas has been one of the strongest real estate markets in the country for quite some time. The metro just moved up on Realtor.com’s list of hottest markets from #17 in June to #14 in July. Let’s take a look at the August numbers to see if the Dallas area can maintain its momentum.
North Texas MLS Area
Average Home Price: $315,394 (up 5% y-o-y)
Median Home Price: $260,000 (up 4% y-o-y)
Number of Sales: 10,488 (down 0.1% y-o-y)
Total Sales: $3.3 billion (up 4% y-o-y)
Average Days on Market: 42 (up 8% y-o-y)
Active Listings: 25,849 (up 15% y-o-y)
Pending Sales: 9,860 (down 2% y-o-y)
*Single-family homes only.
Median Home Price: $243,400 (up 4.6% y-o-y)
Number of Sales: 2,389 (down 1.6% y-o-y)
Active Listings: 5,961 (up 14% y-o-y)
Average Days on Market: 36 (up 1 day y-o-y)
Months of Inventory: 2.8 (increase of 0.3 months y-o-y)
Median Home Price: $231,500 (up 3.4% y-o-y)
Number of Sales: 2,737 (down 0.2% y-o-y)
Active Listings: 5,958 (up 17.7% y-o-y)
Average Days on Market: 31 (down 1 day y-o-y)
Months of Inventory: 2.6 (increase of 0.4 months y-o-y)
Median Home Price: $335,000 (up 3.1% y-o-y)
Number of Sales: 1,555 (down 10.2% y-o-y)
Active Listings: 5,289 (up 19.7% y-o-y)
Average Days on Market: 45 (up 9 days y-o-y)
Months of Inventory: 3.8 (increase of 0.6 months y-o-y)
Median Home Price: $313,800 (up 6.4% y-o-y)
Number of Sales: 1,461 (down 6.7% y-o-y)
Active Listings: 4,008 (up 16.3% y-o-y)
Average Days on Market: 39 (up 4 days y-o-y)
Months of Inventory: 3.2 (increase of 0.4 months y-o-y)
Median Home Price: $248,050 (up 0.6% y-o-y)
Number of Sales: 293 (up 10.2% y-o-y)
Active Listings: 748 (up 16.9% y-o-y)
Average Days on Market: 47 (up 7 days y-o-y)
Months of Inventory: 3.2 (increase of 0.2 months y-o-y)
Median Home Price: $296,500 (up 11.9% y-o-y)
Number of Sales: 229 (down 1.7% y-o-y)
Active Listings: 739 (up 23% y-o-y)
Average Days on Market: 47 (unchanged y-o-y)
Months of Inventory: 3.9 (increase of 0.6 months y-o-y)
Information based on the MetroTex Association of Realtors August 2018 Market Report.
Trends and Happenings Impacting the Dallas Real Estate Market
Things Are Cooling Off as Fall Approaches
August saw a bit of a cool off compared to the extremely active month of July. There were a lot of sales in August, but the average price, median price, sold to list price, pending sales and number of new listings decreased compared to the previous month. There were more active listings than any other time this year, which may account for the decrease in prices.
While price gains are better year over year, the decrease in completed sales and pending sales suggest that the summer season is slowing down a little earlier in 2018 than it did in 2017.
Did the Dallas Housing Market Just Peak?
After five years of appreciation that pushed home prices up in Dallas by 55%, it seems the skyrocketing trajectory won’t hold. Home prices are expected to inch upward, but not like years before. A recent Case-Shiller Home Price Index showed growth has slowed to its lowest point in six years.
Realtors have noted in interviews with local news stations that this July and August isn’t quite the same as last summer. There are far fewer homes getting multiple offers and selling for over list price.
Real estate experts and economists alike believe Dallas, like much of the country, has likely surpassed its peak and next year will see continued slow growth. Those who are looking to sell in the next 12 months may not like the sound of that, but it’s actually not such bad news. The double-digit increases from a few years ago just weren’t sustainable, especially in an area where affordability has long been a concern. Buyers being priced out of the market is partially to blame for the decrease in home sales we’re now seeing.
In the long run, slow growth is much better than a bust because locals simply can’t afford to own in Dallas. The area may have passed its peak, but it’s still a strong, steady market that’s poised to stay that way.
More Homes on the Market is Playing a Role in the Price Slow Down
Real estate pricing is largely about supply and demand. When there are more buyers than there are homes for sale sellers are able to up their asking price. Metrostudy notes that a boom in building on the outskirts of Dallas has helped to balance the market somewhat and give buyers more of a selection.
In Q118 DFW had more new home starts than anywhere else in the country. There were 7,537 to be exact. This was following Q417, which was even more active. Then in Q218 there were 9,907 new home starts and 17,412 units under construction. With numbers like that it’s no wonder new home closings are increasing year-over-year by double digits while resale closings are down.
Beyond the increase in inventory, many of these new homes are being offered at a price under $300,000. This is what real estate pros are calling the “new affordable” for the Dallas metro . For homeowners that haven’t bought in more than 10 years that will seem like a lot for the area. Metrostudy expert Paige Shipp says in 2006 the majority of new homes were priced below $200,000. Today that number has dwindled to just 5% of homes in the DFW metro.
Builders have made a conscious effort to keep home prices low despite increases in land, labor and material costs. They’re building smaller homes with streamlined designs on smaller lots. But the new home starts aren’t in the conventional DFW markets. To keep costs low, builders are branching out to areas like Kaufman County, Midlothian and Royse City. That’s drawing buyers further away from the big cities and nationally known suburbs.
Even though prices are somewhat suppressed by the new inventory, building isn’t likely to slow anytime soon due to demand for housing. In August 2018 there were 827 lot and vacant land sales in North Texas - a 16% year-over-year increase. Year-to-date lot and land sales are up by 12%.
South Dallas is the New Hot Spot in the DFW Metro, but Pricier Areas Up North Aren’t So Active
Southern Dallas proves real estate is all about location - and affordability. In this region real estate agents say the market is just as hot as it’s ever been mostly because there’s a selection of good homes priced around $250,000. While north Dallas neighborhoods are selling for around 97.5% of list price, homes in south Dallas can still get above list price thanks to competition.
Oak Cliff is another area where real estate hasn’t seemed to peak. Here inventory is still low, which is a major factor for why it’s such a hot spot right now.
Data from the Real Estate Center at Texas A&M University and the North Texas Real Estate Information System (NTREIS) identified some of the hottest markets this August based on closed sales. They are:
- Arlington Central NE (Area 84)
- Grand Prairie-New 2 (Area 273)
- Lancaster (Area 3)
- Arlington SE (Area 88)
- Watauga (Area 128)
- Dallas Southeast (Area 13)
- Arlington Central SE (Area 86)
- Weatherford SE (Area 141)
- Dallas South Oak Cliff (Area 15)
- Parker County 152 (Area 152)
In all of these areas inventory is much lower than the average, particularly in Grand Prairie-New 2 where there’s just 0.7 months of inventory.
Experts agree that high-priced neighborhoods have seen a slow down that isn’t likely to end anytime soon. Areas where the average home price is over $400,000 aren’t epicenters of buying and building activity like they were just a year or two ago. North Dallas has seen a significant drop off in new home starts now that California relocation has leveled off. Just 23% of new home building in the last 12 months has been at the pricepoint of $350,000 or higher, which means high-end neighborhoods won’t see much growth.
Jobs Are a Bright Spot for the Dallas Real Estate Industry
Last year Frisco had the highest percentage of population growth in the entire country (8.2%). Plano also saw a surge in new residents that were relocating from California.
Why such strong population growth in the Dallas Metro? Jobs, jobs and more jobs.
The last couple of years have been good for jobseekers in Dallas. So good, Forbes recently ranked Dallas the best city for jobs for the second year in a row. One factor that works in Dallas’ favor is steady job growth across a variety of sectors. Not surprising, construction is one of those sectors.
The Texas Workforce Commission data shows that between May 2017 and May 2018 North Texas added 122,000 net new jobs. There’s been a job expansion of 26% over the last eight years, and there’s no reason to believe job creation will disappear. Currently the Dallas-Fort Worth-Arlington unemployment rate sits at just 3.6%.
As real estate agents know, when unemployment is low sales are high. Just where those sales will occur within the DFW metro in the coming months is still to be determined.