2020: Expecting Another Banner Year for the DFW Market

Experts are Expecting Another Banner Year for the DFW Market

Featured image: Ryan Michalesko / Staff Photographer for DMN

The Texas housing market had a “banner year” in 2019, and looks to be heading for another one, a top economist said at a recent seminar at the Federal Reserve Bank of Dallas.

Nine years after the housing market’s downturn, housing sales in Texas have returned to their pre-recession peak, said Jim Gaines, chief economist at the Real Estate Center at Texas A&M University.

“That prior peak was back right before the Great Recession,” Gaines said. “It was very artificial. It’s pretty easy to have a lot of home sales when anybody who could walk into a bank and fog a mirror got 110 percent financing.”

The Real Estate Center is predicting an increase in home sales in Texas of about 6 percent in 2020, which would beat the 4 percent increase in 2019, Gaines said. Home prices statewide are predicted to rise 5 percent to 6 percent in 2020, after increasing about 3 percent in 2019.

“We’ve had an outstanding decade, and the market is still really strong,” he said.

Population projections for the next 10 years call for the addition of 5.2 million Texans, including 1.6 million in Dallas-Fort Worth, 1.7 million in the Houston metro area, 622,000 in Austin and 563,000 in San Antonio, and the population and job growth are driving the housing market, Gaines said.

Last year, job growth weakened slightly in Texas, from 2.4 to 2.2 percent, as the energy industry declined and labor market constraints continued to suppress job growth, Gaines said. This year, less trade uncertainty is a positive, although the energy sector will remain a drag, he said. Election uncertainty may restrain business investment, he added.

Texas unemployment is at 3.5 percent, a tick lower than the 3.6 percent national rate, Keith Phillips of the Federal Reserve Bank of Dallas said at the seminar. The low national rate is making it harder for Texas companies to lure workers from other states, Phillips said.

“It’s a great time to be a worker,” Phillips said. “Not so much to be an employer.”

Article source: Dallas Business Journals

Real Estate is Transforming and DFW Leads the Way

With appreciation slowing, there are faint indicators of a market shift steeping—but for agents and brokers, prospects are ripe, and will continue to be in 2019, according to a report by the Urban Land Institute (ULI).

“The notion that real estate is a people business has, thankfully, not dropped out of the conversation,” the authors of the report state. “Human capital has been very much a part of the driving forces in real estate demand.”

From affordability to disruptors to the inventory shortage, challenges have emerged in housing in the last 10 years—challenges expected to lead to a normalization in two or three years, along with a broader economic stabilizing. According to the report, breakthroughs come from embracing, not fighting, the shifting tide.

“The real estate market is experiencing more than just a transition from one stage of the typical real estate cycle to another—the market is dealing with transformation on multiple fronts,” the authors state. “While all the changes may seem daunting, and there are increased risks, there are also opportunities for those who are prepared to move forward in the transformed real estate market.”

The most critical issues, according to the report, are the costs of construction, which has been impacted more recently by tariffs, and land, which is scarce. When it comes to affordable housing, the margins, simply, are slim.

For brokers, builders and other constituents, adopting creative fixes is key. Areas like Boston, Dallas-Fort Worth—No. 1 for opportunity, according to the report—and Denver are attracting a diverse pool of talent; builders are developing in response, with future homeowners and their interests in mind.

“Success will emerge from those markets that tackle their problems innovatively—requiring precision in providing the right real estate in an increasingly specialized economy,” the authors state. “Success will elude those markets remaining passive or stubbornly applying 20th century approaches—real estate expansion to ride economic growth—to 21st century challenges.”

In Dallas-Fort Worth, there were a collective 37,000-plus newcomers over one year, according to Census estimates from 2016-2017. In Dallas, home prices are up 4.7 percent year-over-year, but the amount of listings on the market is perking up, as well—a help to the millennial workforce. For millennials, a DFW-area home is easier, relatively, to save for: According to a RealEstate.com report, they can accumulate enough for a down payment on an entry-level home in about three-and-a-half years.

Millennials are not the only ones with promising prospects. DFW was named one of 2019’s Best Places to Retire by U.S. News & World Report for its affordable housing, among other factors.

If you are thinking of buying or selling a home, contact The Indigo Skye Group to learn about your local market conditions and what options are available to you. 

 

Related article: How Will Home Sales Measure Up Next Year?