by Seth Fowler
(This article appeared in Candy's Dirt. It is specific to the Ft Worth side of the Metroplex, but the facts are the same for all of North Texas.)
Some will agree, and some won't, but data doesn't lie — we are heading into a real estate slowdown.
First of all…R-E-L-A-X. No, we are not heading toward a recession. No, the housing market isn't crumbling. No, it's not time to sell your home, stock up on canned beans, ammo, and get off the grid. But the real estate market is changing … dare we call it a slowdown?
How Can You Say It's a Slowdown?
How can I say this? We are in the midst of an historical real estate boom like we've never seen before and everything we hear and read says the market is hot, hotter, hottest! Please hear me: the Dallas/Fort Worth Metroplex is still by far the absolute best place in the world to live, work, play, and own real estate. The daily, weekly, monthly growth that is happening to this part of the state is still out of this world.
But the market is experiencing a slowdown. Interest rates are rising . Municipalities are getting more and more greedy with property taxes. Home values are increasing at a rapid pace. New home construction is increasingly expensive and not meeting demand. Wages aren't increasing as quickly as prices and that's causing a slowdown in the real estate market.
In Part One we will look at those factors and how they combine to cause this slowdown. In Part Two next week, we will discuss whether or not an actual slowdown in the real estate market is a good thing, a precursor to doom-and-gloom (again, R-E-L-A-X), and what it means for buyers and sellers in this brave new world.
Just The Facts Ma'am
According to the Fort Worth Housing Report distributed by the Greater Fort Worth Association of Realtors, the median sales price of homes is going up, up, and up. Up 9.7 percent from February 2017 to 2018 at $214,000. Up 9.3 percent from March 2017 to 2018 at $219,750. Up 7.3 percent from April 2017 to 2018 at $220,000. We see that the overall price continues to increase, but the percentage from year-to-year is falling a little bit. Across the country home prices increased 8.7 percent over the past year according to a recent Zillow report. Increases like this simply are not sustainable in the long run for a stable economy. While sellers enjoy their large return on their investment, fewer and fewer buyers are able or willing to pay these steep increases.
Active Listings And Days on Market
From same reports active listings were up 3.4 percent from February 2017 to 2018 at 1,668 homes. Up 6.4 percent from March 2017 to 2018 at 1,851. Up 17.1 percent from April 2017 to 2018 at 2,105. The more listings the better right? Well, yes and no is the answer. Yes more listings on the market the better for buyers. But that's only if they are good listings that are priced correctly. Days on market has also increased. Homes sat for one day longer in February 2018 than 2017 at 43 days. Seven days longer in March 2018 than 2017 at 44 days. Seven days longer in April 2018 than 2017 at 37 days.
No — not time to panic — but numbers don't lie. Buyers are gaining some control.
Word on The Street
While considering this article over the past month or more, I have talked to many agents, lenders, and title company officers in the D/FW area and 100 percent of them have mentioned how it appears that the buyers are finally pushing back at the skyrocketing prices. Sellers have been in control for a number of years when it comes to asking price. Depending on the range, sellers have tended toward higher asking prices and buyers have very little recourse. If a buyer wants a house then they'll meet asking price … or go higher. As inventory increases (albeit slightly) we are seeing buyers be a little pickier and price conscious. It's not as if buyers are offering 50 cents on the dollar, but more than ever in the past year we are seeing lower offers as homes sit longer on the market. Of course there are variables like price range and location and condition of homes — I know that — so these stats might not apply for all homes universally.
We have been living in the longest real estate boom in the history of ever. It's not going away, it's just not booming like it was, and I contest that it will not boom like that again. A slowdown is happening and will continue to happen. While this might cause panic for some, it could also be just what our overall economy needs — balance. Come back next week and see what else I have to say. If you disagree with this article — or if you agree — hit me up, let me know, I'd love to hear YOUR perspective.
Well that's all from Tarrant County this week Dirty Readers. Thanks for reading and following and sharing! As always, if you have questions, comments or great ideas for a blog … hit me up!
Seth Fowler is a licensed Real Estate Sales Professional for Williams Trew Real Estate in Fort Worth, TX. Statements and opinions are his and his alone. Seth has been involved with the home sales and real estate industry in the Fort Worth area since 2004. He and his family have lived in the area for over 15 years. Seth also loves bowties! You can reach Seth at: 817.980.6636 or firstname.lastname@example.org.
A new look at the prices sellers are asking for their homes is another sign of a shift in the North Texas housing market. Dallas-Fort Worth made it onto a list of 10 major cities that are seeing declines or just tiny increases in the asking prices for houses up for sale.
Researchers at property market firm Trulia compared major home market to see where list prices for homes were rising and where they were falling. All four of Texas' major home markets made the ranks of places where home value increases are stalling. That's obviously nowhere near the double-digit percentage annual home price gains North Texas recently saw. Trulia estimates that the median price of homes up for sale in D-FW was $356,999 in March. In March, homes listed for sale in North Texas traded for 98 percent of what they were listed for, according to local real estate data. Trulia's report that D-FW sellers aren't jacking up their asking prices as quickly this year is another indication that the home market dynamic is changing in the area.
The D-FW area added more than 100,000 jobs in the year ended in March, according to preliminary figures from the Bureau of Labor Statistics. So far in 2018, D-FW has stayed near the top of the list of U.S. cities with the fastest-growing employment sectors. Job gains in North Texas have topped 100,000 a year for more than four years — an unprecedented economic boom. As long as companies keep bringing so many new jobs to the area, the real estate market will continue to thrive. Add to the jobs, the surge in population growth. Last year, D-FW grew by more than 146,000 people — more than any other major U.S. metro market. More than half of that population gain was from people moving to the area to fill all those newly created jobs.
- Dallas Morning News, May 4, 2018
The Dallas-Fort Worth area led the state in first-quarter home sales. Local real estate agents sold more than 20,000 homes in the area, according to a new report by the Texas Association of Realtors. It was more than a fourth of the total 70,292 Texas homes sold in the first three months of 2018. The Houston area was a close second with 17,652 sales. While D-FW hung onto its lead in Texas sales, the number of home purchases increased from first-quarter 2017 by less than 1 percent. D-FW's housing market shows signs of cooling from several years of rapid increases. D-FW median home sales prices in the first quarter were at an all-time high of just under $260,000, according to the Texas Association of Realtors.
Forget about the millennials. Homebuilders are betting that boomers will be among the biggest buyers of new houses in the next few years. And North Texas residential communities are gearing up for the coming gray wave of residents with new neighborhoods aimed at the 55-plus crowd. These older buyers tend to have higher incomes and are more interested in a new house compared with young, first-time buyers.
One of Dallas-Fort Worth's biggest residential projects — the 2,000-acre Viridian development in Arlington — just announced plans for a 500-home neighborhood for older buyers. The first homes in the 141-acre Viridian Elements neighborhood will be ready later this year. "There is a tsunami of seniors coming in and we didn't have the right product for them," said Robert Kembel, general manager of Viridian. "We are hoping to start selling these houses in the high $200,000s and low $300,000s. "A lot of these older buyers want to downsize from larger and more expensive homes." Viridian, which started in 2011, is home to more than 1,000 residents. "We have a lot of families here and our amenities have been geared toward them," Kembel said. Viridian's new 55-plus community will have a separate neighborhood center with demonstration kitchen, fitness center, pool and game tables and meeting facilities. "I think this will be an absolute winner for us," Kembel said. "A lot of these older buyers will come from Arlington, Hurst, Euless and Bedford and don't want to leave the area."
When McKinney residents Erin and David Bush decided to downsize, they wound up in the Windsong Ranch development in Prosper, where they purchased from builder Grenadier Homes. They went from a three- to a two-bedroom home in Grenadier's Villa townhome project. The 1,301-2,286-square-foot, single-story homes have sold to mostly 55-plus buyers. "My husband and I are older and it was time for us to have something smaller," said Erin Bush. "We had already downsized once. We wanted to get into a nice community but we hadn't been able to find a one-story house." Bush said they were the first buyers in the neighborhood.
Grenadier Homes co-founder Anthony Natale said his firm's Villa townhouses start at less than $300,000 and have been a big hit with older buyers. "One of the reasons they are buying from us is their kids are living in neighborhoods nearby," Natale said. "We have grandparents moving from California or the Northeast and they want to live down here near their kids." While previous generations of aging buyers often headed to separate seniors communities, Natale said his firm's 55-plus buyers don't want that. "There are a larger number of people who want to be mixed in with younger people," he said. "A lot of these 55-and-older people don't consider themselves old and they don't want to be with people all the same age."
Fewer boomer buyers want to relocate to a segregated seniors-only community in the far 'burbs, said Dallas housing analyst Ted Wilson of Residential Strategies. 'There has been a complete rethinking on how to approach these buyers," Wilson said. "It used to be golf courses and million of dollars for amenity centers. Now it's about being close to the grandkids and being part of a bigger community."
With the aging U.S. population, the building industry is banking on thousands of 55-plus buyers in the next decade. The industry index of potential buyers from this demographic is at an all-time high, according to the National Association of Home Builders. Boomers already make up about a third of U.S. homebuyers. And 38 percent of all homebuyers last year were 55 or older, according to the National Association of Realtors. Wilson said a quarter of the D-FW area's population is 50 or older, and this pool of homebuyers will swell by 188,000 in the next five years. "There are amazing stats on the growth of active adult buyers," he said. "That's why the builders are doing it."
One of Texas' largest residential project developers, Dallas-based Hillwood Communities, sold land last year for 600 homes, targeting 55-plus buyers in its Union Park community in Denton County. Builder Del Webb will have the first phase of the project ready this year. Del Webb is a subsidiary of Pulte Group and is the largest builder of 55-plus housing in the country. "Prices will range from high $200,000s to high $300,000s and I expect them to do well," Hillwood Communities CEO Fred Balda said. "Currently, in both our Harvest and Union Park projects (both in Denton County), we are experiencing a sales rate of approximately 20 percent to the empty-nester segment."
Nationwide housing industry demand from 55-plus buyers is at an all-time high.
(National Association of Home Builders)
- Dallas Morning News, March 19, 2018
Robson Ranch by Robson Community Builders
Texas has its tightest housing supply in almost three decades, just as the spring/summer home buying season kicks off. In February, there was a 3.1-month supply of new and preowned houses listed for sale across the state — the lowest inventory in 28 years, according to a report from the Real Estate Center at Texas A&M University. "Existing homes have been in short supply for a while," center research economist Luis Torres said in the report. "The big difference is now the shortage of new homes is more pronounced." The supply of homes available for purchase is even tighter in North Texas. In February, there was only a 2.7-month inventory of preowned, single-family homes listed for sale with area real estate agents. There was a 2.2-month inventory of completed but vacant new houses available in Dallas-Fort Worth at the start of 2018. A balanced home market is considered to have a six-month supply of available homes. The number of preowned homes for sale in North Texas has increased about 6 percent so far in 2018 compared to 2017. But most of the gain has been in higher-cost houses. More affordable homes, priced below the median price of $250,000, are increasingly in shorter supply.