My Opinion on the Current DFW Real Estate Market

I am hearing a lot of conjecture on the current housing market situation in the DFW Metroplex that currently includes almost all the way to Oklahoma, in my opinion and practice. According to the North Texas Real Estate Information System (NTREIS, the Multiple Listing Service of North Texas), the fact is that the average days on the market for a house in August 2019 (8-2019) in North Texas is 46 Days for Single Family Residential (SFR). That represents 7% increase in how long it takes to sell a home when compared to August of last year (8-2018). Condos/ Townhomes average Days on Market increased a whopping 38% from August 2018 compared to August 2019. SFR means a house basically. I am just an email away from trying to explain all of the interesting terms and acronyms in real estate. If you are new to real estate transactions, these terms sound like a foreign language.

Also, as a side note, I use averages for statistics. I am a statistician in my other career, and I like to keep real estate simple. I am, again, an email away from trying to explain all of the differences of statistical terms (mean, median, average, outliers, etc.). Average means that we take the sum of all values (whole number in the entire metroplex, and add it up), and then divide by the number of transactions or the total number of values. Average and Mean are in essence the same thing and are used synonymously for purposes of this article.

So, is the increase of Days on Market one of the many signs that the smoking hot DFW housing market has finally begun to cool down? Not in all areas. I have read a lot of interpretations of the data. And, since I am super comfortable with data, I read it, interpreted it and am telling you MY opinions here. Please understand that I am not making any investment recommendations. ALWAYS CHECK DATA SOURCES! (NTREIS201908) That declaration made, my reasoning and argument against this big “slow down” is that fact that prices continue to rise and overall numbers continue to increase.

Average price of SFR in August 2019 was $319,463 representing an increase of 2% from August 2018. This is down from about 5-6% in the previous year-to-year comparison. The average price for Condos/ Townhomes in 8-19 increased 1% compared to 8-18. Now, to really look at averages and make any logical and scientific assumptions, we need to look at rentals. The average monthly rental amount in 8-19 was $1,858 representing an increase of 3% when compared to 8-18. So, what does that signify economically, I am not sure. But, mathematically, I can infer that rent is increasing on average about 3% in year-to-year analysis while condo ownership is documenting a 1% increase. I work with many entry-level or first-time buyers. The data indicates that it is still a good idea to buy rather than rent just from mathematical inferences, not to mention the tax and credit benefits.

Now, let’s look a little deeper into some of the numbers. While Zillow calls our market, “Cool”, I am not in 100% agreement. I hear that it is a seller’s market. A seller’s market is typically signified by the number of months inventory of the market. If months of inventory is between zero and four months, real estate professionals say the market is a seller’s market. In other words, if supply is relatively low, that means that sellers have more control to set terms or raise prices. A healthy market is about 3.0 (depending on who you ask) or meaning that there is about 3 months of housing inventory at the time meaning that, if no new houses were listed for sale for the next three months, the existing level of demand would consume all the current listings leaving no more homes left to buy. But, DFW has new listings coming online all the time—both for new homes and existing homes.

There are some areas of DFW that documented in excess of 12.0 signifying that there were about twelve months of houses available at that time. DFW has been in such a hot market over the past several years meaning that we had less than 1.0 in many markets. We are still hovering around 1.0 in many submarkets in the DFW while some are in the healthy 3.0 and up.

In my opinion, the reports are too quick to call any shift a big deal. I see this as a shift in a healthy way. But, as I said, I work with many first-time buyers and entry-level buyers. These people have a very difficult time finding a nice home for $200,000 or under. I have to be prepared and aggressive as an agent to get these deals for my clients, and it is quite stark for them when they think they are going to have the ‘HGN’ experience. I look forward to a healthier market to help those on the fringe get out of the mathematical trap that I documented in the paragraphs above about rental increases.

The other variable that DFW has is that we have significant amount of jobs. The area is growing and is so diverse. Dallas is not just Dallas any more. Parts of Arlington are ridiculously hot. And, Salina Melisa and Aubreyville are part of the DFW Metroplex these days. Obviously, I am a real estate agent, and I am still really encouraging my people to buy now. Interest rates are favorable, and the market is to the point that you may not need prescription medications to get through buying a home. If you are an investor, the same principles apply, and there are some tax benefits in some slowing areas of the Metroplex making it more appealing to invest in certain areas. I look forward to answering your questions.

The following is a chart that I extrapolated from the August Report published by Real Estate Center at Texas A&M University and NTREIS (North Texas Real Estate Information System) for August 2019.  I have also attached the NTREIS report from which I extrapolated all of the data and based my pontification for this article.

Areas with highest “Hotness Ratio” as designated by NTREIS Hottest Sales Locations in DFW Area

(The hotness ratio is calculated by NTREIS by pending sales as a percent of active listings)

August 2019

Location pending         sales active        listings months inventory NTREIS Hotness Ratio
Parker County 144 14 11 2.0 127.3
Arlington (Kennedale) 17 14 1.1 121.4
GRAND PRAIRIE- NEW 2 22 20 1.1 110.0
Arlington SE 140 140 1.4 100.0
GRAND PRAIRIE – NEW 3 32 34 1.4 94.1
Mesquite 207 232 1.6 89.2
Lancaster 55 63 1.6 87.3
Arlington Central SE 18 21 1.0 85.7
Bedford 64 78 1.5 82.1
Arlington Central NE 18 22 1.2 81.1
Watauga 34 42 1.2 81.0
GRAND PRAIRIE – NEW 4 45 57 1.2 78.9
GRAND PRAIRIE – NEW 21 27 1.8 77.8
Arlington Central NW 47 65 1.8 72.3
N. Richland Hills/ Richland Hills 95 157 1.9 71.3
FW – Summerfield Park / Park Glen 235 374 1.8 67.0
Carrollton/ Farmers branch 173 312 2.0 55.4
Richardson 124 239 2.4 51.9

 

NTREIS201908

 

 

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