Welcome to the May column of my musings about real estate in Fort Worth and surrounding areas.  As any reader of my regular monthly posts know, May is my favorite month of the year.  I celebrate my 48th birthday on the 23rd.  This age milestone doesn’t mean much in most circles, but as my 47th year comes to a close, I realize that I am on the cusp of being old (some would say I am already!).   I do plan to live to be a 120 so I got a ways to go before I get too worried the number of times I have orbited the sun.   I digress as I am sure most of you want to hear my spot on analysis of this month’s news articles that caught my eye and see how our numbers are doing.   Without further ado, let’s get to the news!  

The first article comes from the Dallas Business Journal and it highlights a survey of Commercial Real Estate Brokers who have DFW as the number 2 hot spot for real estate investors (only LA beat us out).    Canadian investors are the biggest international spenders funneling in over $300 million in the last 12 months.   Job Growth and economic diversity are the two biggest things we have going for us right now.   We just keep adding more jobs which attracts more people so companies need to find places to put their new employees while they work.   The article indicates that this growth in needed office space will continue to grow for the foreseeable future.  

What do investors like to put their money? 

Nationally, industrial real estate is attracting the most investor interest, with 50 percent citing it as their preferred investment opportunity. Multifamily real estate follows at 20 percent, office at 14 percent and retail at 10 percent.

North Texas largely follows those trends, with industrial garnering the most investment dollars. Kramp chalks that up to the metroplex being one of the country’s five super-regional industrial centers.

I find interesting the part of the article explaining that we do not have one dominant industry.  We have less risk that a industry bubble popping on the national or world stage will have a bone crushing effect on our local economy. In other words, our local diverse economy really protects us from the overall economy ups and downs (for the most part).  Investors should be interested in us for this reason alone.   

The next article comes from my man Steve Brown over at the Dallas Morning News.  He highlights a recent study from the portal giant Trulia that looked at which metro areas have increasing prices and which ones are starting to slack off a bit.  All four Texas metro areas made the list of areas not performing.   DFW has only seen a .5 increase in sales prices from this time last year with only 98% of the listings selling at their asking price or higher.   It might not seem like these numbers would put us on the good list, but when you have annual double digit increases for years running, any slow down in price appreciation is a big deal.   Our prices are only up 6% over the entire region this year, while it was up to 13% this time last year.  I have to brag at this point, because I have been forecasting this flat performance all year long.   The higher interest rates and pockets of buyer’s markets around the area are really starting to turn the market around.  Will we see it decrease this year?  I don’t think so, but I don’t see us going much higher in price.   

Now for the weird news of the day.  The last story from the Fort Star Telegram has to be one of the strangest takes on the hot seller’s market over the last four years.  Zillow released a study that showed that many housing markets are making a higher hourly wage than the people who might live in them.   Yes.  You read that right.  I’ll let the article do the explaining

The study calculates property value increases, then expresses them as an hourly increase, assuming an eight-hour work day for roughly 261 days per year (the equivalent of a full-time job).

In Arlington, homes are typically worth $190,900, based upon the Zillow home value index. That’s a $16,800 increase from a year earlier.

And, $16,800 is what a person making $8.05 per year would make in a year. A person making Texas’ minimum wage of $7.25 an hour would make $15,131.

Crazy! Right?   For me, this highlights two areas of concern.  Our market’s price appreciation is an unhealthy one and will correct itself in the near future.  Also, we need to raise people’s ability to make a living.  Housing affordability is a big concern of mine and a lot of the inability of buyers to get a home stems from their very low wages.   We need to come together as a city, state, nation and figure out way to give people better living standards.   

Before we get into the numbers, let’s look at the area from which the numbers are based.   I use this area as this is where I focus my marketing, but I will do real estate with anyone, anywhere in Texas.

Real Estate in Fort Worth

Real Estate in Fort Worth.

April Inventory of Homes

As you can see from the graph below, our inventory in my area has remained the same from this time last year and only gone up slightly since this time two years ago.   Inventory measures how many months it will take for the current supply of homes to sell out to the available buyers.   Six months or lower is considered a seller’s market.  We have been below two months for the last three years so you can understand why we in a seller’s market.   Inventory is just not getting much better in our area.  As a seller, this is good news as you can still expect a good reaction to your home coming on the market.   You should be sure to price the property correctly and a make sure to make your house as presentable as possible.  If you paint the walls, clean the floors and declutter, you stand a good chance of having buyers putting in offers.  Buyers need to be aware of how crazy competitive this market is right now.  You need to move fast on homes you like by going to see it the day it comes on the market and putting your best offer forward the first time.   You want to make sure your offers are strong enough to convince the seller to not look at any other offers.   

April Median Days on Market

How long will it take your house to sell?  In our area, it looks like 10 days which is a 11 percent increase from this time last year and a 23% increase from two years ago.   Once again, this stat is reflective of a seller’s market where there tends to be many more buyers than homes.  As buyer, you have to face facts that you can’t mull over the decision.  Be sure to have your agent ready to put in an offer as soon as you are sure you want to try to get the home.  With homes selling so fast, you will encounter situations where a final and best offer deadline is set.   In multioffer situations, you need to offer the highest offer price as you can without going so high you have a possibility of the property not appraising at sales price.  Offers should also be free of any seller closing fees like title policy, survey, and home warranties.   If you can avoid it, you should not request any closing cost assistance.   Option period should be at a minimal of five days and pay more for it.    It is not a fun environment if you are not one for challenges, but with the right agent, it can be a lot less stressful.  You can find a property, you just have to be patient with real estate in Fort Worth. 

Average Sales Price

When it comes to real estate in Fort Worth, the one question everyone wants to hear is “What will my house sell for?”   According to the numbers in our area, you should expect for it to sell at 7% higher than it did this time last year.  As with other areas in the DFW area, we have seen price appreciation slow down this year compared to this time last year.   In fact, we are so used to see the double digit numbers that I am seeing investors make some horrible speculation on the price points of properties.   For example, one REO was purchased for $50k over asking price and then put on the immediately back on the market for an additional $10K.   The price then went from $120k to $180k in less than a week.    Their justification for the outlandish act was that we will see a price appreciation at the usual pace.  Numbers simply don’t support this assumption.   In my humble opinion, this type of thinking is what got us in trouble 10 years ago.  I pray we don’t see a repeat! 

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