Looking at DFW Real Estate in 2016

DFW real estate saw rapid growth last year but experts are predicting an even better 2016. This despite the prolonged lower oil prices and resulting job cuts in the energy industry that could cause slower statewide real estate growth.

DFW’s status as an important tech town, coupled with low unemployment and solid home value increases, has earned it a place in the top markets to watch in 2016. With property appreciation set to rise, the DFW real estate market has something for everyone, whether investment properties or a family home.

These factors, together with strong income growth as the job market continues to expand, set North Texas apart from other parts of Texas that are more vulnerable to energy industry fluctuations.

Nevertheless, industry insiders warn DFW real estate agents to expect a slowdown in the frenzied market they experienced last year: a new “normal” growth rate around 2.3 percent instead of the 3 or 4 percent highs of past months. But as the 2015 growth in Dallas-Fort Worth real estate sped up immensely, the downturn will be from those record highs to slightly more modest gains.

Lower oil prices have impacted Houston and Midland due to the loss of energy sector jobs and analysts predict that employment gains will moderate next year. But traditionally there’s a delayed effect when oil prices drop and the full impact may not hit the economy for another couple of years.

Still, North Texas will see growth in high tech, healthcare, and professional and business services and as population expansion continues so DFW real estate should remain buoyant.

While Texas produces 50 percent of the nation’s oil, and occupies the enviable position of homebuilding capital of the world, there are still factors that impact the DFW real estate market such as these six issues.

  • The changing demographics as more millennials become first-time homebuyers with fluctuating lifestyles and buying behaviors.
  • Money is increasingly synonymous with cash as more foreigners buy up real estate for cash.
  • Interest rates are set to rise slightly which could hurt buyers on the credit fringes.
  • Easing of credit terms and availability as the federal government loosens the reins on lending.
  • Urbanization will continue to increase as more people head to the big cities.
  • Affordable homes could be a problem —the median price of a home in DFW is now near $280,000. A bargain basement price if you’re in the Bay Area, LA, or D.C., but high for Texas.

One of the bigger issues facing the DFW real estate sector is the problem of home affordability and a lack of lower priced stock. Home prices have been steadily increasing, outstripping wage growth.

According to industry experts, reasonable workforce housing is going to be a big issue as there are not enough homes available in the $150,000-to-$200,000 range.

According to local agents, the market has already started to cool. While still busy, it’s not as frenzied, with overly optimistic home prices being downscaled. Exceptional, beautiful properties enjoy high consumer demand and for these, the market remains vigorous and steady. Likewise, lower priced properties are extremely hot due in part to high buyer demand and a lack of stock.

Consider the fact also that while lower gas prices aren’t good for the oil industry, consumers are getting a boost at the pumps. This, in turn, makes the suburbs more accessible to commuters and therefore, more attractive to buyers.

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