The Dallas Fort Worth (DFW) market here in Texas has an active contingent here on Bigger Pockets.
Not only locally, but many users here on BP will consider investing outside of their local markets simply because, in their markets, the cash flow isn’t there.
It’s no secret that the DFW housing market is hot right now, inventory continues to be tight and prices continue to rise, but let’s dig deeper into the variables a bit deeper and take a look at what’s going on in DFW for Q1 of 2014, just take a quick glance at the stats below to see why DFW is such a strong real estate market and why these factors will continue to make it an ideal market for real estate investing moving forward in the future.
One of my favorite indicators below is the average days on market, at 55 days. That’s fantastic, most markets consider “great” to be at 90 days or less on average.
The Local Economy
One of the fundamentals to a healthy real estate market is how healthy is the first time home buyers demographic?
First time home buyers are a critical component and without them it is impossible to have a natural housing recovery. The truth is, the DFW market has been more resilient to detrimental factors affecting this group compared to other parts of the country.
For instance the cost of living is generally more affordable, and unemployment is lower (5.7%) compared to the national average (6.7%).
In fact for those who have just graduated college DFW has been listed as a top 10 place for new grads to start a career.
However, it is not just first time home buyers that benefit. DFW continues to have a strong job market and is currently ranked the 4th strongest in the country. The local economy has continued to expand, and payroll employment continues to make gains as well. The fact of the matter is, you cannot have a strong real estate market without good jobs, its as simple as that.
Housing Inventory Declining, Prices Rising
As previously mentioned, the local economy is doing well, however the existing home inventory is historically low.
In most areas of DFW we are sitting around 2-3 Months of Supply of inventory. For those of you who don’t know, months of supply reveals how long it would take for the current housing inventory to completely deplete if no additional homes were added.
In other words, how many months would it take to run out of our current supply of housing inventory? For most areas in the country, including Dallas – Fort Worth, equilibrium is considered to be around 6 months supply which results in a so called “balanced” or “neutral” market.
However, most areas in DFW right now are sitting around 2-3 months of supply. If Month of Supply is under 6 months it is generally considered a sellers market because demand is high, inventory is low and prices are rising.
Conversely if months of supply was over 6 months, that is generally considered a buyers market because inventory is up, prices are down and the buyer is now in the power seat for making offers.
We can see the image below showing inventory fall year to year. Dallas County had approximately 4,600 homes for sale in Q1 2014 compared to 5,700 in Q1 2013.
As previously mentioned the local job industry remains robust, and when the economy is strong naturally people will want to buy homes, and with increased demand and limited inventory, prices will rise as reflected in the prices below. And that is what we currently reflected in the graph below.
As a result its making it much more difficult for local investors like you and me to buy at prices that make sense, that is why the MLS is such a mad house right now.
Not only are investors feeling the pinch, but realtors are as well, just ask any local agents the number one thing everyone is complaining about is a lack of listings.
For those of you who do not live in the DFW region, would you consider investing in Texas real estate?
Be sure to leave your comments below!