Waiting on the sidelines?
I was looking at some historical data from Zillow on DFW home values and found some interesting stuff. I'm still a noobie analyzing properties, but after looking around these last couple of months I've decided to delay my first property purchase until at least 2021. Just wondering if the more experienced investors in Texas are also doing the same.
Findings: From 2000-2007 Median home values in DFW increased from ~160k to ~195k, and then proceeded to drop around 2-3% every year before bottoming out at ~170k in 2011/2012. If you look at the decrease from just top (2007) to bottom (2011) then the drop in value is only ~12%.
Not Terrible.
However, if you look at it from another perspective and see how much of the value add that was destroyed during that time, it is actually around 70% --> (195-170k)/(195k-160k).
In other words, 70% of the home value appreciation in that 7 year period (from 2000-2007) was wiped out during the Great Recession.
Median Home Values have almost doubled since 2012 in DFW, and this is especially true for homes under 300k. Not saying the situation is apples to apples, but forbearance and unemployment are about to be both in double figures which is unprecedented. Despite how robust our economy in DFW may seem, the data shows that we aren't completely in the clear. I just saw a report of around 13% unemployment in the DFW area in addition to a wave of bankruptcies that were filed for major retail players. Other industries including airline, energy, and auto are also at risk but I guess these negatives may be offset if more companies and people begin moving here from higher cost of living areas. Zillow and Redfin also predict a conservative drop in prices of around 2-3% for the next 12 months.
Yet despite all this news, home prices are going up due to low interest rates and low inventory. Wow.
- DFW Bankruptcies Link: https://www.bizjournals.com/dallas/news/2020/05/23/bankruptcies-texas.html
- Unofficial Unemployment Rate as of 5/22/2020: https://apps.texastribune.org/features/2020/texas-unemployment/