Housing boom about to end?

Question

Interesting analysis by this economist professor on the Dallas Fort Worth market:

As we have seen before Texas has lead the way on both the burst as well as the boom from the last decade. Thoughts?

Chris Mason · Answer

Also the fed:

Effective immediately, you can buy a $1m house in Los Angeles, Oakland, San Francisco, etc, with bruised credit and only 5% down! Backed by the tax payer!!!

Lucia Rushton · Answer

Right now we have less than 2 months of inventory in DFW. We need to hit 6 months just to break-even and at 9 months we would start to see a correction. Most of the SFH homes on the market past 10 days are owned by Zillow, OpenDoor, OfferPad etc (all ibuyers) and they are overpriced. The rest is still going with multiple offers, so I think we are aways from a correction in DFW. Demand is still very strong and there are still people waiting on the sidelines. Again just my opinion

Bruce Lynn · Answer

Why would it end?   Wages and productivity going up, severe housing shortage, still super low interest rates even if they go up 1%, most people have equity and maybe great equity?  Pick your number about how many stay in Texas, but something like 2million immigrants have crossed the border this year.   They have to live somewhere.   Also you look at war chests of hedge funds, family offices, and the amount of individual investor cash sales and they will all add a lot of liquidity to the market over the next 2-3 years.   Is there any foreign money that wants to invest?   We still get 10-20 offers on many listings, so there is demand out there.  I always say only one buyer gets it, but that means there were 19 other buyers out there with POF or PA letters that took time with agents to write good offers that are actively looking for property.

Matthew Crivelli · Answer

If the feds actually start to taper bond buying and raise rates I think we will see a decline or at least a slow down in home equity. Will we have a crash? It's possible, we would need a catalyst for that to happen. If inflation continues and rates stay put I think we may see steady growth though 2022 too. The inflation data will be out on Friday for the month of November.

Joe Splitrock · Answer

You hit the nail on the head with inventory. During any real estate correction, inventory levels increase over months or even years before they hit a level that hurts prices. When people talk about a "crash", I like to remind them that the 2008 crash started in 2006 and bottomed in 2010-2012 depending on the market. In reality that "crash" took years to unfold. More likely we headed towards a leveling off as interest rates increase and inventory catches up with demand. I still thing a leveling off means healthy yearly price increases, just not crazy appreciation and bidding wars.

Brian Nally · Answer

The Texas economy is set up much differently now and will likely weather an economic downturn better than most states.  There will likely be a national slowdown in the economy and thus RE markets, hold on let me get my crystal ball to tell you when that's going to happen ;)

Joe Splitrock · Answer

And what could possibly go wrong:)

Joe Splitrock · Answer

I agree and the feds actually already started reducing bond buying in November. Their plan is to taper down to zero by June, but they are even discussing doing it in half that time. This is a fast move to reduce the rate of inflation and it will result in higher interest rates. I am not sure they will move up quickly, but there will be upward movement in 2022.

My personal opinion is that supply chain will catch up in 2022. I think companies have over ordered in an effort to get ahead of shortages. When those orders are filled, we will have a supply side surplus. It is hard to say what effect that will have on the larger economy, but I think it will slow inflation.

Paul Blair · Answer

Currently the market is slow and that goes along with time of year.  This spring should be telling, if homes sit longer than the few days of last year we should expect a cooling off, not necessarily a drop off.

I agree with @Matthew Crivelli when the fed makes moves to raise interest rates the boom should slow down.

The DFW economy is too strong in my opinion to fail, there are too many jobs for the population to not be able to afford to move.   With well paying employment the population here in DFW will continue to do well.

Bud Gaffney · Answer

@Flavio Zanetti no way

Housing boom about to end?

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