Realtor Brenda’s Projections for Dallas July 2014

July 4, 2014 By Brenda Patton

A friend of mine recently asked what I thought the appreciation of her house in Savannah, Texas would be for 2015. Looking at the Dallas market in its entirety, current projections are conservative at about 5% appreciation in the Dallas region for 2015.  No one that I know of has a Crystal Ball that is perfect but the current thinking is to be conservative at 5%.

Under $200k Market

That will be the average and some areas will increase higher and faster than others.  The under-$200k market is likely to continue its limited availability as that price point has a large pool of buyers and only a few home builders are building Single Family properties in that price range.

New Construction Homes

Cost of land in this region has increased dramatically driving the cost of new construction.  In the North Dallas region most new construction homes start in the mid-$350’s and go up from there.  Additionally, the new home builders have not increased their production since 2008/2009 for numerous reasons, risk of another bubble being one and weak wages being another[1].  Weak wages is also forcing young people to live with their parents longer making the pool of potential buyers for new homes more limited.

Mortgage Interest Rates

Another factor that directly affects the housing market is interest rates for 30-yr mortgages.  They have been intentionally kept low by the Fed as the US economy is a real estate / housing-based economy at the moment and has been since the early – mid-1950’s. Janet Yellen is the new Chairperson of the Federal Reserve Board (the Fed) and rumor last spring/summer before she took over from Ben Bernanke was that she would increase rates to around 6% which is the threshold for many things but one of particular note is the rate of return investors in the mortgages market make.

Sellers Challenges

The Fed hasn’t allowed rates to increase much because our economy is still weak.  One economist at Freddie Mac wrote that he expects rates to rise closer to 5% by the end of this year (2014).  Should that occur, sellers will once again pull back and not sell because interest rates on a new loan for them will be higher making it more difficult to move up.  Sellers face two challenges themselves: 1) finding another property within their price range so they can ‘move up’; and 2) impact of increased rates on their new mortgage payments.

More Jobs in Dallas

Texas’ business-friendly environment is bringing more employers here and many of those are locating on the east side of the metroplex.  State Farm is bringing in more than 8,000 jobs (could be as much as 15,000) to Richardson; Toyota is bringing around 3,000 to Plano; Nebraska Furniture Mart is bringing 2,000+ jobs to The Colony.  And, I still haven’t tracked down what is coming to Frisco that is bigger than the Cowboys Training Camp…One rumor that I heard recently is of Amazon bringing their headquarters here to Dallas. There may be some truth to that rumor as Amazon has been in negotiations for office space at Dallas North Tollway and SR 121/Sam Rayburn Tollway but may have opted to go further south into Dallas.[2] There is also an unconfirmed rumor of Amazon putting a distribution center here and although I’m not sure where “here” is I think it could be in the Denton area.

Low Inventory of Housing in Metroplex

Based on the above my Crystal Ball says Dallas is likely to have sufficient buyers for the next two years to keep our market tight, and even more so if rates do increase and existing homeowners hold onto their properties and opt not to sell. This type of market won’t last forever, it will stabilize or correct itself sometim

e within the next five years so be wise and plan accordingly.

Brenda Patton is a Texas-licensed real estate agent with Ebby Halliday REALTORS located at 1415 Legacy Dr, Suite 100, Frisco, TX 75034.  You can reach Realtor Brenda at the above address or by calling 469-408-3148,

[1] Freddie Mac, June 25, 2014, Frank Nothaft’s Blog, retrieved July 4, 2014 http://www.freddiemac.com

[2] Brown, Steve, Dallas News Business, January 2, 2014, Some big North Texas real estate deals still in the works http://www.dallasnews.com/business/columnists/steve-brown/20140102-some-big-north-texas-real-estate-deals-still-in-the-works.ece

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