2013 Dallas Economic Summit real estate trends from CENTURY 21 Judge Fite

For the past 4 years, Jim Fite, President of CENTURY 21 Judge Fite Company, has been asked to attend the Dallas Morning News annual roundtable on the “Economic Forecast” for the Dallas/Ft. Worth Metroplex.

Here is a list of this year’s participants:

2013 Economic Summit Members

§  ■ Norm Bagwell, chairman and CEO, Bank of Texas

§  ■ Lucy Billingsley, commercial real estate developer, principal Billingsley Co.

§  ■ Wilson Chu, M&A partner K.L. Gates

§  ■ Jim Fite, president, CENTURY 21 Judge Fite Co.

§  ■ Ken Hersh, CEO of NGP Energy Capital Management

§  ■ Hattie Hill, CEO, Hattie Hill Enterprises Inc.

§  ■ Gary Kelly, chairman and CEO, Southwest Airlines

§  ■ Michael Rawlings, Dallas Mayor

§  ■ Wyman Roberts, CEO Brinker International

§  ■ Shad Rowe, principal, Greenbrier Partners

§  ■ Harvey Rosenblum, executive vice president, Federal Reserve Bank of Dallas

On Sunday, April 28, 2013, there should be a special section in the Dallas Morning News Business Section with each of these business leader’s perspectives on their respective business interests.

 

Local Dallas/Ft. Worth Outlook

 

Dallas/Ft. Worth real estate continues to be one of the top residential real estate markets in the United States.  2012 was the best of the previous 5 years.  The residential real estate market has shifted from a buyer’s market to a seller’s market in less than 6 months.  The market has shifted faster in this cycle than any in the past.  Real estate professionals are optimistic about DFW in 2013.  Inventory is currently at 3.6 month supply which is the lowest since 2006.  As inventories drop and demand increases, we expect another increase in closed sales from 6-8% during 2013 both locally and nationally.

 

 

The “Wild Cards” in the immediate future:

  1. Lack of Inventory – as inventory is at an all time low, usually the new home inventory fills the demand from the consumer
    1. Developers and builders have not been active in over 5 years
    2. New home construction costs continue to rise rapidly
    3. The new home market is 18-24 months behind demand
    4. Existing home prices –
      1. Multiple offers are common place
      2. Will rise in most sub-markets rapidly
      3. Appraisals keeping up with rising prices
      4. Buyers paying above list and appraisal price is common place
      5. JOBs – even though consumer confidence is increasing, jobs continue to be the #1 factor of consumer confidence or lack thereof
      6. Credit restrictions on qualifying buyers – further government restrictions and sanctions that affect available credit continue to be discussed
      7. Shadow Inventory – virtually does not exist in DFW, the loan work-out and short sale initiatives in housing policy have reduced the foreclosure rate by 50% year over year
      8. Rental of foreclosed properties – direction of Fannie Mae, Freddie Mac and FHA to rent current inventories rather than sell to the private sector seem to be doomed for failure as real estate is a local business and very difficult to manage a national portfolio
      9. Investor activity – is at an all time high, DFW is experiencing local and international investors in addition to Real Estate Investment Trusts (REITs) bringing 10’s of Millions of dollars into the DFW market

 

December 2011 vs. December 2012:

New Listings                                         – 2.8%

Closed Sales                                        + 0.3%

Days on Market Until Sale                      – 20.8%

Median Sales Price                                + 9.5%

Supply of Homes For Sale                    – 34.9% (down from 5.7 to 3.7 months)

 

Year to Date Fiscal Year 12/31/2011 vs. 12/31/2012:
New Listings                                         – 0.1%

Closed Sales                                        + 14.9%

Days on Market Until Sale                      – 19.6%

Median Sales Price                                + 8.3%

 

Opportunities in 2013:

 

  • Inventory dropping rapidly
  • Demand is high
  •  Interest rates remain low
  • Prices rising rapidly in most sub-markets
  • Foreclosure rate is dropping rapidly – replaced with loan work-outs and short sales
  • High rents and going up
  • Real Estate  Investors continue to enter the market in unprecedented numbers
  • Relocation – as other U.S. markets have begun to sell, relocation buyers (pinned up demand) are buying in DFW

 

 

 

U.S. Real Estate Market Overview

As you have seen over the past year we are experiencing the beginning of a recovery in the residential real estate market. NAR is forecasting an 8% increase in the number of homes sold in 2013 as compared to 2012 (5.0 million units compared to 2012)

If we are able to return to more normal lending standards, home sales could rise to as many as 5.3 million units, or a 14% increase compared to 2012.

NAR also is forecasting a 7% increase in median existing home sale prices in 2013 compared to 2012.

However, the greatest challenge for many markets today is a decreasing supply of inventory…

While total housing inventory at the end of February rose 9.6 percent to 1.94 million existing homes available for sale, which represents a 4.7 month supply 2 at the current sales pace, up from 4.3 months in January, which was the lowest supply since May 2005. Listed inventory is 19.2 percent below a year ago when there was a 6.4 month supply.

The good news is that the decreased inventory has had a positive effect on pricing. Prices have stabilized in the vast majority of markets, and are in fact rising in 92 of the country’s 100 largest metropolitan areas, (according to CoreLogic) Sales volume rose in 69 of the top 100 markets, and 35 of those showed double-digit gains.

The impact of price appreciation should attract more sellers to list their homes for sale as they see the advantages of buying in today’s market. There may never be a better time to investigate the possibilities of homeownership, moving up, investing or even moving down.

Interest rates remain historically low, below 4%. This has a tremendous impact on the ability for first time home buyers to get into the market. Even with rising home prices, affordability remains historically favorable because home prices over-corrected during the downturn. This means there is still great value for buyers in the current market.

Foreign Home Buyers, Diversity and Demographics

The global market is very exciting. The prospect of transacting more business through the Century 21 global network is a new area of future growth.

In the United States international transactions totaled $82.5 billion dollars for the 12 months ending March 2012, that figure is up 24% year over year from 2011.

Transactions were divided evenly between foreign clients with permanent residences outside of the U.S. and clients who are recent immigrants or temporary visa holders residing for more than six months in the U.S.

Especially here in Texas as the proximity to Latin American markets and technology-based economy attracts people from all around the globe.

As a global real estate company, the inter-connectivity that Century 21 has is critically important as we enhance our business opportunities with foreign investors and referral and relocation business.

Understanding different cultures is important… as the opportunities for serving a diverse clientele increase.

Did you know that non-whites and Hispanics accounted for 98% of the population growth in large metropolitan areas between 2000 and 2010?

The Asian population, while smaller than the Hispanic population, grew just as rapidly in the 2000’s. A larger share of Asians represents new immigrants, especially the flourishing Asian Indians.

Another major shift is in the Age Demographics.

Between 2000-2010 the number of 45-64 year olds swelled by nearly 20 million people. However, what is more surprising to note is that the 65+ population grew by more than five million during this time frame.

More than 10,000 Baby Boomers will retire every day for the next 20 years.

Conversely, the number of 30–44 year olds declined by nearly five million as the smaller Baby Bust Generation supplanted the Boomers in this age range.

The number of young and emerging adults aged 15-29 increased by six million due to the maturation of the large Baby Boom Echo Generation (aka Gen Y or Millennials), which rivals the BabyBoom in size.

The size and differing demands on real estate professionals by the Millennial Generation will play a pivotal role in shaping the housing industry during the present and next decade.

Overall Message on Residential Real Estate:

“If you have a job, good credit, and money for a down payment – BUY NOW”

 


Learn more about Dallas area real estate at http://century21judgefite.com.
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