Thanks to Steve Brown for most of the following news. Follow @SteveBrownDMN on twitter.
To be continued. That’s the story this week as the low inventory level of D-FW homes for sale is expected… to be continued. As I’ve noticed a few more yard signs pop up, it hasn’t yet had much of an effect. Dallas had only about 1.8 months of supply of homes for sale in January, which is the lowest of all of the major Texas cities. Fort Worth is the next most constrained market with just above 2 month’s of supply. Even Bloomberg noted a story on their web site this week, titled “Why it’s almost impossible to buy a home in Dallas“.
Dallas – Fort Worth home builders can’t build homes as fast as they’re needed. In fact, The Dallas – Fort Worth market has the least number of approved single family home permits, just below San Antonio, and well behind Houston and Austin. As you can see in the chart below, Dallas – Fort Worth has trailed in this category since January 2007. (Charts are courtesy of the Texas A&M Real Estate Center)
The very limited supply of new homes created throughout and in the aftermath of the Great Recession, along with robust in-migration, has created perhaps the greatest residential seller’s market that we’ve ever seen in D-FW.
This supply-demand imbalance has led to higher prices on development land, preowned homes and new homes.
To give you an idea of how much home prices have moved in just one year, I researched my zip code (75206) to compare residential sales in the last 30 days versus the same month a year ago. For single family homes, the average price in the last 30 days is $513,317 versus $444,709 last year. The average price per square foot has risen to $223.16 from $195.51.
For condos and town homes built in 2005 or newer, the appreciation is even more dramatic. A year ago, condos and town homes had an average sales price of $280,822, or $171.62 per square foot. In the last 30 days, the average sold price is $359,486, or $202.33 per square foot.
As a result, lot and land prices are moving up dramatically. Most home builders know that good times don’t last forever, so they’re anxious to get development lots and homes built as soon as possible. (If you’ve had any thoughts of selling a development site, that’s our specialty, so feel free to contact our office at 214-827-1200 if you have any questions or are curious to know your property’s new value)
Moving to the commercial real estate front, the big news this week was more smoke regarding the Liberty Mutual relocation to north Dallas. The Boston-based insurer is expected to relocate to two yet-to-be built office buildings in Legacy Business Park, just west of the Dallas North Tollway. This new Liberty Mutual Plano campus could house 4,000 to 5,000 employees. Liberty Mutual employees are expected to begin arriving in early 2016 and Dallas-based KDC is rumored to be the lead developer.
Texas-based grocer H-E-B has been quietly purchasing land throughout the Dallas – Fort Worth metro. They’re considered by competitors to be a savvy and very effective retailer. They dominate the market in San Antonio and Austin. In Houston, H-E-B is effectively tied with Kroger and Walmart, each with a 20% market share, but H-E-B is expected to lead the pack in Houston soon. Most Dallas shoppers are familiar with their Central Market stores.
Jim Lake Companies and an investor group has purchased the Ambassador Hotel. Located on South Ervay Street, the six-story building opened in 1905 as the Majestic Hotel. The building is expected to be converted into loft apartments and hotel rooms. Back in it’s heyday, it had a speakeasy in the basement, and a hidden tunnel the went under S Ervay Street that connected to the Stables building across the street. It’s believed that the tunnel was used as an escape route in case the speakeasy was raided.
A high-profile Frisco development site has sold to Western International. The 11-acre site is just east of The Star, the new Dallas Cowboys mixed-use training facility on the North Dallas Tollway, north of Warren Parkway. Western International plans to do a mixed-use development including office and hotel space.
Dallas – Fort Worth leads the country with almost 30,000 apartments under construction. Despite the robust construction, vacancy is only 5.1% throughout D-FW. Dallas rents rose 5.4% over last year while Fort Worth rents rose 6.3%. The average apartment rent in Dallas-Fort Worth is more than $1,000 a month.
Golf courses are out at new home subdivisions in north Texas. Golf continues to decline as very few millenials take up the sport. A Golden Tee video game app on their phones would likely be more appropriate.
New home communities now feature trails and outdoor activities, including vegetable gardens at Hillwood’s new Harvest community in Denton County and a farmer’s market at Celina’s Light Farms. Home theatre rooms have also lost their luster as more home buyers now opt for a home gym.
More quick hitting Dallas – Fort Worth real estate news below.
Lewisville’s Vista Ridge Mall could be facing foreclosure since it’s owner, Rouse Properties Inc. missed a payment to it’s lender. Some tenant’s are optimistic while others have voiced concerns.
Store closings expected soon by RadioShack and Office Depot are not believed to have an adverse effect on the north Texas retail real estate market.
Let’s look forward to another great week in Dallas real estate. If we can answer any of your real estate questions, we would love to help. Call our office at 214-827-1200 or reach me directly at 214-690-9682.
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