DFW Real Estate FAIRcast. Britt Fair April 1, Fair Texas Title 8201 Preston Road Suite 160 Dallas, TX 75225

Transcription

1 DFW Real Estate FAIRcast Britt Fair April 1, 2019 Fair Texas Title 8201 Preston Road Suite 160 Dallas, TX 75225

2 Interest Rate Improvement Rates hit all-time lows in July 2016 but rose through Nov 2018 With concerns about global growth, trade wars, political gridlock and possible recession, rates have declined by about ¾ of a percent since early November 10-year Treasury yield Source: cnbc.com

3 Yield Curve Inversion Yield curve became inverted starting Friday 3/22/19, meaning that long-term rates fell below short-term rates Concern that this is a signal of a coming economic recession Sources: CBC News, Bloomberg

4 History of Yield Curve Inversions When short-term rates exceed long-term rates, that typically has been followed by a recession Sources: Federal Reserve Bank of St. Louis, Wall Street Journal

5 Odds of a Fed Funds Rate Cut in 2019 Source: CME Group, Wall Street Journal

6 Did someone say the R word? Expansions in US usually last around 7 years, and this one started in 2010, so has it reached expiration? Don t get scared by the word recession expansions are always followed by recessions, which in turn are always followed by expansions A recession is generally defined as 2 or more quarters of declining GDP, meaning that the growth of the economy disappears for 6 months or more Recent recessions in US were triggered by mortgage meltdown and the dot-com bust coupled with 9/11 What could trigger next one? Trade war, government shutdown, international event like Brexit or war

7 2 Quarters of GDP Declines? Not Imminent Sources: The Wall Street Journal, US Commerce Department

8 US Annual Change in Nonfarm Employment Eight straight years of over 2 million jobs being added in US Sources: The Wall Street Journal, US Department of Labor

9 US Change in Average Earnings vs Prior Year Sources: The Wall Street Journal, US Department of Labor

10 Low Interest Rates Remain Rates rise in good times and fall in slowdowns Buyers shouldn t wait on rates to set record lows again further significant improvement is unlikely Source: multpl.com 10-year US Treasury rate

11 DFW vs USA Economy As solid as the US economy has been, the local DFW economy and real estate market remain even healthier DFW outperformance relative to other metro areas is important for a couple of reasons Because Fed policy is based on a national economy, the big slowdown in other metros (Chicago, Detroit, LA, New York, etc.) keeps the Fed from taking actions that would cool off our DFW economy Since growth in these other metros appears to be dwindling, that will support the pipeline of company/worker relocations to DFW looking for more opportunity

12 Top Metro Job Growth (1/18-1/19) New York Metro 141,000 Dallas/Fort Worth 100,100 Houston 83,800 Chicago 75,200 Phoenix 64,800 San Francisco 62,300 Miami 59,100 Atlanta 57,000 Seattle 50,500 Source: US Bureau of Labor Statistics

13 Employment Change (1/18-1/19) 12 Largest US Metro Areas Boston Los Angeles Washington Philadelphia New York Chicago Atlanta Miami San Francisco DFW Houston Phoenix 0.5% 0.8% 1.0% 1.1% 1.5% 1.6% 2.1% 2.2% 2.6% 2.8% 2.8% 3.1% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Source: US Bureau of Labor Statistics

14 Source: Dallas Regional Chamber

15 US Metro Daily Migration Source: Bloomberg (via the Dallas Morning News 12/14/2018)

16 Metro Population Growth (7/16-7/17) 2017 Rank 2016 Rank County Numeric Population Population Change 1 1 Maricopa County, AZ 4,307,033 4,233,383 73, Clark County, NV 2,204,079 2,156,724 47, Riverside County, CA 2,423,266 2,386,522 36, Harris County, TX 4,652,980 4,617,041 35, Tarrant County, TX 2,054,475 2,021,746 32, King County, WA 2,188,649 2,155,962 32, Bexar County, TX 1,958,578 1,927,747 30, Dallas County, TX 2,618,148 2,587,462 30, Denton County, TX 836, ,299 27, Collin County, TX 969, ,453 27, Percent Change Source: US Census Bureau

17 Housing Starts in 2018 Sources: Metrostudy Inc., The Dallas Morning News

18 MLS Dollar Volume Since 2007 $4,000,000,000 $3,500,000,000 $3,000,000,000 $2,500,000,000 $2,000,000,000 $1,500,000,000 $1,000,000,000 $500,000,000 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC February dollar volume of North Texas existing home resales was $2.04 billion. This figure was the second highest February on record, slightly behind February 2018 but slightly ahead of February Sources: The Real Estate Center at Texas A&M

19 MLS Sales Data Feb 2019 % Change vs. Prior Year % Change vs. Prior Year % Change vs. Prior Year % Change vs. Prior Year # of Sales Average Sale Price Median Sale Price Months Inventory 9 The Colony 31-26% $282,408-1% $267,500 2% % 10 Dallas Far N 49-32% $464,832-3% $383,850-15% % 11 Dallas N 41-18% $1,325,674-26% $1,150,000 42% % 12 Dallas E % $441,108 5% $367,500 2% % 14 N. Oak Cliff 92 67% $258,721 9% $200,000 3% % 16 Dallas NW 40-7% $440,828 0% $377,500-5% % 17 Uptown/OakLawn 71-11% $411,528-4% $342,000 11% % (condos & townhomes) 18 Dallas NE 45 25% $410,502 4% $394,500 1% % 20 Plano % $409,553-2% $340,000 1% % 22 Carrollton/F.Branch % $326,936-2% $307,890 8% % 23 Richardson 73 4% $323,488 5% $306,000 7% % 25 Park Cities 40-7% $1,169,788 3% $864,000-18% % 51 Allen 93 16% $369,623-5% $315,000-15% % 52 Fairview/Lucas 15-21% $458,779-6% $387,000-2% % 53 McKinney 195-8% $345,182-2% $325,000-2% % 55 Frisco % $449,936 10% $410,000 16% % Sources: The Real Estate Center at Texas A&M

20 Local Supply/Demand Trends Active Listings Sales Area 25 Area 11 Area 12 Area 25 Area 11 Area 12 2/28/ /28/ /28/ /28/ /28/ /28/ Current listings are significantly higher than the recent low inventory years Current sales a little on the low side but not too far out of range, especially in most expensive zones Sources: The Real Estate Center at Texas A&M

21 2019 Predictions Global economy will continue to slow, and while US economy will be among 2019 s best, US growth will slow down vs 2018 Growth in DFW jobs/population continues Next exodus on April 15 from places with huge state/local taxes that are no longer deductible from federal tax returns Continued relocations will mitigate next recession in DFW Market inventory realities starting to dawn on sellers # of transactions will pick back up as sellers lower their asks Extremely attractive interest rates will pique buyers interest It s a balanced market in most areas, but it has moved to a buyer s market at the higher priced neighborhoods 2019 real estate sales volume will approximate 2018 (below 2017), making 2019 the 2nd best housing year ever in DFW