Dallas Housing Market

[X Factor]

With all of the new units Uptown and the conversions Downtown, Is there a market for all of this growth? Or are the developers just building and waiting for them to fill up? Are we on track for an 80's type real estate bust?

What do yall think?

[AZDallasite]

Now I don't have any statistics, but from searching MLS, there are way too many units available, both new and preexisiting. While the high profile projects are doing well, how many more W's and House's can Dallas fill? Whats really scary is the number of million+ spec homes for sale throughout the Park Cities and Preston Hollow. Some of the houses have been on the market for more than a year.

[St-T]

^Look at the number of new housing units for all of metro Dallas and check the % between high priced high rise and other/suburban contrcution. It is a niche market but it's not overbuilit. We talk a lot (on this forum) about the construction in Uptown and DTD but not much about Collin, Denton, Tarrant and Rockwall counties. Is there overbuild in the suburbs? I doubt it. Is there overbuild in the city? I doubt that too.

[AZDallasite]

Whats also scary is that according to DMN, metro Dallas has one of the highest foreclosure rates. Not a good sign.

[St-T]

^Yes, CoCo does. But, not Dallas.

[AZDallasite]

According to RealtyTrac, DFW had the most among the five largest metro areas nationally. Dallas county had 1591 foreclosures in August. That is 1 foreclosure for every 537 households. Thats 2.9 times the national average.

[AZDallasite]

http://prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/10-03-2005/0004157861&EDATE=

[Insidetheloop]

I just wonder where all the rich people will come from that will throw down $500,000+ for a downtown or uptown condo. Currently they do not live in Dallas. Where are they and why would they leave comparable digs in NY or SF that command similar sq. ft. rates to move to the cultural wasteland that is Downtown Dallas?

[AZDallasite]

I think we've only seen the beginning of the high rise boom. There is nowhere else to build. However, prices will be coming down. Projects like the Azure(which originally was planned for the high 100's) will be more in this price range. More affordable and still profitable to build.

[AZDallasite]

Does anyone have any statistics who live d.t./uptown who commute to the burbs. I wouldn't imagine that many do. This could be significant for future development. We need more corporate relocation to d.t.

[infoscott]

I just wonder where all the rich people will come from that will throw down $500,000+ for a downtown or uptown condo. Currently they do not live in Dallas. Where are they and why would they leave comparable digs in NY or SF that command similar sq. ft. rates to move to the cultural wasteland that is Downtown Dallas?

It still beats the cultural landfill of Irvine, California, and at a few 100K cheaper. Orange County still has four remaining Fortune 500 companies that could relocate.

I'll be one of those DTDers commuting to the burbs (Las Colinas), but hopefully only three or four times a month via the Valley Ranch 202 bus.

[clipper]

I dont' see an '80s style bust which I experienced first hand. I do see a steady slowdown and I think its already begun but we can't see it yet. Until a project gets started between now and the end of the year it likely won't happen.

[effulgent]

Well, there might be quite a few households like mine, where one person works in DTD and the other commutes. My husband works across the street, and I work in Grand Prairie, so I am the lucky one who gets the 30-minute commute.

[Insidetheloop]

I think we've only seen the beginning of the high rise boom. There is nowhere else to build. However, prices will be coming down. Projects like the Azure(which originally was planned for the high 100's) will be more in this price range. More affordable and still profitable to build.

Dallas has tons of land to build on. Once the Woodall extension is completed the whole West Bank of the Trinity will open up. That land is practically a steal currently. Scarcity is a common real estate developers tactic to driving up price.

It's an old saying that the pioneers are always the ones with the arrows stuck in their backs...but I think in the upscale urban luxury Dallas they will be wearing egg on their face with high vacancies(in the case of the developers) or stuck with a inflated mortgage(in the case of tenants). Just look at Fort Worth and the Bank One Tower. They are having a damn tough time finding tenants.

[Columbus Civil]

There just simply aren't enough gays to go around.

[slfunk]

Dallas has tons of land to build on. Once the Woodall extension is completed the whole West Bank of the Trinity will open up. That land is practically a steal currently. Scarcity is a common real estate developers tactic to driving up price.

It's an old saying that the pioneers are always the ones with the arrows stuck in their backs...but I think in the upscale urban luxury Dallas they will be wearing egg on their face with high vacancies(in the case of the developers) or stuck with a inflated mortgage(in the case of tenants). Just look at Fort Worth and the Bank One Tower. They are having a damn tough time finding tenants.

Agreed. Like I had alluded to in an earlier post on another thread was what was happening in Las Vegas which is one of many examples. We are starting to see it here; there are people here in Dallas buying up the condos, but there is a HUGE percentage 30-40 percent from outside the region buying them as investments. Usually people in the East and West coast looking to invest their equity in other properties throughout the country, like Dallas, Kansas City, Minneapolis, Las Vegas etc.

It's that whole notion that more expensive means better.... that some on this thread praise. But there will be a shift. Like Tamtagon alluded to, developers will keep building to see how much money they can suck out of us. Its only a matter of time before the developers like the one for the Metropolitan really clue in to the true market for downtown Dallas living, and not all those pretend 100,000/yr professionals some believe make up all of Dallas. I don't know about the occupancy rate of the Bank One Tower in Ft. Worth. I would think we would start to see a trend of "high end" apt towers having a hard time renting soon enough.

I've seen more then enough of town homes sitting on the market in my neighborhood of St. Thomas for too long. I am not a real estate agent, but have talked with a couple that say it is still way too speculative for a somewhat conservative person to invest in a townhome or condo here, especially if you want a quick turn around. The market is just not strong enough.

[Insidetheloop]

The reason I look to the Bank One Tower, now known simply as "The Tower" is because it's currently where many of these yet-to-be-built high rises in Dallas will be in 5-7 years. What the real estate agents are finding over there is that no one wants to commit to actually purchasing a condo. They want a lease they can jump out of.

I will also say that Downtown Dallas commercial real estate is owned almost entirely by "back East" companies, REIT's and foreign governments. In the dark days after 9/11/01 REIT's were a great investment and in some cases still are. I wonder if the Victory residential properties will be open to sub-lets.

[slfunk]

http://www.dallasnews.com/sharedcontent/dws/bus/stories/100705dnbusteardown.1c921ba3.html

'Feeding frenzy' pushes up teardown prices

08:40 PM CDT on Thursday, October 6, 2005

By STEVE BROWN / The Dallas Morning News


Terry Woldt wants to build 14 homes next year.

But first he's got to find the dirt.

"There is a feeding frenzy for lots," said Mr. Woldt, who builds spec and custom homes in Park Cities and North Dallas neighborhoods. "We have been having to work double time to find good-quality building sites that aren't overpriced."

With exploding demand for new homes in old neighborhoods, builders are scrambling to find houses they can tear down just to get the lots.

The number of so-called teardown home starts in the Park Cities and close-in Dallas neighborhoods has increased almost 90 percent in the last four years.

At midyear, builders were constructing about 360 houses in neighborhoods stretching from near LBJ Freeway to East Dallas, according to a study by Residential Strategies, which tracks the local new home market. Along with the houses under construction, about 70 spec houses were sitting unsold in those areas.

Builders would probably be starting even more teardown houses if they could afford to buy the lots, said Residential Strategies' Ted Wilson.

"That's the challenge for the builders," Mr. Wilson said. "The price of teardown lots has really jumped up in the last year.

"A year ago you could buy a teardown house in parts of the Park Cities for as little as the mid-$600,000s," he said. "Today, that lot could be north of $800,000."

Some are going for $1 million and more.

Priced out?
It's a problem for builders who want consumers to pay the higher price tags on their homes.

"The higher your prices go, the smaller the buyer pool is," Mr. Wilson said. "I won't say prices won't go higher, but a lot of buyers are starting to question it."

Builders who decide to construct homes in older neighborhoods face many challenges. Along with the economic implications of higher lot prices, teardown home construction in the Dallas area is already facing pressure at City Hall from residents opposed to "McMansion" construction.

Overall, home prices in North Texas have been up only slightly in the last few years.

But the cost of lots in hot teardown markets has been surging at an annual rate of almost 25 percent, according to veteran Dallas residential appraiser D.W. Skelton.

"The sticks and bricks are not really going up at all," said Mr. Skelton. "Right now, it's the dirt that is king – everybody wants a lot.

"We're adding dollars onto the cost of a house because of the price of the lots," he said. "The builders' profits are going to be squeezed, and the consumer is going to be asked to pay more."

Anxiously watching
Builders like Mr. Woldt are understandably nervous about the sharp increase in lot costs and are trying to hold back prices.

"I'm not buying any more real expensive lots that I think are grossly overpriced," said Mr. Woldt, who sells spec homes that are mostly priced at less than $2 million.

He said some builders are overpaying for lots in the Park Cities and Preston Hollow, and it's driving up comparable sales prices.

"We and a couple of other major competitors in the Park Cities are backing off the million-dollar-plus lots," Mr. Woldt said. "We have been looking at some alternative locations in Lakewood and around the M Streets" in East Dallas.

Branching out
Other builders are going into neighborhoods north of LBJ Freeway.

Jay Wysong has been building homes in the M Streets and nearby neighborhoods since the late 1990s.

He's seen lot prices escalate in those neighborhoods, too – though not as fast as in the Park Cities.

"The price tag for lots keeps going up," said Mr. Wysong, who builds about a dozen houses a year. "I've heard from everybody that it is such a hot market, and you have to get over here and get a piece of it.

"Every time I look up, there are two or three more builders in the area," he said.

In the last year, builders have started more than 100 houses in the neighborhoods east of North Central Expressway, according to Residential Strategies – more than any other close-in residential area.

The number of finished, unsold spec houses in the M Streets area rose to about 24 at midyear – higher than in any other teardown neighborhood. About 60 teardown homes were under construction in the M Streets area at midyear.

"I won't get in a bidding war with other builders for lots," Mr. Wysong said. "That's bad for everyone and eventually will hurt business."

Driven higher
It's already affected prices east of North Central. Two years ago builders were still starting some spec homes between $400,000 and $500,000. Now they are often $600,000, $700,000 and up.

Teardown lot prices in the neighborhoods south of the M Streets have recently topped $200,000, said real estate agent Ken Lampton.

"This requires they build homes for $650,000," Mr. Lampton said. "That's why the McMansions get so big.

"The question is at what point will there not be anybody there to buy them," he said.

E-mail stevebrown@dallasnews.com

[pillsburykem]

It still beats the cultural landfill of Irvine, California, and at a few 100K cheaper. Orange County still has four remaining Fortune 500 companies that could relocate.

I'll be one of those DTDers commuting to the burbs (Las Colinas), but hopefully only three or four times a month via the Valley Ranch 202 bus.


Are you relocating to Dallas from Irvine? I relocated from Irvine when I graduated from UCI.

[Lakewooder]

Loopy, you really don't have to be rich to buy a $500K property with the mortgage magic the mountebanks are manufacturing...

[Lakewooder]

' "We and a couple of other major competitors in the Park Cities are backing off the million-dollar-plus lots," Mr. Woldt said. "We have been looking at some alternative locations in Lakewood and around the M Streets" in East Dallas.'
Oh boy...notice the article says lot prices have topped $200K in the area SOUTH of the M Streets. I own two properties south of Henderson in Cochran Heights (one is a precious Dilbeck) and I would say the 'non' teardown prices are about $100K over a couple of years ago. The zoning for duplexes and single family in there is confusing, but two 'teardowns' have gone up for sale next to my other property* for $225 K. How do I know they are teardowns? The lot sizes are on the Realtor's sign...

Then again, a couple of the 'non' teardown Dilbecks have gone down in the $200-$300 range.

I imagine a lot of landlords will be selling as rents have not been so great in the past 3 years. This will dramatically change East Dallas and perhaps not for the better...

* I inherited that one from my daddy, who paid $20K for it in the early 80s. My cost basis on it is $65K I think. It needs some work -- very tempting to sell and not do the work!

[tamtagon]

My general rule of DFW thump has new single family home construction occuring about 10% more often than realtime population growth would predict.