American Real Estate Investments - Dallas Market Report · 2019-04-02 · AMERICAN REAL ESTATE...

AMERICAN REAL ESTATE INVESTMENTS2

ContentsOverview 03

Statewide 04

Dallas-Fort Worth Metroplex 05

Northern Dallas 06

South Dallas 07

12

Jobs & Economy

Infrastructure & Development

08

Population Growth 11

Quality Properties

Quality Neighborhoods

Quality Tenants

Housing Data

Conclusion

14

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AMERICAN REAL ESTATE INVESTMENTS

There is no other way to say it; the Dallas-Fort Worth, real estate market, is red hot. Consistently recognized by esteemed publications such as Business Insider and Forbes as a growing economic powerhouse, DFW is firmly on the map. With a growing population, advances in infrastructure, and continued job growth, all signs in Dallas point to a dynamic 2018 for real estate.

The big question for 2018 is, can the DFW area sustain the level of growth it has been experiencing for the past (almost) decade. Will real estate stop increasing in value? Will job growth slow down? Can the population growth continue? For now, it’s not a question of whether or not Dallas-Fort Worth will continue to grow, but how much more growth will take place and what areas of the metro area will see the most growth.

OVERVIEW

Dallas Real Estate Market

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The state of Texas has seen rapid growth over recent years. Because of factors like a growing economy, business-friendly tax laws, and other economic forces, the Texas economy is a strong force.

From 2010-2016, most of Texas’s population growth is due to migration. According to the U.S. Census Bureau, “Average annual net domestic migration between 2010 and 2016 was close to 140,000 while net international migration averaged around 82,000.” There is nothing to indicate that this type of growth won’t continue through 2018. In a recent ranking of hot real estate markets by Ten-X, an online real estate sales firm, San Antonio, Fort Worth and Dallas received the highest scores out of 50 cities ranked.

Families are putting down roots in Texas as well, seeking newer builds to offset the competition of sales for existing homes. The Texas Comptroller compiled data showing the construction of more than 20,000 new single-family homes anticipated to break ground in 2018. Texas, alone, accounts for almost 10 percent of the country’s new builds for single-family dwellings, as shown in the National Association of Home Builders 2017 report.

As families move in, the need for employment follows. In the first quarter of 2017, 10 of the 11 business sectors showed gross job gains. By August, job gains in the Dallas-Fort Worth area surpassed the US average in almost every sector. The success of the state is reflected by the success of its leading cities – in this case, Dallas is the heartbeat of Texas. - Bureau of Labor Stats


Statewide

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According to the Ten-X report previously mentioned, Dallas is a top city to watch. "The Dallas market continues its amazing performance," Ten-X analysts said. "While the home sales rate has declined slightly from last quarter's pace, it is still on track to surpass prior peaks and is more than double the nationwide rate. Home prices also continued to outperform the national average, rising to more than 50 percent above their pre-recession peak.”

Dallas-Fort Worth Metroplex

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Northern Dallas

Dallas is split into two regions: north and south. North Dallas includes smaller cities like Plano, Frisco, and McKinney, all of which are big draws for families. It’s a short drive to the central business center, the DFW International Airport or downtown Dallas. The location paired with the high quality of properties puts North Dallas in a position of high demand.

The North Dallas suburbs have been prosperous economic centers for several years. The relocation of Toyota’s corporate headquarters to Plano supports the growth and expansion of this area. As the area has grown in population, so has the economy and the surrounding commercial developments. Developments like the Shops at Legacy in Plano and The Star in Frisco have reshaped the suburban residential landscape around Dallas. New mixed-use developments with luxury amenities that were previously only found in Dallas’s city center are now moving to the north.


South Dallas

In South Dallas, DeSoto, Lancaster, Duncanville are gaining momentum in the real estate market as frugal buyers are looking for deals. The southern region of Dallas is perfectly set for rehab investors who want to snag properties at a below market price, put in some work, and place renters to turn a quick profit with room to grow. The renaissance of south Dallas is just beginning; the formerly disregarded neighborhoods, although rich with civic history and colorful culture, are finally rising.

The real estate market is showing quick advancements as investors swoop up properties. Residents in South Dallas are given opportunities for employment growth, focusing particularly on entrepreneurship. A brand new 5,000-square-foot building called the Fair Park District Entrepreneur Center, offers mentorship, co-op working desks, and access to information needed to build a business. It’s the sixth center of its kind in Dallas. City leaders recognize small business resonates more with residents, and research shows high success rates stemming from these centers. Also, the city offers economic incentives to establish a business in South Dallas, like tax breaks, grants, workforce development funds, and more. With so many hands pitching into the revitalization of South Dallas, experts anticipate a strong upturn in 2018.

As the traditionally desirable areas of Dallas continue to increase in value, savvy investors, homebuyers, and renters will start giving South Dallas a second look..

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Jobs & Economy

A list by Forbes.com placed Dallas as the 10th best place for business in the U.S. In fact, the DFW Metroplex boasted 22 of the companies on the 2017 Fortune 500 list. In the past eight years, more than 75 companies have relocated to North Texas, bringing 500,000 new jobs.

As more large companies choose to relocate to Dallas, the DFW area will continue to see more population and economic growth. Several new developments are already underway on the jobs front in DFW. As an example, Wayfair, a large e-commerce retailer, is opening a regional operations facility in Lancaster with more than 14,000 square feet of office space. Dallas is likely on the Amazon HQ2 shortlist which could add more through 2018.

The Dallas, Fort Worth metro, covers more than9,200 square feet. In addition to North and South Dallas, several other cities and suburbs merit attention, including Richardson, Garland, Mesquite, Farmers Branch. These areas are thriving with long-lasting small businesses and active communities and located a little farther from central Dallas. The population numbers in each area are increasing – as much as 15 percent since 2010 in Farmers Branch. These distinctive nooks of Dallas are becoming micro- supercenters for both economic and real estate growth.

Surrounding Areas

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By the end of 2017, the Dallas-Fort Worth economy posted above trend growth, matched with booming payroll employment and the lowest yet unemploy-ment rate in almost 17 years. The national uney-ployment is traditionally higher than the rate of Dallas-Fort Worth, but bothare following a very similar decline.

Source: Bls.com

DWF US

10

7.5

2.5

5

0OCT-10 OCT-11 OCT-12 OCT-13 OCT-14 OCT-15

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The metro area noted job growth in every sector except for one. Statistically, the Dallas-Fort Worth area ranked in the nation’s top 12 for employment progress. Cities like Chicago and LA followed behind it. Professional and busi-ness services, as well as leisure and hospitality, showed the most growth during 2017, which reflects small business ventures on the rise and big companies planting roots in the lucrative plains of Texas.

DALLAS-FORT WORTH METRO, NONFARM PAYROLL YOY

Source: Bls.com

AUG 2016 PERCENT CHANGEAUG 2017

Total Nonfarm 3,516.2 3,612.9 2.8

Mining, Logging, Construction 207.1 210.5 3.4

Manufacturing 265.8 272.8 2.6

Trade, Transportation, Utilities 753.7 768.2 1.9

Information 83.1 81.7 -1.7

Financial Activities 284.0 293.5 3.3

Professional and Business Services 586.8 611.9 4.3

Education and Health Services 432.8 440.7 1.8

Leisure and Hospitality 371.9 390.5 5.0

Other services 122.9 127.6 3.8

Government 408.1 415,5 1.8


POPULATION GROWTH FOR DALLAS, FORT WORTH, ARLINGTON 2010-2016

201 0

0 350,000 $700,000 $1,050,000 $1,400,000

2011

2012

2013

201 4

201 5

201 6

Population Growth

The Dallas-Fort Worth metro added about 145,000 residents from 2015 to 2016. Added to the growth in the Houston, San Antonio, and Austin metros, the four areas combined accounted for more than 400,000 new residents in 12 months. The US Census recog-nized 20 counties as the “fastest growing” in the nation, four of which belong to Dallas: Dallas, Denton, Tarrant, and Collin.

The Dallas-Fort Worth metro comprises 12 counties and three big cities: Dallas, Fort Worth and Arlington. The population is approximately 6.8 million people, making it the 7th largest metro in the US. In 2014, it ranked 4th for fastest growing areas by popula-tion. The small cities in North Dallas and surrounding areas have increased an average of 20,000 people since 2000.

These numbers reflect the population within city limits and show the drive for business development. Corporate companies are drawn to the affordability of brick and mortar workplaces and the proximity to interstates and international airports. Employment is proving to be career-oriented, which means people want to buy homes and stay for the long haul.


Fort Worth

Arlington

Dallas

Source: Census.gov

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Infrastructure & Development

Federal funding and grants, state dollars, a variety of taxes, public fundraising, and private donations support the infrastructure in the Dallas metro area. The Trinity Strand Trail, for example, accumulat-ed funds through public fundraising to begin Phase 1, and a $50 mil-lion private donation set off Phase 2. The riverfront area to the south of downtown Dallas is showing off maximum potential with recent development after years of waiting.

On the south side of Dallas, a strategic plan to boost sustainable growth is now in full swing. It’s called GrowSouth. It outlines methods of improvement from infrastructure and capital projects to a new potential sales revenue to drive economic growth. Also, the program is working to build 1,500 new homes from $150,000 to $500,000 through 2021.With the bullet train, improved travel, Trinity River Park, and the Grow-South project underway, the development of the city is no longer limited to the North. In 2018, south Dallas will be a market to explore.


Dallas-Fort Worth International Airport

Dallas-Houston Bullet Train

Trinity Strand Trail, Phases 1-2

The Bridge Plan (Dallas Independent School Districts)

Interstate 35W

$450M

$15B

$1.6B

$9M

$148M

Improvements to baggage handling in Terminal B, new cell

phone lot, rehab of runway

Construction of 240-mile rail line from Dallas to Houston

Connecting 73 miles of non-motorized trails with a 7.8-mile path, moving through Medical

District and Market Center

Additions and renovations to 30 neighborhood schools

beginning in 2015

Improvements to 10-mile stretch by doubling capacity

CostWhere Strategy

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Housing Data

With the population influx and new employment opportunity, people are moving to the Dallas metro, but that doesn’t necessarily mean they’re buying. Renting is a common choice, so newcomers can get a feel for the area or wait a few years before leaping into homeownership. Currently, in the Dallas-Fort Worth area, 59.3 percent of dwellings are owner-occupied. This percentage is less than the state and the national trend.


The median list price for home sales is bumping up each year by more than $20,000. The demand for existing homes is high, as buyers understand the inventory for new builds requires a long waiting period. Sellers can ask for competitive prices. The rental market is also showing the effects of supply

and demand. Property owners can occupy units with quality tenants and monthly profits.

Source: Zillow.com

RENT PRICE

AVERAGE RENT PRICE IN DFW METRO MAY 2014-2017

MEDIAN LIST PRICE DFW METRO OCTOBER 2014-2017

$320,000

$240,000

$160,000

$80,000

$0OCT-14 OCT-15 OCT-16 OCT-17

$1,700

$1,275

$850

$425

$0MAY-14 MAY-15 MAY-16 MAY-17

LIST PRICE

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These statistics are particularly interesting for Buy and Hold Real Estate Investors.With rent increasing and the price of real estate potentially plateauing, there is potential for positive cash flow, low risk of vacancy as well as the potential for modest appreciation.

The rental market in Dallas is very attractive to buy-and-hold investors as the demand is consistent, creating little to no vacancies and the ability to ask for for premium rent prices. Business Insider published the list of the best places to rent, data gathered by the real estate investment management company, HomeUnion.Which city was at the top? Dallas, of course. Based on the median investment price, average mortgage payment (assuming 30-year fixed) with 20 percent down, and the comparison of average rent prices, the best investment was Dallas. At the time of publication, median rent was $1,630 and the average annual return, 5.6 percent.

Source: http://www.businessinsider.com/best-places-buy-rental-property-2017-10/#1 dallas-13

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The Dallas-Fort Worth metro area is sitting nicely at the top of the list of fastest growing and most attractive places to live in the US. It has already surpassed its pre-recession employment numbers by 24 percent, accord-ing to Fannie Mae.

Buying and selling real estate is as competitive as ever, but still puts buyers in reach of home ownership. The renter population is also strong and steady, creating an ideal environment for investors. The infrastructure is adjusting as the population increases; employment opportunity is thriving as new businesses pop up and big-time companies move in. Community leaders want to see the neighborhoods prosper, and have set funds and projects into place for 2018. Dallas metro is a magnet for families, which strengthens the pull toward single-family homes. Renting in the current market is more reasonable than purchasing because of prices and flexibility. The vacancy rate for Q1 2017 was 5.5 percent, matching the national average. The window of of opportunity for real estate investors is large in 2018.

CONCLUSION



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American Real Estate Investments - Dallas Market Report · 2019-04-02 · AMERICAN REAL ESTATE...

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