Home Prices Set to Jump 35% Over Next Three Years in Eastern DFW | Candy's Dirt
Strong economic factors, job gains, and population increases have experts predicting strong growth in North Texas home prices in 2015, and a 35 percent increase in home prices over the next three years in the Dallas-Plano-Irving areas.
Local Market Monitor, Inc. released its December 2014 local market reports for North Texas, looking at factors like jobs, migration, housing permits, local market risk premium, and average home prices. Based on those analytics, they say home prices will likely grow 11 percent in the eastern counties of North Texas and 8 percent in the western counties over the next 12 months. Nationally, prices are forecast to increase by 6.3 percent.
They’ve extended their forecast two and three years, as well. In the eastern DFW counties, home values are predicted to increase 11 percent in 2016 and 10 percent in 2017.
In the western counties, home values are expected to increase 8 percent in both 2016 and 2017. The report predicts home prices to increase 25 percent over the next three years, noting that market is currently underpriced 17 percent relative to income.
These reports echo the sentiments of local realtors and real estate experts, who have been crowing aboutstrong North Texas job growth, more buyer and seller confidence, continued low interest rates, and investor demand. Jump to read more!
The fundamentals are in place for this sustained growth, as job growth is the most immediate guide to the demand for housing used by Local Market Monitor for their reports. In the Dallas-Plano-Irving areas, jobs have grown 4 percent in the past 12 months, compared to a national average of 2 percent. In the Fort Worth-Arlington area, that number is 2.5 percent.
This spurs population migration to the area, and jobs regained in a recovery create new households. Additionally, investments are less risky when job growth is strong.
The reports also looked at rent, which they predicted will grow in the Dallas-Plano-Irving areas 18 percent over the next three years, to an average of $1,238 per month. In the Fort Worth-Arlington area, they forecast a 16 percent increase, to an average of $1,147 per month. They believe these increase are partly due to higher inflation.
They noted rental vacancy rates fell to 8.5 percent in the third quarter of 2014 in all North Texas areas. This is in line with many other reports for strong demand for rental units, which is partly fueling new construction.
As we reported earlier this month, apartment construction in North Texas is at its highest since 1999, and is the second highest in the nation (Houston is number one). In 2014, developers built 15,575 new apartments in DFW; 30,196 were in the process of being built at the end of 2014.
All of this led Local Market Monitor to give the Dallas-Plano-Irving areas an investment score of 10.2, with under zero considered “dangerous,” 0-3 being “speculative,” 3.1-6 being “moderate risk,” and anything over 6 considered “low risk.” The Fort Worth-Arlington area received a score of 8.4.