Happy April! It is that time of the month of again for me to instill you with my wisdom and knowledge of real estate in Fort Worth and surrounding areas. If you are a first time reader, I do this once a month towards the beginning of the month. I go over the latest news and happenings concerning real estate in Fort Worth. I also go over three numbers you need to know for real estate here in the Dallas-Fort Worth area.
My home area continues to be a red hot bed of activity as buyers continue to struggle finding homes to buy. I sold a listing in three days after four showings. I have also had buyers decide to put a pin in their home search due to their frustrations in finding something within budget that meets most of their wants. The biggest news to me in the last month has been the release of population growth numbers for this area. The entire area was only beaten out by Houston for the largest growth in a year’s time (July 2014 to July 2015). We had 145,000 people suddenly become neighbors. Here in Tarrant county, the growth was 36,000. Why are we seeing such growth in Fort Worth? Our wonderful Fort Worth Mayor Betsy Price has an idea.
Maybe it’s the abundance of culture, jobs, top-notch universities, the “big city with a small-town feel” of Fort Worth — as Mayor Betsy Price told the Star-Telegram — or they wanted to see the beauty of bluebonnets personally, but people like Tarrant County and want to live here.
April is tax time for most individuals including getting an appraisal notice on what your house is worth in the minds of the appraisal district. Mine was a whooping 10 percent higher than 2015. I was shocked, but not as much as some people who saw their appraisal values go up more than 14% or higher. I heard that some new homeowners saw increases of more than a $100K from this time last year. It won’t be easy to fight these new figures either as many industry data brokers are agreeing with the appraisal district’s approach. If I was going to contest the increase, I would come prepared with a appraisal in hand. These appraisals are not cheap($400 to $600), but if it can convince the government to reduce my taxes, it might be well worth it.
When it comes to investing, D magazine did a nice article on what some top industry leaders are thinking about the Real Estate Investment climate. Most agree that we are in the middle of a ten year cycle that is not very favorable to certain kinds of investing. From my own experience, it is hard to do rehab on a home and expect to get good returns. Many investors are taking less in the cap rate and looking at good cash flow as a way to tread water until the cycle turns. The article did a good job of pointing out some niche markets investors might look into pursuing until we see that turn in 2017, 2018 or beyond.
As a reminder, my primary coverage for these numbers are below. I like to focus my efforts on this area, but will work real estate anywhere. I have two listings right now in Dallas County.
March Inventory of Homes
I personally think our market right now is very unhealthy and unbalanced. It is great if you are seller. Buyers are having a tough time of it right now. There are simply not enough homes available for all the buyers looking. New home construction is moving at a higher rate, but a lack of construction workers are putting this in danger of slowing down as well drive prices up higher to a price point many buyers cannot reach. How do we know all this? You can tell a lot from the Inventory of homes available on the market at any one time. By looking at this number, you can tell how many months it will take for the current inventory to sell out, or turn over. It stayed steady in March 2016 from March 2016 with less than 2 months supply of homes available on the market in my coverage area. Because of this shortage, buyers are facing long odds on getting a home. Many listings go multi-offer almost immediately so you have to be aggressive on your offers to the point of bidding more than asking price. Be careful here, though. You don’t want to bid so high that you go above the price the house will appraise. One trick to avoid this pitfall is to ask your agent to stick in the contract that you will pay a certain amount over appraisal as long as it does not go over the bid amount. For example, you might make a $160K bid on a $150K house. You are telling the seller that if the house appraises at $155K, you will buy it for $157K. This eliminates the danger in the seller’s mind that you will back out of the contract if the house’s appraisal does not match your bid amount as many buyers will do.
March Days on the Market
The number of days on market is a great indication of how quickly your house will sell. It is not a fool proof measurement as it is only an average, but if you have a low number of days on market in your neighborhood, you can expect to sell the house very quickly. For my coverage area, it took an average of 33 days to sell a house in March. This is a 18% drop from this time last year. It means that our inventory continues to remain tight (see above) and buyers are still plentiful. What do you do as a seller if you house sells in three days? (A common occurrence in this market). I tell all my clients to tell me what they plan to do if the house sells quickly because it is highly unlikely that we will be able to purchase of a new home with the current home selling so quickly. Most people tell me that they plan to live with family or friends for a couple of months. Some people tell me that they plan to take out a short term lease on an apartment somewhere. Others, just look at me like a deer in headlights. They had never thought about what to do. If you are selling your home in this market and plan to buy a new home, you need to have a plan in place for temporary living. It is never pleasant to live with family/friends or in an apartment, but it is the reality of the situation we are in right now. In fact, I recommend to most clients to have the plan in place before we list. It is a safety net for them and gives me a peace of mind that the clients will have a place to go if the house does move quickly.
March Median Sales Price
This is the stat that most of my readers want to know. How much more is my house worth? In my coverage area, we have seen home prices rise 19% in the last two years. Crazy fast appreciation is how to describe our current market. It is so artificially escalated that many buyers worry if they are paying too much. I always tell clients you need to think about why your are buying the house and when you plan to sell it. If you are planning on staying the house forever, who cares about how much you might have overpaid. You don’t plan to sell anytime soon so it is best to find the home you want and enjoy it without feeling stressed about the value. If you plan to sell in eight to ten years, you might want to think seriously about how much you are paying for the home. You don’t want to be in a position that will not allow you to sell because you do not have enough equity in the home. I would discuss your situation with your agent and financial adviser to make a strategy and then stick with it. You might fall in love with a house, but it does not justify the future pain of having to sell it later and not getting anything, or very little, in return.