Welcome to my monthly musings about real estate in Fort Worth. I take this opportunity to look at three critical numbers for real estate in Fort Worth while also giving you some sense of what real estate is looking like in a broader sense. This month we saw the same level of business growth we have been seeing recently with Facebook adding more space to their headquarters in North Fort Worth. Why did they do this? Fort Worth Star Telegram explained the reasons.
The Menlo Park, California-based company acquired the land to give Facebook the option to expand its plans in the future, a spokesman told the Fort Worth Star-Telegram, which initially reported on the land deal for 39.4 acres at Texas 170 and Independence Parkway.
Land is becoming more of a scarcity in the Alliance corridor so Facebook wanted to get the land it would need for future expansion. Many industry watches believe it could bring up towards $1 Billion to the area. With companies like Facebook realizing how great our area for sitting up shop, I expect the land grabs to continue in the foreseeable future.
Renters continue to make the news in the industry as a recent study showed that 29 percent of the people living in the suburbs were renting versus owning their homes, which is up from 24% back in 2006. The main reason that renting is gaining so much favor is the affordability factor. Frankly, for many, owning a home is too much a financial commitment for them to take the idea seriously. Good news for renters in the DFW area, however. The study found that our area boasts the best big-urban area rents in the country.
Finally, on this news roundup for the month, we saw this report outlining four top trends for real estate in 2016. The site listed four trends that will carry the Real Estate Investing sector. First, is the idea that other cities, like San Diego, Austin, San Antonio and Denver, will continue to draw the eyes of investors who looking for places outside the usual big name cities like San Francisco, New York, etc. On the commercial side, the recent good employment news means that demand for office space will continue to increase with the numbers of people with jobs. Suburbs will continue to attract investment as people will seek out living spaces outside of the town center. Finally, the real estate sector will work with government entities to find ways to help with affordable housing. As home ownership continues to be a pipe dream for many, it will take a public-private partnership to make any dent in the number of people renting versus owning homes.
So, let’s move onto the numbers for this month. As a reminder, I focus most of my efforts on the area you see below. I, however, will work with any individual in Texas (buyer, seller or investor) to help them get their real estate needs met.
February Inventory of Homes
How many homes are on the market right now? How many months will it take for the inventory to sell out? This is known as the Months Supply of Inventory. Six months supply is considered a balanced inventory with homes for sale matching the number of buyers looking to purchase the homes. As you can see from the chart below, we are still way down from the six months. We continue to see this get smaller (as hard is that is to believe) with it going down an additional 12.5% to 1.4 months supply of inventory. Two years ago, I remember people were exclaiming about the two months supply being so low. The two months now seem down right huge. I know I sound like a broken record, but if you have any intention of selling your home, there is no better time to do so. If you price your home correctly, have some good walls and floors, the house will most likely sell in this market. Of course, many people will tell you that you shouldn’t sell right now, because you will never find another home to move into. This does continue to remain a big challenge for sellers, but if you plan accordingly and set your expectations for this market, you can find something eventually. It is always a good idea to have a backup plan in case that new homes is not found immediately.
February Days on the Market
How long does it take for a seller to sell his home? In my target area, it takes about 17 days on average for a home to sell. This is a 40% drop in the number of days from 2014 when it was 29 days. I have seen most homes that show well and priced correctly get an executed contract within a week. Buyers are learning that they cannot sit on good homes because there might not be another one like it to come their way. If you like a home in this market, you have to move fast, or someone else will get it from underneath you. I generally tell my buyers that they need to classify their homes in three buckets. The first bucket is “love.” If they truly love a home, we need to go look at it as soon as the buyer can be there. It is also a good idea to put in a strong offer almost immediately upon finding a home you want to move on. A strong offer will be asking price or higher with as little as possible asked of the seller, like surveys, closing costs, home warranties etc. Each of these asks mean less money for the seller and they may want to wait for a better offer (which most get in this market). The second bucket is a “possible” property. These homes can be ones that you are curious about seeing, but don’t have to rush off to view it. I usually tell buyers to reserve these homes for the weekend when we have time to string several homes together. The final bucket is “trash,” which means there is no way you want this home based on what you have seen online. Ironically, you can get a Home Search Portal with our MLS that allows you to mark these properties as one of these three buckets. These portals are great because it helps you become more focused and your agent (hopefully me) can get a better idea on what their clients are looking to buy. You can get one set up with no obligation.
February Median Sales Price
This final stat is a good indication of how much appreciation your home might have seen in the last three years. For Alliance, the median sales price for a home is $210,000, which is nearly 20% higher than three years ago. These home prices are dictated by the low inventory of homes on the market and too many buyers shopping that low inventory. Most industry experts will agree that this level of appreciation will level off soon and we might even see a constriction in the prices as a way of correcting the overpriced market. Right now, it is a crazy time to be a buyer with real estate in Fort Worth. I heard one story from an investor that some individuals were bidding $10,000 or higher above home value at a foreclosure auctions. I put in a bid for a very nice home in the Park Views Subdivision. It was $10,000 above asking and it was sent back asking to resubmit a final and best offer. My clients decided to walk away from that deal. These stories exemplify the kind of madness we are seeing right now. For sellers, they should be looking at taking advantage of this market and get their home on the market. Buyers will need to learn patience and realize that it might take several months to get the home you want.