Up, Up, and Away- A Look back at 2017 Markets

As real estate appraisers, we continually watch and analyze real estate markets.  We will look at what is happening locally in our markets as well as regionally and nationally.   The National Association of Realtors reported in their last report that existing home sales are up 5.6% and reached their strongest pace in almost 11 years.   It appears that in many markets throughout the US low inventory has been pushing prices upward.  In our local markets in North Texas, we have seen high demand and low inventory push prices upward.  The upward trends in our markets began in 2013.   At the beginning of 2016, we covered the impacts of Toyota's  North American Headquarter, Liberty Mutual, and J.P. Morgan Chase relocating to Collin County bringing 15,000 jobs.  With the large population growth in North Texas, we have seen home prices appreciate at a much more rapid pace within the past five years.  See chart below. 

Are we in a real estate bubble?  We get this question often.  When prices appreciate at a rapid pace those who watched housing prices and values plummet in the 2007 housing meltdown, begin to get a bit nervous.  We are not economists and do not have a crystal ball to predict the future.  That said, there are some things that we can look at to see the strength or perhaps direction of our housing markets.  We can look at the economy.  We can look at both what is happening at a national level as well as what is happening locally.  We can say that the Texas economy is currently very strong with unemployment at a record low of 3.8 percent,  Texas crude oil production is up, however, wages remain stagnant.  You can read more about the Texas economy at -The Outlook for the Texas Economy (Texas A&M Real Estate Center).   It will be interesting to see the impacts of the Tax Reform on the economy and its impact on the housing markets.  We can also look at housing supply and demand.  As stated previously,  in our markets we have seen high demand for single-family homes as we are experiencing large population growth in North Texas.  With demand high and supply low there is upward pressure on the market.  We are currently seeing growth in the inventories of single family homes which will begin to relieve this pressure.  Particularly, in Collin County, where we have seen the highest home price appreciation, we are now seeing 25% increase in supply since last year.  We can also look at the marketing times for listings.  If marketing times begin to increase, then this will indicate a slow down in the market and price will begin to come down to meet buyer demand.  

Here is a look at our main markets of D-FW - Dallas County, Tarrant County (which includes Fort Worth and Arlington) and the markets north of these two counties- Denton County and Collin County. Enjoy the infographics. 

A couple of things to keep in mind.  All of this market data and analysis is generalized for an area.  If we are appraising a home in a very specific market in a very specific area this data may be different.  For instance, we just appraised an equine property on large acreage with many amenities for horses in Denton.  The number of sales for similar properties in this market area was very limited and the sale prices did not fall in line with the numbers presented in the Denton County infographic above.  Just because overall housing prices are up a certain percentage, it does not mean your particular property has appreciated the same percentage.  

Pending sales can give a glimpse into the future. As appraisers, it is important for us to look at pending sales as it does give us a hint at what will be happening in the future.  When we perform relocation appraisals, we are actually giving an anticipated sales price thus the pending sales are the best indicators of what the property will sell for.   If pending sales are lower than what similar homes were selling for six months prior this is a good indicator that the market for similar homes is retracting. 

We cannot predict what will happen in the future but we will continue to watch what is happening in the markets that we appraise in.  Need to know what is happening in your local markets?  Contact your local real estate appraiser.  They can be a great resource.  If you have any questions about real estate or real estate appraising please don't hesitate to contact us or comment below.