I saw East Dallas Ag say this on another thread and it seems like an interesting topic.

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I think you picked the right time to sell that house as save for a few really hot areas, I'm about ready to call the market (at least Dallas proper). peaked.

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There seems like a huge number of houses for sale just in the L streets, quite a few not popping on realtor.com. $250 sq/ft for hardly anything updated? And they are not flips, just people moving out or up. We do have our fair share of flips that our neighbors feel will never turn a profit, but that's just our own little area's personal take.

What's word on the street?

Work in home building supply. Not peaked. Not even close. Prices are going up due to margin erosion from tight labor supply and material cost increases.

Dallas -Fort Worth is the new Phoenix/Vegas/LA/Bay Area. There isn't enough infrastructure to support the growth in the NEAR term, which means prices in the already developed areas will spike. As an example, 30,000 people are coming to live and work in Legacy West in Plano in the next 12 months. Traffic is already bad and tollway expansion won't be completed for over 18 months. 121 expansion isn't even planned, nor is GB Tollway expansion.

Can't find anything between 635 and 30 for under $300k

My folks just sold two properties in a matter of days. One was a 2/1 condo off W Lovers Ln near Love Field. A lady who lives in the complex saw my folks moving boxes out and asked if they would be selling the unit. She happened to be a Realtor and knew an investor who owned a handful of units in the complex. They were able to put a cash deal together and it closed in a week. The next house was a remodel on W Amherst Ave in the same area. They had multiple offers on day one and ended up accepting a cash offer over list price with a 14 day close. I believe it was in the $280/SF range. Pretty crazy.

Fiance and I are saving to try to buy next year, hopefully in the M streets or Lakewood...would love to see prices stay flat or come down some but not counting on it. We are good earners and I thought way ahead of the game compared to many, but just don't see how some of these houses are worth what people are paying. How do so many people afford 500-900k houses? Is it people just being comfortable with more debt or are there really that many people making well north of 250k/year?

Bonfire 1996 said:

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GarlandAg2012 said:

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Fiance and I are saving to try to buy next year, hopefully in the M streets or Lakewood...would love to see prices stay flat or come down some but not counting on it. We are good earners and I thought way ahead of the game compared to many, but just don't see how some of these houses are worth what people are paying. How do so many people afford 500-900k houses? Is it people just being comfortable with more debt or are there really that many people making well north of 250k/year?

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What you will also have is the down payment cycle. The people buying that house may have $100k-$200k of equity from the house they just sold, which has appreciated over the last few years. Then the people who sold THAT house have the $200k in equity and they will buy another house. Wash rinse repeat. It accelerates prices and bubbles.

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Exactly, had this conversation in reverse a million times during the downturn.

"Yes you are selling for less than you hoped, but at the same time you are buying below market."
I personally like this situation better for my buyers because they are receiving a 5-10% hit on a smaller house, then getting the same 5-10% discount on the new one. Currently that is reversed but usually works out ok because they are getting substantially more cash on the sale to use for the purchase.

Market timing very rarely works perfectly for everyone unless they have the ability to sell in an up market and then sit out for the down market purchase. i.e. live with mom and dad or rent.

There is the bubble factor to be concerned about, but with the economic growth, lack of a prior overvaluation, and massive debt load on properties in relation to value, we are a long ways from the AZ/CA/NV bubble of the 2008-2013.

That's all fine and good for people who already own a home, but we are renters! Oh well, just gotta save more.

bthotugigem05 said:

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Can't find anything between 635 and 30 for under $300k

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Should be some houses between Ferguson and 30 for under $300,000, not that you'd really want to live there...

Just sucks for people moving from renting into buying, which I'm trying to do.

Oh yeah, it does. My wife and I were in the same situation last year and were getting desperate before finally finding something still inside 635.

Matsui said:

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DFW is the new LA/Bay Area? LOL

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In terms of real estate appreciation? Yes. Many areas are experiencing greater than 20% annual growth over multiple years. Not only can the builders not build fast enough, now, the municipal infrastructure cannot keep up, which has never been a problem for North Texas, but suddenly is.

GarlandAg2012 said:

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Fiance and I are saving to try to buy next year, hopefully in the M streets or Lakewood...would love to see prices stay flat or come down some but not counting on it. We are good earners and I thought way ahead of the game compared to many, but just don't see how some of these houses are worth what people are paying. How do so many people afford 500-900k houses? Is it people just being comfortable with more debt or are there really that many people making well north of 250k/year?

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It is amazing the debt average folks take on in other areas. Having lent in those other areas for years, New York, California, Hawaii, you see people do things differently. My unscientific sample of clients in those areas had much less student loan, credit card, and car loan payments than around here.

To further explain, when we look at income in relation to debt and income it is all about the monthlies. DTI or debt to income ratio is either front or back-end. Front is house PITI over monthly gross income. Back is house PITI+all other debt over monthly gross.

We like those to be 35% and 43% respectively. They can be higher but that is the happy place. Here in Texas I see most of my clients around 27% and 38%. Thats's 11% of monthly income going to non-property debt. Now in the other markets you see a lot more of 40% and 45% respectively. These folks don't buy a new car every other year like us Texans, a family very easily might only have 1 car(unheard of in Texas), they generally they have less student debt(left leaning programs), and for whatever reason tend to have lower revolving debt.

So let's look at The Smiths and The Jones. The Smiths live n Texas, and the Jones live in New York.

Both Mr.'s are Blue collar employees, with Mr. Jones being union. The Mrs's are both teachers and Mrs. Jones is in the union.

Smiths = $8,000/mo
Income
B1 $60,000 per year
B2 $36,000 per year
House = $400,000 with 20 % down
PITI =$2,402
2 cars totaling $500 a month, a $200 student loan payment, and $300 of other debt payments
Ratios 30% and 42.5% with normal Texas taxes and Insurance

Jones = $10,000/mo
Income
B1 $72,000 per year
B2 $48,000 per year
House = $800,000 with 20 % down
PITI=$4,139
1 cars totaling $400 a month lease, no student loan payment, and $100 of other debt payments
Ratios 41.39 and 46.39 with normal NY taxes and Insurance(non-conforming guides usually don't get too upset below 50%)

Just for perspective

Sorry for the long post

Would be great if it happened in the next 12 months and then recovered rapidly. Plz and thanks.

FincAg said:

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I saw East Dallas Ag say this on another thread and it seems like an interesting topic.

Quote:

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I think you picked the right time to sell that house as save for a few really hot areas, I'm about ready to call the market (at least Dallas proper). peaked.

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There seems like a huge number of houses for sale just in the L streets, quite a few not popping on realtor.com. $250 sq/ft for hardly anything updated? And they are not flips, just people moving out or up. We do have our fair share of flips that our neighbors feel will never turn a profit, but that's just our own little area's personal take.

What's word on the street?

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East Dallas Ag thinks believes in DFW appreciation as much as Freakonomics.

Thankfully I haven't sold my Northwest Plano (near Legacy) rental and will bank when I sell in the next 1-2 years.

TLDR

GarlandAg2012 said:

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Is it people just being comfortable with more debt

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Yes. I know too many who owe north of $600K on a house that they bought in the $700K neighborhood. If interest rates returned to their 2000-2010 average they would probably be destroyed, or at least unable to move for a very long time.

With my favorite example only one of them works, 1st kid is a year and a half old, plus two car loans. The place they bought needs lots of cosmetic work (old people late '90s decor) and he's not handy enough to do very much of it plus mold/mildew remediation underneath the house that they had to pay for.

Bonfire 1996 said:

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As an example, 30,000 people are coming to live and work in Legacy West in Plano in the next 12 months. Traffic is already bad and tollway expansion won't be completed for over 18 months. 121 expansion isn't even planned, nor is GB Tollway expansion.

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Actually...

Quote:

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Sam Rayburn Widening
Improvements to Sam Rayburn Tollway include constructing an additional lane in each direction, in the center median, along the entire 26-miles of the SRT, from west of Denton Tap Road to U.S. 75.
Design is in progress and construction is anticipated to begin mid-2018 and be completed by the end of 2020.

PGBT Widening
The PGBT Widening Project will include widening of the PGBT from north of Belt Line Road (Irving) to State Highway 78 to four lanes in each direction. PGBT between Interstate 30 and I-20 in Grand Prairie also will be widened to three lanes in each direction. All widening will take place within the center median.
The project will be built in phases, and construction is underway in some sections.

• PGBT between U.S. 75 and Dallas North Tollway and westbound between Renner Road and U.S. 75: Construction began May 2015; anticipated completion: late 2016.
• SH 78 to U.S. 75 and DNT to I-35E: Construction anticipated to begin in late May or early June 2017; anticipated completion: end of 2019.
• I-35E to north of Belt Line Road (Irving): Currently in planning phase.
• I-20 to I-30: Currently in planning phase

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Even with all that, it still won't matter. Traffic in and around north Plano/south Frisco near the SRT/DNT interchange is going to suck even worse once all that comes online.

Thanks, I hadn't seen that

L Streets $/sf is skewed because the majority of the houses are tiny.

jpd301 said:

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Bonfire 1996 said:

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As an example, 30,000 people are coming to live and work in Legacy West in Plano in the next 12 months. Traffic is already bad and tollway expansion won't be completed for over 18 months. 121 expansion isn't even planned, nor is GB Tollway expansion.

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Actually...

Quote:

---

Sam Rayburn Widening
Improvements to Sam Rayburn Tollway include constructing an additional lane in each direction, in the center median, along the entire 26-miles of the SRT, from west of Denton Tap Road to U.S. 75.
Design is in progress and construction is anticipated to begin mid-2018 and be completed by the end of 2020.

PGBT Widening
The PGBT Widening Project will include widening of the PGBT from north of Belt Line Road (Irving) to State Highway 78 to four lanes in each direction. PGBT between Interstate 30 and I-20 in Grand Prairie also will be widened to three lanes in each direction. All widening will take place within the center median.
The project will be built in phases, and construction is underway in some sections.

• PGBT between U.S. 75 and Dallas North Tollway and westbound between Renner Road and U.S. 75: Construction began May 2015; anticipated completion: late 2016.
• SH 78 to U.S. 75 and DNT to I-35E: Construction anticipated to begin in late May or early June 2017; anticipated completion: end of 2019.
• I-35E to north of Belt Line Road (Irving): Currently in planning phase.
• I-20 to I-30: Currently in planning phase

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Even with all that, it still won't matter. Traffic in and around north Plano/south Frisco near the SRT/DNT interchange is going to suck even worse once all that comes online.

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There's also an 18 month project about to start planning to widen the DNT from downtown to 635 (removing the median and I believe the shoulders as well).

Dallas is the fastest growing metro in the country right now and the expectation is to be the 3rd largest market by 2020 behind only NY and LA. The housing market won't be slowing anytime soon.

Deats99 said:

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GarlandAg2012 said:

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Fiance and I are saving to try to buy next year, hopefully in the M streets or Lakewood...would love to see prices stay flat or come down some but not counting on it. We are good earners and I thought way ahead of the game compared to many, but just don't see how some of these houses are worth what people are paying. How do so many people afford 500-900k houses? Is it people just being comfortable with more debt or are there really that many people making well north of 250k/year?

---

It is amazing the debt average folks take on in other areas. Having lent in those other areas for years, New York, California, Hawaii, you see people do things differently. My unscientific sample of clients in those areas had much less student loan, credit card, and car loan payments than around here.

To further explain, when we look at income in relation to debt and income it is all about the monthlies. DTI or debt to income ratio is either front or back-end. Front is house PITI over monthly gross income. Back is house PITI+all other debt over monthly gross.

We like those to be 35% and 43% respectively. They can be higher but that is the happy place. Here in Texas I see most of my clients around 27% and 38%. Thats's 11% of monthly income going to non-property debt. Now in the other markets you see a lot more of 40% and 45% respectively. These folks don't buy a new car every other year like us Texans, a family very easily might only have 1 car(unheard of in Texas), they generally they have less student debt(left leaning programs), and for whatever reason tend to have lower revolving debt.

So let's look at The Smiths and The Jones. The Smiths live n Texas, and the Jones live in New York.

Both Mr.'s are Blue collar employees, with Mr. Jones being union. The Mrs's are both teachers and Mrs. Jones is in the union.

Smiths = $8,000/mo
Income
B1 $60,000 per year
B2 $36,000 per year
House = $400,000 with 20 % down
PITI =$2,402
2 cars totaling $500 a month, a $200 student loan payment, and $300 of other debt payments
Ratios 30% and 42.5% with normal Texas taxes and Insurance

Jones = $10,000/mo
Income
B1 $72,000 per year
B2 $48,000 per year
House = $800,000 with 20 % down
PITI=$4,139
1 cars totaling $400 a month lease, no student loan payment, and $100 of other debt payments
Ratios 41.39 and 46.39 with normal NY taxes and Insurance(non-conforming guides usually don't get too upset below 50%)

Just for perspective

Sorry for the long post

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Maybe I've just been living under a rock, but are people making $120k a year before taxes really buying $800k houses?

I make slightly more than that before taxes and have no other debt, and my $230k mortgage makes me uncomfortable. I looked at upgrading last year and ultimately couldn't justify it, but I was shocked to see that I could get preapproved for about $650k. Just because I was preapproved doesn't mean it makes good financial sense!

I know there are many areas of the country where you can't even buy a shack for under $500k...but an $800k house on a $120k income? That just seems nuts to me.

TXTransplant said:

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1) Maybe I've just been living under a rock, but are people making $120k a year before taxes really buying $800k houses?


2) I know there are many areas of the country where you can't even buy a shack for under $500k...but an $800k house on a $120k income? That just seems nuts to me.

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Yes and Yes

https://www.dallasnews.com/business/real-estate/2017/05/18/mark-downs-growing-dallas-area-home-market?utm_campaign=Echobox&utm_medium=Social&utm_source=Twitter

Hmmm...

I like dis

East Dallas Ag said:

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https://www.dallasnews.com/business/real-estate/2017/05/18/mark-downs-growing-dallas-area-home-market?utm_campaign=Echobox&utm_medium=Social&utm_source=Twitter

Hmmm...

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I'm seeing this in neighborhoods around me (far north Dallas, just north of Addison). You've had a lot of sellers that who it seems thought they could just put whatever ridiculous price out there and people would be lining up the day it goes on sale. I'm hoping this is a sign of a possible slow down just a tad, as I'm hoping to buy something next summer.

investorAg83 said:

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jpd301 said:

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Bonfire 1996 said:

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As an example, 30,000 people are coming to live and work in Legacy West in Plano in the next 12 months. Traffic is already bad and tollway expansion won't be completed for over 18 months. 121 expansion isn't even planned, nor is GB Tollway expansion.

---

Actually...

Quote:

---

Sam Rayburn Widening
Improvements to Sam Rayburn Tollway include constructing an additional lane in each direction, in the center median, along the entire 26-miles of the SRT, from west of Denton Tap Road to U.S. 75.
Design is in progress and construction is anticipated to begin mid-2018 and be completed by the end of 2020.

PGBT Widening
The PGBT Widening Project will include widening of the PGBT from north of Belt Line Road (Irving) to State Highway 78 to four lanes in each direction. PGBT between Interstate 30 and I-20 in Grand Prairie also will be widened to three lanes in each direction. All widening will take place within the center median.
The project will be built in phases, and construction is underway in some sections.

• PGBT between U.S. 75 and Dallas North Tollway and westbound between Renner Road and U.S. 75: Construction began May 2015; anticipated completion: late 2016.
• SH 78 to U.S. 75 and DNT to I-35E: Construction anticipated to begin in late May or early June 2017; anticipated completion: end of 2019.
• I-35E to north of Belt Line Road (Irving): Currently in planning phase.
• I-20 to I-30: Currently in planning phase

---

Even with all that, it still won't matter. Traffic in and around north Plano/south Frisco near the SRT/DNT interchange is going to suck even worse once all that comes online.

---

There's also an 18 month project about to start planning to widen the DNT from downtown to 635 (removing the median and I believe the shoulders as well).

Dallas is the fastest growing metro in the country right now and the expectation is to be the 3rd largest market by 2020 behind only NY and LA. The housing market won't be slowing anytime soon.

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Uh oh, an 18 month project on DNT between downtown and 635 will be an epic cluster...

Media is catching up with my call...

Dallas Market Likely Peaked

Matsui said:

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DFW is the new LA/Bay Area? LOL

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Yeah...so Bay Area prices but trade in the west coast beauty for flat prairie land with no trees?

East Dallas Ag said:

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Media is catching up with my call...

Dallas Market Likely Peaked

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Article doesn't even match the title.... does the editor know what a peak means?