What's a Buyer to Do in Dallas?

We have issues in Dallas.  Housing supply issues.  Steady economic growth, low interest rates, and rising rents should have sale prices escalating to record levels.  Low housing inventory is driving up prices and making buyer competition fierce, and bringing the number of sales to record lows.  

This morning, both the Wall Street Journal and USA Today reported on "gridlock" in the housing market that's preventing first-time homebuyers and current homeowners who would like to trade up from realizing their housing goals.

Current entry and mid-level home owners are unable to move up due to soaring prices of both mid-tier and luxury homes.  Although it is a great time to sell, many current homeowners simply cannot afford to trade up now.  Families who would be trading up to a larger home in a "normal" market are, instead, digging in their heels and remodeling to extend the appeal of their current homes.  Since those homeowners aren't selling, hopeful buyers have more limited choices than ever for finding modestly priced preowned properties.

Tight inventory presents an opportunity for new home builders, but those builders are having to purchase land far from the city, even into areas where there aren't sufficient neighborhood schools to handle the influx of families.  Prices for new homes aren't all that appealing for first-time buyers, either.

The bottom line for home buyers is that there are homes available for purchase, but the selection is limited and prices aren't going down any time soon.  Buyers need to adjust their housing expectations to more modest levels and understand that list prices are a mere starting point in this market.  Fierce competition from other buyers means that multiple offers and above-list-price offers are the new normal.  

In 2014, the average home price in Dallas was $365,506. In 2015, the average price rose to $388,460.  So, waiting a year to buy a home cost the average buyer $23,000.*

With home prices expected to continue their escalation well into 2017, waiting to save for a higher down payment or in hopes that the market will cool down could cost thousands in home price a year from now.  Rental prices are soaring, too, so buying a home at a fair price now to live in for a few years is a buyer's best strategy, even if it means settling for something that is not a "perfect" dream home for now.

*Source:  NTREIS