© The Financial Times Ltd 2016
FT and 'Financial Times' are trademarks of The Financial Times Ltd.
The Financial Times and its journalism are subject to a self-regulation regime under the FT Editorial Code of Practice.
January 18, 2013 6:37 pm
At first sight Dallas and its far-reaching suburbs appear typical of many urban areas in the southern US: large, sprawling, hot. But, behind the scenes, there is growing evidence that the country’s long-awaited housing recovery is at last taking hold.
Dallas county, an area of 900 square miles, with Dallas city at its centre, has 820,000 households and 2.45m residents, making it the ninth-largest county population in the US. Yet there are few residents in its downtown business district, forever identified with the assassination of President John F Kennedy half a century ago.
Instead, the wealthiest Dallas citizens are found north of downtown in suburbs such as Preston Hollow (former president George W Bush has a home there), Highland Park and University Park, adjacent leafy communities with about 35,000 residents.
Further from downtown but still within the Dallas metroplex, other affluent buyers gravitate to Southlake, where 20 years ago minimum house-plot sizes were an acre (they are now a third of an acre), or to the western side of Plano, a settlement of 250,000 residents and near to Southfork Ranch, erstwhile home of the Ewings in CBS’s soap opera Dallas.
These locations are where the residential real estate sector is moving up after almost six years of falling sales volumes and prices. In the 10 months to the end of October 2012, for example, there had been 35,401 pending or completed sales of homes in the Dallas metroplex area, well up on the 31,283 in the same period of 2011.
The average sale price in those 10 months was $228,503, some five per cent up on the equivalent 2011 average of $215,947, while the number of new listings – homes coming to the market in the previous month – had fallen from 27,718 in October 2011 to 25,991 a year later, a drop of 6.2 per cent.
A home was on sale for an average of 72 days in the January-October 2012 period before the vendor accepted a buyer’s offer: a year earlier the average was 88 days. And the eventual sale price in that same period of 2012 was 93 per cent of asking price: in 2011 it was 90.7 per cent.
The residential new-build sector is also optimistic following the release of figures from business consultancy Residential Strategies showing home construction jumped 34.5 per cent in the third quarter of 2012 compared with a year earlier, the fifth successive quarterly growth figure in Dallas.
On top of all this, two reports have also given a fillip to the Dallas real estate sector. The Brookings Metropolitan Policy Program, a Washington, DC, think-tank, says Dallas and nearby Fort Worth combine to be one of only three US urban areas to have fully recovered from the recession. It says professional and financial services delivered 41 per cent of the growth in economic output in 2011-2012 while commodities, including oil, added 20 per cent. The market research firm Pitney Bowes Software has assessed which surrounding metro areas are set to grow most in the next five years. Dallas was fourth ahead of Washington, DC, Pheonix in Arizona and two other Texas cities, Austin and San Antonio.
As a result of this optimism, more high-value homes are on the market now. For example, VIP Realty has a 10,500 sq ft house in north Dallas, with a bowling alley and 10 acres of land, for $24.9m. In Old Preston a 10,900 sq ft house built in 2003 with an outdoor kitchen and cabin plus almost an acre of grounds is for sale through Ebby Halliday Realtors for $5.695m; nearby, the same agency is selling a 7,850 sq ft house for $3.1m.
Industry spokesmen are predictably upbeat. “At the peak in 2005 and 2006, places like Florida, California and Las Vegas saw an influx of investors buying or building condos and apartments. Dallas didn’t see that and built modest numbers of units, mainly single family [house] lots,” explains Ted Wilson, the principal of Residential Strategies. He believes there may also be Texas-wide reasons for Dallas’s apparent recovery.
Fracking – the extraction of oil from shale using controversial hydraulic methods – has boomed in Texas in the past two years. The state is one of the few in the US to have no corporate income tax, prompting company relocations. Outside of the energy sector, the rest of the Texas economy is growing rapidly: data from the Texas Workforce Commission show that the state’s construction industry gained 46,700 jobs from October 2011 to October 2012 with increases also in leisure and hospitality (up 51,200), health and education (up 43,200) and business services (35,400).
“Taxation levels are likely to rise in much of the US so Texas is very appealing to businesses. It’s also very lightly unionised,” says Wilson.
At a micro-level this means realtors are reporting more people buying and selling. “Prices are recovering quickly. For the first time in six to seven years agents are seeing multiple offers and offers above listing price,” says Mary Foss of the Ebby Halliday realty company and a former acting mayor of Dallas city.
Even so, in the 12 months to October 2012, 11,813 homes were repossessed in Dallas county – a high-sounding total although, as a proportion of the housing stock, it was the second lowest of 25 US locations surveyed by analytics consultancy CoreLogic.
The Dallas housing market still has difficulties but is at least performing better than at any time in recent years: now, it hopes, this Texan optimism will spread to other states too.
● Property taxes are among the highest in the US
● But combined personal and property taxes are low
● Integrated bus and tram services operate in Dallas and 12 suburbs
● Dallas is hot and humid, with summer temperatures surpassing 39C at times
What you can buy for ...
£500,000 A modern three-bedroom home in a northern suburb
£1m A 7,500 sq ft five-bedroom house in a large plot
£5m A six-bedroom house on a six-acre plot at Highland Park
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.