Housing affordability in the US is fast becoming a national problem. A Pew Research Centre report last year showed that more US households are headed by renters than at any point since at least 1965. Renter households have grown by 8.7m since 2006, even as the number of owned households has remained fairly stable.
Dallas is a sharp example of waning affordability. According to Fitch Ratings, the Dallas-Fort Worth area remains the third most overvalued housing market in the US, behind Las Vegas and Portland, with prices 14 per cent higher than they should be (Seattle and Phoenix tied equal third with Dallas). The average home price gained 58 per cent between 2010 and 2017, according to Texas A&M University’s Real Estate Centre.
To the relief of anyone looking to buy their first home, price gains are finally starting to slow — growing a relatively muted 3.4 per cent in the year to June. “You simply can’t sustain that rate of growth for very long before you price everyone out of the market,” says James Gaines, chief economist at the Real Estate Center.
Fuelled by the area’s economic health, growing inward migration over recent years has created a clear imbalance of supply and demand. The Dallas-Fort Worth area has seen population growth of between 135,000 and 150,000 people per year since 2012 as workers followed the large number of companies relocating there. According to Gaines, firms have come for the generous corporate and income tax regime and the ready supply of skilled graduates from the Texas Christian and the Southern Methodist universities.
Contrary to the impression given by the popular 1980s TV series Dallas — which depicted the dirty dealings and fraught personal dynamics behind the fictional family-owned Ewing Oil — the city boasts a more diversified economy than neighbouring Houston, with large financial and professional services, defence and technology sectors. When the university of Texas last ran the data, the mix of businesses and employment in Dallas Fort Worth showed a 0.93 correlation with that of the US as a whole; that of Houston, the neighbouring oil and gas city, was 0.77.
Despite recent gains, the city’s plentiful supply of land means that prices remain low relative to California, from where many of the new businesses are arriving. At $569,000, according to Trulia, the current median sales price of a home in Dallas is about two-thirds the $867,000 median in Los Angeles, according to Trulia.
Many executives at the firms fuelling Dallas’s economic renaissance have settled to the city’s north, across Highland Park and University Park — together known as Park Cities. The most minted choose Preston Hollow, immediately to the north of University Park. Here, locals — who include George W and Laura Bush, who arrived from the White House in 2009 — are attracted to Dallas’s largest homes in the quiet, leafy neighbourhood on lots of up to five acres. New arrivals have helped lift average home sales across the three areas to $1.3m in June, according to Bill Head, director of communications at the MetroTex Association of Realtors. On Hollow Way Road in Old Preston Hollow, Sotheby’s International Realty is selling a five-bedroom house on 1.5 acres for $3.95m.
At the market’s top end, few homes are selling. Those priced above $1m in the Dallas area fell to 357 in the second quarter of this year, 4 per cent fewer than the same period last year, with average discounts also running at 4 per cent, according to Coldwell Banker.
In fact, transaction numbers for homes above $5m have been falling for 18 months, says Gayl Braymer, of the firm. These super-prime homes became over-valued earlier as their more discretionary buyers — “opting for a slightly bigger or a different house, but not moving because they have to” — adjusted what they were prepared to pay.
Around the $1.5m mark, where the demand for Park Cities’ public schools remains a draw, prices have proved more robust, she says. On Potomac Avenue, near the McCulloch Intermediate School in Highland Park, Coldwell Banker is selling five-bedroom detached house with six bathrooms for $1.799m. The same agent is selling a four-bedroom house on Turtle Creek Boulevard in University Park for $3.75m.
The Park Cities area has a strong sense of community, agents say. Braymer reckons the small-town feel also helps curb recalcitrant local youths: “I say to my children: ‘If you stop and buy beer at a convenience store, by the time you get home, someone will have called me to let me know’. ”
- Local property taxes range between 2.3 and 3 per cent per year in most cases
- Total Dallas home sales were up 0.2 per cent in the year to July, compared with the same period in 2017
- The population of Dallas-Fort Worth-Arlington grew by 146,000 in 2017, the largest of any US metropolitan area
What you can buy for . . .
$500,000 A two-bedroom apartment near Lakeside Park
$1.5m A four-bedroom house in University Park
$10m A four-bedroom house on three acres in Preston Hollow
More homes at propertylistings.ft.com
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