by Broderick Perkins
Dallas has come a long way since cowboys roamed the range and the football team with the same name lassoed five Superbowl victories, but housing remains comparatively affordable.
Silicon is the new big oil in Dallas, also dubbed "Silicon Prairie" for its high concentration of telecom and information technology companies, including regional or national headquarters for the likes of AT&T, Ericsson, Fujitsu, MCI, Nokia, Nortel, Rockwell, Sprint, as well as technology industry pioneer, Texas Instruments.
For all its big city spread, the relative low cost of living keeps home prices affordable, which at the start of 2006, were listed at a median of $147,600 for single-family homes, compared to the $207,300 national median for metropolitan areas, according to the National Association of Realtors.
"Recent increasing interest rates have made affordability a primary issue for new home consumers," said Howard Mills, Regional Sales Director for Hanley Wood Market Intelligence.
"However, with a median price of $151,450 (for newly built homes) with an average square feet of 2,341, many Dallas-Fort Worth homes provide consumers with a combination of space and affordability that is difficult to find in other markets," added Mills.
That could make the area a spillover market, enjoying an influx of buyers and investors fleeing over-inflated housing markets where prices have peaked.
In the resale market, on average, Dallas metro area home buyers negotiate to pay only 97.4 percent of the asking price and they enjoy a standing inventory of some 40,000 listings. The market managed a decent 6.4 percent rate of home price appreciation during the past year, according to the Real Estate Center at Texas A&M University.
In the apartment market, commercial real estate brokerage Marcus and Millichap ranks Dallas a low 31 out of 42 markets based on supply and demand indicators, but mediocre news for investors is good news for renters.
Throughout the expansive 385 square mile area of Dallas alone, rents vary, but also remain affordable thanks to high vacancy rates the market has suffered for years. Studios and one-bedroom units can be found from $500 to $600 a month, two bedroom units are a few hundred dollars more.
Marcus and Millichap says high vacancy rates will continue to limit rent growth in the Dallas/Fort Worth apartment market this year with asking rents rising to an average $755 per month overall an increase of only 1.8 percent over 2005.
But that could be overstating rent increases. The short term boost from Katrina evacuees will soon end, pushing vacancy rates to as high as 10 percent, Marcus and Millichap also reports.
"North Irving will register the lowest vacancy through 2006 at 6.8 percent, a figure largely unchanged from last year," the company added.
High vacancy rates mean relative affordability that allows investors to acquire more units for the money and realize greater economies of scale than in many other markets, Marcus and Millichap reports.
Renters likewise will enjoy those economies of scale passed on as lower rents and more concessions and amenities as the area's economy continues to attract renters and buyers.
The 12-county Dallas/Fort Worth metroplex, the largest metropolitan area in south central United States has one of the nation's highest concentrations of corporate headquarters and is also the region's leading business, finance and marketing center.
That makes the region of 5.7 million residents (the nation's fifth most populated metro area) quite a draw for conventioneers, relocating corporate employees and builders who house them.
"Job creation in the Dallas/Fort Worth metro will increase dramatically in 2006. Employers are forecast to add over 69,000 jobs this year, more than twice the number added in 2005," reported Marcus and Millichap.
Published: April 27, 2006
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