Over the last several years, more and more individuals and companies are migrating to Texas, specifically Dallas and Austin. In 2019, over a million people left California; of those million, 150,000 migrated to Texas. Dallas is quickly turning into one of the most attractive places to live—with booming suburbs, high residential starts, no state income taxes, etc. One of the key factors of this migration is the influx of young professionals moving to the Dallas Metroplex; while many of them are renters, others are purchasing homes or looking to purchase within the next couple of years.
So, what does this mean for the Dallas Real Estate market? With the federal mortgage rate remaining steady at record lows (~2.8%), the economic rebound has slowed down, but demand from first-time buyers is still high. In fact, new home demand in North Texas was up 34% in Q3 from 2019 to 2020, making this this strongest quarter since 2006. New home closings also saw a high year-over-year change in Q3, with a growth of 20.7%.
Dallas millennials (ages 30-39) are the prominent group driving this growth, and they are mostly affecting the $350K and under market. The overall annual start rate has grown 25.9%, while the $350K and under start rate has grown 34.5%. The increased start activity in the lower-priced sector has helped the median new home price fall, even though construction costs have increased.
Overall, most homebuilders are facing the same effects of the housing market—high demand, low inventory, low supply of finished specs, construction delays, and a backlog of build-to-suit homes. The last quarter of the year is typically slow, but with Covid-19 effects, the extent of this slowdown is uncertain. However, at Camden Homes, we are preparing for 2021 with high hopes. If handled correctly, the current activity of the North Texas housing market will drive a strong start to next year.