Is buying a property in the North Texas real estate market a wise investment decision? Experts say yes!
As the new year is quickly approaching, property investors are searching for their next investment. The Great State of Texas has always been known to be a thriving, highly profitable, and a sought-out market. Texas has three markets in the top 20 best places to invest in real estate in the Urban Land Institute and PwC’s Emerging Trends in Real Estate 2019 report for the United States and Canada. The report also places the Dallas-Fort Worth metro area in the #1 spot!
Related: Texas Real Estate Market 2018 Steals 7/15 Spots in New Study for Top Markets
As a result, many property investors are now turning their eyes to North Texas real estate – as should you. In this blog post, we explain the various reasons behind North Texas’ successful housing market. Furthermore, we explore where and how to find profitable investment properties to capitalize on in the North Texas real estate market (specifically in the Dallas-Fort Worth-Arlington metropolitan area). Let’s get started.
Demand
With a GDP of $1.6 trillion and a GDP annual growth rate of 5.2% late last year, you can easily say that Texas has one of the strongest economies in the United States. With this thriving economy comes growing population. It seems that everyone wants to move to Texas – especially to the northern parts of the state. The Dallas-Fort Worth-Arlington metro area has a population of 7.23 million and, according to the US Census Bureau Population Estimates, the area saw the largest population growth in the US. Hence the hot North Texas real estate market – after all, those people have to live somewhere.
The main reasons people are moving to North Texas include its low cost of living and strong job market growth. Moreover, real estate experts claim that North Texas has enough job growth to justify the rising property prices and rents (explained in detail below). Properties are selling at a rapid pace in the metro area as the average days on market dropped below 58 days. The demand for housing (especially in the $200,000 – $300,000 range) is still strong as new residents move into the state, meaning plenty of prospective buyers will always be around.
However, is the supply of housing in North Texas real estate keeping up with this demand?
Supply
The bad news is: Texas has 3.6 months of inventory (a balanced housing market has around 6). The good news is: a recent report issued by the Texas Real Estate Center at Texas A&M University notes that supply is on the way. According to the report, the Texas Residential Construction Cycle Index (RCLI) – which measures current construction activity – is climbing upwards. For one thing, the number of developed lots set for houses to build upon is increasing and the Dallas-Fort Worth-Arlington metro area is leading the way with 48,690 developed lots.
Furthermore, Texas remains the US leader in permits issued, accounting for 16% of the national total. North Texas topped the metropolitan ranking with 2,912 single-family building permits issued.
While permits don’t automatically mean “will be built,” the fact that more permits are being issued is generally regarded as a good sign. As long as the North Texas real estate market continues its current home-building activity, the new supply of properties will ultimately catch up with the growing demand.
In addition, many complexes and multifamily homes are currently under construction. As a result, the increasing rental rates in the area are likely to stabilize, making renting more of an option for residents. For a real estate investor, this is a good time to enter the market and buy investment properties for rent as this will yield good rental income and ROI.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
North Texas Real Estate Prices
Property prices are expected to rise in the US housing market, so it shouldn’t come as a surprise that North Texas is experiencing an increase in prices as well. According to Zillow, the median price of homes currently listed in the Dallas-Fort Worth-Arlington metropolitan area is $320,000 while the median home value is $235,500. This is a 10% increase over the past year and real estate experts expect another 8.7% increase within the next year.
Since North Texas already has historically high property prices, some property investors now wonder if buying in the metro area is still a worthwhile investment. Well, even though prices have increased, the North Texas real estate market’s affordability is still favorable compared with other states. In addition, dues to its good economic and employment growth, rental prices are increasing as well. According to Zillow, the median rent price in the metro area is $1,680, which is higher than the Texas median rent price of $1,520.
Where Should You Invest in North Texas?
North Texas real estate investors have to make sure they choose a growing neighborhood in which to buy a rental property. This is something we can help you with! Mashvisor provides real estate investors with the tools necessary to find the best investment properties in their city and neighborhood of choice, one of which is the Heat Map.
Using visual cues, this investment tool shows you how the different areas in North Texas are performing based on the metric you choose. The available metrics are listing price, cash on cash return, rental income (both traditional and Airbnb), and Airbnb occupancy rate. So, if you’re looking for an affordable rental property in North Texas, simply set the Heat Map to preview areas based on their listing price, just like in the picture below where areas in red are more affordable than areas in green.
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The Bottom Line
To sum up, the Great State of Texas remains a top choice for property investors, especially the North Texas real estate market. The Dallas-Fort Worth-Arlington metropolitan area has a strong economy, growing population and employment, and improving inventory. All of these are signs of a thriving housing market where you should definitely keep your eyes open for a profitable investment. And remember, Mashvisor can help you start and finish your property search in a matter of minutes using only the best tools for property investors.
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