Investing in Texas real estate in 2019 is still a good move for your portfolio.
When we think about what causes problems for your portfolio, we don't think about the housing market slowing or slight increases in interest rates. However, when we look for evidence of good markets to invest in, we do think about what we're seeing in Dallas. At Memphis Invest, we take the investment markets we choose very seriously.
We look to invest for the long-term, not for flash-in-the-pan market booms.
So that said, what is creating ideal investment conditions in Dallas? Here's what you need to know.
Quick Facts About Investment Conditions in Dallas
Job Growth is Twice the National Average
The biggest indicator of Dallas’ potential for real estate investors is its job growth. When we look at Texas, we see a population growth of 3.5 million since 2010. And across Texas’ three biggest markets of Austin, Dallas, and Houston, we have a job growth rate of almost 4 percent. Thats close to double the national average.
Job growth is one of the if not the leading factor in real estate market health and growth potential. It leads to population growth and consequently, real estate demand. With Texas markets topping list after list of hottest markets in the country for years, we know that this is true. Even in the past year, Dallas experienced real estate price growth of 8 percent.
This is despite Texas having such a strong relationship with the oil industry, which has had its fair share of trials in recent years that, in other decades, could very well have crashed the economy and real estate market with it.
Affordability is Strong Overall
With job growth driving population and housing demands, we also see, as expected, price growth. We know that Dallas and other hot Texas markets have seen exponentially rising prices in the past several years. Though they have begun to cool at the end of 2018, the price increases have created lingering questions of affordability.
However, prices, for the most part, sit under $300,000 across Texas outside of high-end parts of the market. When we compare the growth and size of these markets to their competitors, like Los Angeles, Sacramento, Seattle, or Miami, we can't help but be amazed!
This isn't to say that Dallas doesn't have an affordability crisis on its hands. Most modern markets do. However, for investors looking to put their money in a buy-and-hold investment, it's hard to go wrong with a Dallas property. You have an increasing inventory thanks to the balancing of the market, which decreases competition and is keeping prices in check. We also have an influx of professionals and job opportunities that secure demand and stable, long-term tenants.
When investing in a higher quality mid-range property in Dallas, you are paying that same for what would be a “cheap” property in another market. While in the short term, this doesn't seem like a great option for cash flow, the property is less expensive to hold in the long-term and it attracts more stable, high-quality tenants. This is what makes Dallas a great candidate for buy-and-hold investors.
Then There's the Interest Rate Issue
We've discussed the issue of rising interest rates several times on our blog as it has been a growing point of contention among real estate professionals. We do want to point out that while rates have been rising, they are not nearly as high as they have been in the past twenty years. Regardless, they have been a deterrent among homebuyers—and as a result, could be seen as both a factor holding the real estate market back and something that keeps renters renting.
However, in a twist, mortgage rates have actually seen a decline recently. Homebuyers were paying attention and rushed to the markets to take advantage of the dip.
What this may show is that mortgage rates aren't doomed for a constant upward trajectory that some fear, or, at the very least, how even the smallest of fluctuations will impact markets month-to-month.
Regardless, some have perceived Dallas’ demand for housing to be in a slump due to interest rates, despite growing demand from population growth and a still-tight inventory. In reality, prices are kept in check by these interest rate increases in what has, in the past several years, been strictly a seller's market.
For real estate investors, it's hard to deny that the opportunities afforded by Dallas’ economic strength and population growth, along with the market's relative affordability, make it a market well worth their time.
And when you have a turnkey partner like Memphis Invest by your side navigating properties, neighborhoods, and bringing you ideal investment opportunities, it makes Dallas real estate a no-brainer.
Get started today in Dallas turnkey real estate.