DFW Market Conditions for 2019.....Back to Normal?

I hope this post finds you well. We have 1 month left in 2018 and it has been an interesting year. I have been contacted by several buyers and sellers as to "What is Next" (in my opinion).

While North Texas (and really all of Texas) remains very strong with job and income growth, we have reached the top of market in terms of cash flow property. I focus on single family rental, 2-4 unit and commercial MF properties. Rents have jumped to sustain the price increases the past 5 years but we are finally at a point of TOP OF MARKET.

More and more inventory is coming on market (still at inflated pricing) and we are reaching a point for the first time in years of having much more to look at. Typically, more inventory gives buyers more options and better purchase price opportunities. The issue still is unrealistic sellers of over pricing property. The 1:1 ratio is a great bench mark for buyers but that is more realistic at .8:1 ratio these days to land in the 6.5%-7% Cap Range.

My hope and belief for 2019 is a return to 7% Cap deals in the Texas Region. Too many properties are staying on market longer than needed because of unreal expectations of sellers. I believe as their properties linger on market, they will clue in to being more realistic in pricing (both on residential and MF). While this group of owners purchased with more money down and undoubtedly cash flow in their current position, it doesnt mean you THROW OUT THE OLD RULES of evaluating a property on the income method.

For buyers that have been looking, keep your lender letters current, be on the look out. Explore deals that have been on the market and stale. I have closed several deals in the past 6 months on overpriced properties by starting with realistic offers and showing a STRONG BUYER and our reasoning for the offer price points. Showing a STRONG AND QUALIFIED BUYER is a big part of the battle.

I hope 2019 gives us a return to normalcy on both buyer and seller expectations for the Texas region. Please call or email with any questions. Happy Hunting. Jim.