A Birds-Eye View of Housing Supply and Demand in Dallas

I’m writing this post about Dallas, because I own a condo there and because Dallas is a good example of the basic economic laws of supply and demand.

Let’s start with some general reporting from a recent Dallas Morning News:
“North Texas home prices are at an all-time high. And the price increases in the D-FW area this year are among the largest in the nation…
“Texas home sales rose by almost 8 percent in the third quarter and are likely to set a record in 2015.”

And then, more specifically, the same article quotes a statement by Scott Kesner this week. Kesner is chairman of the Texas Association of Realtors:
“Overall, statewide numbers continue to be strong. At this current pace, 2015 could very well surpass 2007 as a record year for Texas home sales.”
Sounds good, right?

Well, Texas recently geared-up for increased oil production when oil prices were high, and now oil prices are low and many oil-related industries are hurting. Boom and bust cycles are one natural result of over-production during the good times.
Dallas, Texas has dozens of developers with residential projects moving forward because prices of Dallas real estate are on track reflect the highest gains in the US in 2015. Single-family homes, condominiums and apartment complexes are popping up all over the Metroplex, while others are still in the project-planning and financing phases.

I don’t have a crystal ball, but I don’t need one to predict what is probably going to happen to the residential real estate market in the Dallas area. Let’s just put it the way many Texas do - things are fixin’ to change…

Nobody needs a crystal ball to predict the downturns that inevitably follow dramatic growth. In a separate Dallas Morning News article I read:

“Nationwide, home prices will grow about 5 percent in 2016, and in Texas the increase could be less than 2.5 percent, according to industry forecasts.”

I don’t have any idea what the future percentages will be according to industry statistics, but I know one thing for certain – when there are more housing units on the market for sale and for rent than there are people looking to purchase and lease, prices will go down. That’s just how it works.
And I know another thing for certain. The falling price of oil seriously influenced the price of residential real estate in Oklahoma City in the 1980s. I lived there and owned plenty of residential real estate there, too.
Having experienced the boom and bust cycles of residential real estate markets in one oil-producing state in the past, I learned to look and plan ahead. I learned to consider the economic consequences of market conditions, but also to see the big picture for the future.

So there you have it, my birds-eye view of housing supply and demand, from my Dallas condo and from my life experience.