Looking to Buy in Dallas? Bring Cash
Dallas and its surrounding suburbs are one of the hottest housing markets in the nation. It seems like a new record is shattered each quarter as more and more people take advantage of historically low-interest rates. Even large companies like Charles Schwab and real estate juggernaut CBRE are moving in, and they’re bringing with them thousands of good-paying jobs which will only continue to spur demand. Sounds like a perfect storm for real estate professionals, right? In many cases yes, but some potential homebuyers face their own set of challenges — particularly when it comes to securing home loans.
Dallas Possesses Serious Momentum
According to a Realtor.com study, the average home value in the Dallas/Fort Worth area could rise to $316,000 in 2021, which is a substantial increase from its current value of $270,757. Meanwhile, in September of 2020, nearly 49% of Dallas-based Redfin agents reported that they’ve been experiencing bidding wars. This competitive housing market is fueled largely by the combination of high demand, low-interest rates, and low inventory that seems to be contributing to the spike in average home value in Dallas/Fort Worth and around the country. The hottest spots are northern Dallas suburbs which are leading the charge.
D-Town Is in Demand
Dallas is one of the hottest real estate markets in the nation and for good reason. Beyond the record low-interest rates, Dallas is attracting many millennials who want to snag a high-paying, big-city tech or finance job all while enjoying a suburban lifestyle. Meanwhile, others with new remote work opportunities are leaving places like New York City for the fair weather, relatively affordable real estate, and lower taxes that Dallas has to offer. From 2017-2018, Dallas gained nearly 132,000 new residents, making it one of the fastest-growing cities in the nation - and, after the COVID-19 dust settles, we expect the 2020-2021 population growth to be significant.
Why That’s a Problem
If you’re new to the real estate game, then you’ve likely come across a client who struggled to snag their dream property - not because they couldn’t afford it, but because bidding wars pushed the house just out of reach. Essentially, homes are appraised at a certain value, then the bank is willing to issue a mortgage for that value. However, if the price climbs above the appraised value, it’s nearly impossible to get a lender to stretch, and then it’s time to duke it out with cash. Unfortunately, that cash could be the money that your buyer was planning to use for a downpayment. For many, throwing in an extra $10,000 or $25,000 along with their down payment could be a deal-breaker.
What You Can Do?
One of the best skills an agent of any skill level can master is setting expectations. Be upfront with your clients during the shopping process in a high-demand, low-inventory market and prepare them for a bidding war. That way, they can rearrange their finances if need be or shop within a different price range so that everyone gets exactly what they want — and quickly.
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