According to the latest monthly review of the Texas economy from the Real Estate Center at Texas A&M University, Texas is leading the United States in economic recovery. The Texas economy experienced its second month of positive annual employment growth up 0.9 percent from June 2009 to June 2010 compared with a negative rate of 0.1 percent for the nation.
Over the past 12 months the Dallas metro added 27,300 more jobs than it cut. That is enough job growth to warrant the development of a mid sized city!!! If a city needs 3 jobs to support every 5 people, 27,300 new jobs justifies a population increase of 45,500 people. Kids and retired people don’t work but they need places to live. Assuming 2.5 people per household, 45,500 new people need 18,200 additional housing units.
Is the supply of Dallas housing keeping up with the demand?
In the past 12 months Dallas County added 5,351 apartment units and absorbed 7,596. The numbers show people are absorbing apartments faster than they are being built. The demand for housing is strong but apartment construction has dwindled because of the lack of construction financing. This positive absorption is lowering vacancy rate substantially, however rental rates have remained steady.
Dallas hasn’t experienced a boom in rental rates because while demographics are headed in the right direction, Dallas is still burning off a small amount of excess housing that was built during the easy credit building boom from 2001-2007. Current apartment vacancy rates are around 9%, however if you look at the rate of vacancy for properties that are less than 15 years old and the residential occupancy rate is MUCH better.
Many people forecast a housing boom in Dallas because the job market is forecasted to bring more people to Dallas than the housing market can keep up with. Land near Dallas job centers is scarce and people are starting to pay substantial rental premiums to live closer to work. Dallas commute times are increasing as people are choosing to live farther into the affordable suburbs rather than pay the higher cost of living associated with living near the city center. While Texas still has amazing expanses of inexpensive land, none of that land is close to jobs.
Get ready for a Texas sized real estate boom!!!
The Dallas population is growing rapidly as a result of relative economic prosperity while developable land near job centers is scarce. As traffic commute times increase over the next decade, it will become more desirable and more economical to pay a larger and larger housing premium to live closer to your job.
Statistics for this blog were taken from the real estate research center at Texas A&M University http://recenter.tamu.edu/mreports/