MARKET SPOTLIGHT: TASTE OF TEXAS
everyone else who wants to be cheap and compete on price,” Clothier said. “Our price point is $150,000 to $225,000. Once you get above $200,000 you have fewer investors who want to commit that much money to a passive investment. In reality, those houses tend to be the best performers.” When it comes to buying in Dal- las, Clothier is talking about a 2,000 square foot home with three or four bedrooms and two baths, an at- tached garage and a backyard. “We’re appealing to a higher-in- come-earning family. You get a more stable resident; therefore, your income flattens out. It’s the more expensive property that may not feel like it cash flows as well, but over a period of time it costs less to hold it,” he said. The monthly rent on a three-bed- room single-family home in Dallas County rose 4 percent in 2018 to $1,563 a month, for an annual gross rental yield of 8.9 percent, according to ATTOM Data Solutions. Plus, Clothier said investors are having a positive impact on the market by giving complete overhauls to the many homes that were built before 1985. “Investors are putting their money to good use in Dallas, making them like new. It’s a good thing for Dallas — bring- ing them up to code,” he said. “Investors want to be in this market because they think it’s a safe place for their money.” ASAFE BET IN ‘SUN CITY’ Known as the “Sun City” for its sunny days most of the year, El Paso is a popular place for investors seek- ing opportunities to get into a safe and stable market. Plus it ranked 7th among the top 10 safest metro cities in America for 2018. “We recently had an expansion of the Fort Bliss military base that has brought in soldiers and families,” said Lacy O’Leary, president of the El Paso Investors Club. “We have a very diverse economy sustained primarily by the military base, and El Paso is making
DALLAS-FORT WORTH MEDIAN PRICES & APPRECIATION
El Paso is a great city for rental properties. It’s a great place for seeking passive income and flipping opportunities. Not only are tenants abundant, but you have the ability to find plenty of distressed properties and the market will buy them.
MEDIAN HOME SALES PRICE
YEAR-OVER-YEAR PCT CHANGE
50%
$300,000
40%
$250,000
LACY O'LEARY
30%
$200,000
20%
an effort to be more tourist-oriented.” As of October 2018, unemployment in El Paso has dropped to 3.9 percent, down from 4.1 percent a year earlier. According to Stewart Title, employment in the El Paso metro area gained 2.32 percent net new jobs in the 12 months ending October this year, and net new jobs have risen 9.2 percent over the five-year period through October. Depending on the size of the house, O’Leary estimated that the housing inventory in El Paso is be- tween a three- and six-month supply. “El Paso is a great city for rental properties,” she said. “It’s a great place for seeking passive income and flipping opportunities. Not only are tenants abundant, but you have the ability to find plenty of distressed prop- erties and the market will buy them.” A total of 1,312 properties in El Paso have been scheduled for fore- closure auction through November 2018, up 6 percent from the same time period in 2017, according to ATTOM Data Solutions. The monthly rent on a three-bed- room single-family home in El Paso County was virtually unchanged from the year before at $1,302 a month for a potential annual gross rental yield of 11.9 percent, according to ATTOM. “We have a lot of single-family bun- galows, detached and attached, with a yard. El Paso is abundant with oppor- tunities in all areas of the city because it’s expanding east and northwest,” she said. “The areas of central and south El Paso are seeing a lot of revitalization.”
While home affordability during the third quarter of 2018 was down 3 percent from the previous quarter and down 7 percent from a year ago in El Paso County, the median sales price of $147,130 was up 3 percent over the past year and up 20 percent from the first quarter of 2013 (it’s most affordable quarter). In the El Paso metro area the me- dian sales price in the third quarter was $146,519, up 2.5 percent from a year earlier and up 50 percent from the post-recession bottom in Q2 2001, according to ATTOM Data Solutions.
$150,000
10%
$100,000
0%
$50,000
-10%
-20%
$-
erties sold via foreclosure auction. “Ninety percent of what we do is buy on the courthouse steps. We buy and sell about 20 percent then use the profit as equity to refinance the other 80 percent that we keep as rentals." Scheduled foreclosure auctions in the Dallas-Fort Worth metro area declined 13 percent in November compared to a year ago, but are still up for the year, according to ATTOM Data Solutions. A total of 6,694 prop- erties in the metro area were sched- uled for foreclosure auction through November, up 3 percent from the same time a year ago. Memphis Invest partner Chris Clothier still considers Dallas a vi- brant market for single-family home investors because of all the whole- sale activity going on there. “We’re in that sweet spot of rental property. We’re not competing with
EL PASO HOUSING STATS AT A GLANCE
DFW HOUSING STATS AT A GLANCE
$261,250 median home price, up 5.8 percent
$146,519 median home price, up 2.5 percent
$41,250 average gross flipping profit, 22.0 percent gross ROI 6,694 scheduled foreclosure auctions, up 3 percent
$1,563 average rent for 3 bedroom, up 4 percent (Dallas County) 8.9% potential annual gross rental yield (Dallas County)
$1,302 average rent for 3 bedroom, unchanged (El Paso County)
11.9% potential annual gross rental yield (El Paso County) $27,813 average gross flipping profit, 27.8 percent gross ROI 1,312 scheduled foreclosure auctions, up 6 percent
Worth have increased 119 percent from the post-recession bottom price of $119,253 in the fourth quarter of 2012. The slowdown’s silver lining is improving affordability. ATTOM Data Solutions reported a 1 percent improvement in housing affordabil- ity in Dallas County during the third
quarter of 2018, although affordabili- ty was still down 10 percent from the same quarter the year before. "Dallas is a very business-friendly city. The houses are very affordable. That's the draw for Dallas,” Amu- chastegui said, noting that most of what his company buys are prop-
26 think realty housing news report
february 2019 27
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