Want to know what the best major metro market in the country for real estate investors is?
You’re sitting on it right now.
I’m not just making that up because I’m a Realtor in the Dallas area.
That’s the verdict of BiggerPockets.com, one of the leading Internet news and information resources for real estate investors.
For the 2nd year in a row, the editors of BiggerPockets named Dallas the top real estate market for investors in the country. The reason: Solid returns on investment – averaging 20.7 percent, on average, on an unleveraged basis. Those who are using borrowed money to help them acquire properties can do much better, on average. But of course, leverage also increases the risk for the unwary!
Dallas also posted excellent results for property appreciation and rent to value numbers, compared to other markets. But it was the combination of appreciation and rental yields that led to Dallas’s first place finish.
Here are the standings, measuring total unleveraged return on the average residential property:
1. Dallas, TX 20.7 percent
2. Portland, OR 19.91 percent
3. Denver, CO 19.23 percent
4. Miami, FL 18.12 percent
5. Tampa, FL 17.62 percent
6. Seattle, WA 17.18 percent
7. Nashville, TN 16.73 percent
8. Atlanta, GA 16.20 percent
9. Houston, TX 15.83 percent
10. Austin, TX 15.55 percent
What’s more, BiggerPockets wasn’t alone in its assessment. The National Association of Realtors just published its list of the 20 hottest markets in the country – and once again Dallas, Texas appears right at the top of the list, bested only by San Francisco and its legions of tech millionaires.
Furthermore, unlike San Francisco, Dallas is still affordable for working families.
According to the NAR report, researchers looked at the median number of days each home spent on the market, and the number of listing views per market to generate their hottest market rankings. Homes are selling quickly – and often for more than the asking price.
Momentum is on Dallas’s side as well: Its ranking improved two places compared to October when it ranked 4th in the country overall.
The hottest ten markets according to the economists at the National Association of Realtors are as follows:
- San Francisco, CA
- Dallas, TX
- Vallejo, CA
- Denver, CO
- San Jose, CA
- San Diego, CA
- Stockton, CA
- Fort Wayne IN
- Columbus OH
- Detroit, MI
Looking at these two metrics, it appears that BiggerPockets’s methodology tends to elevate marquee markets in high-growth areas, while the NAR methodology gives more emphasis to more affordable markets in lower-growth areas that still offer terrific value, such as Stockton, Fort Wayne, Columbus, and Detroit.
So the fact that Dallas appears at or near the very top of the list in both methodologies is quite remarkable.
If you’re considering listing your home, there’s never been a better time.
I continue to feel strongly that the best market for future returns here in Dallas – the best market within the best market for real estate owners – continues to be the North Dallas suburbs, including Frisco, Plano, McKinney, Allen and the surrounding communities.
Nearly every passing day is bringing more news of significant employers relocating or establishing themselves in this area – and all these workers will need somewhere to live. There is a shortage of quality housing as demand is outstripping new home construction here – leading to strong support for home prices.
So what can we expect in Dallas area real estate over the next year?
So far things look excellent. First of all, the Organization for Economic Development just increased its growth forecast for the U.S. economy as a whole over the next two years, expecting a Trump administration to cut taxes and invest in solid infrastructure, construction, which bodes well for the economy for the time being. (Of course, the economic growth rate gained by such measures has to be enough to counter their cost to the Treasury, in the long run, which is always the tricky part!)
That would be slower price appreciation than the astounding 16.6 percent we saw here in Dallas last year, but much stronger than the 2.4 percent house price appreciation Zillow forecasts for the rest of the country.
So with a strengthening national economy, increased growth rates both here in Texas and nationwide, and high demographic inflows into the North Dallas area in particular to support home prices, it’s clear: There’s nowhere in the country I’d rather be working with clients than right here in Texas. If you would like an evaluation of your home, click here for home valuation.