As it turns out, Americans taking their first vacations in almost 2 years was just what the market needed to calm down a bit. The moment kids finally got out of school, the frantic state of the real estate market finally relaxed, and frankly, I couldn’t be happier.
“But John, you strapping yet annoyingly sensitive narrator,” I hear you ask, “surely a slower market is bad for appreciation!” Well, fictional person, as a homeowner myself and someone who plans on living in Dallas for at least the next 15 years, I want to see home prices remain as close-to-affordable as I can.
I’ve had several people ask me the last few weeks if Dallas is in for a market correction now that things are slowing down. To this I have a short answer and a long answer. Short answer: no. Long answer: Dallas was, for decades, one of the most undervalued markets in the United States. We are now victim of our own success, as hundreds of thousands of people migrate to our business-friendly environment, and we have rapidly caught up with the prices of other major metropolitan areas. Dallas is still cheap in the aggregate in that our (non-property) taxes are low, and the cost of goods-and-services still lags behind many regions. Prices – both housing and goods-and-services – are rapidly catching up, however, and the national labor shortage has done nothing to ameloriate that.
Interest rates still hover around 3% for a 30-year fixed mortgage. I may have mentioned this before, but the Dave Ramsey/Robert Kyosaki mantra of always paying cash is, for now, on it’s ear.
It’s really doubtful we’re going to see 20% appreciation in the coming years, but that doesn’t mean we won’t see 10+. The moral is this: the odds are really high that real estate is going to outperform the stock market in the next few years. I’m not an analyst and of course there will be outliers, but 10% return is nothing to scoff at. You may be paying 20% more than you would have paid a year ago, but buying real estate is still the most time-tested method of accumulating wealth.