Luxury home sales were on rocket fuel last month in Dallas Texas. Sales of luxury homes price at a $1 million or more spiked 44 percent from May of last year. The average price of a Dallas home skyrocketed 21 percent year-over-year setting a new record high of $716,131. That’s $124,000 higher than May of last year and $63,000 higher than the previous bubble peak of June 2022.
While the Federal Reserve is still trying to shrink that bloated balances sheet, The U.S. Treasury department is still pumping out a lot of new debt issuance to fuel a massive fiscal deficit before the elections. Fiscal dominance has more than offset quantitative tightenting from the Federal Reserve. This crisis-like spending has kept the economy out of recession (so far). It has also helped to keep the labor market from buckling, though signs of stress are percolating under the surface.
Liquidity Still Driving the Real Estate Market Higher
Excess liquidity is still driving area home prices higher. Just about everyhwere you look in North Texas prices have been perking up this spring. What just happened in Dallas is a testament to the liquidity still sloshing around in the financial system. There are plenty of owners sitting on big equity gains. There are also plenty of investors who have been enriched by fiscal and monetary stimulus inflating the markets.
For the bulk of the residents in North Texas the housing market is more complicated and more challenging. The city of Dallas saw overall home sales fall by 8 percent last month even though luxury homes were flying off the shelves. Home sales in Denton County fell by 1.5 percent year-over-year while average prices rose by 5.6 percent.
With the Fed’s balance sheet still in excess of $7 trillion and Treasury funding big deficit spending, home buyers and investors are still active in the North Texas housing market.
Denton County Ag Scam is All the Buzz
Tax avoidance by wealthy North Texas land owners is picking up steam. It’s literally buzzing with activity in Denton County.
Wealthy landowners are shuffling bee hives like Pokeman cards so they can wipe valuable property off the books and pay little to nothing in property taxes. This is happening while many typical home owners saw their property tax bills rise again this year.
When the bee bill of 2012 gave tax breaks for property owners sitting on five acres or more many landowners took notice. Beekeeping for tax avoidance is now a very sweet industry in Texas. With the generous tax loophole and the recent spike in property values, it should come as no surprise that many Texas landowers are taking advantage of the new gift.
“the number of Texas beekeeping operations shot up from 1,851 in 2012, when the policy took effect, to 8,939 by 2022. That was more than the bottom 21 states combined.”
“When Barber and his brother first started their company, he thought beekeeping for others who wanted the tax break would be a quarter of their work…Beekeeping on other peoples’ land is now a majority of Barber’s business.” You don’t say!
This is probably a good time to remind you that the Denton Central Appraisal District wiped over $9 billion in property off the tax rolls in 2023 for a host of “ag” exempetions and the wealthy property owners who utilized them. Whee!
Financialization Still a Major Headwind for Housing
Prospective home sellers and buyers could easily be confused from all the mixed signals in the housing market. While luxury home sales are spiking the broader market continues to stagnate. Months of inventory rose again in May to 3.2 months of supply. There are still plenty of investors in the market looking for places to park their money after recent pandemic-era gains.
Elevated home prices and seven percent mortgage rates are still a big hurdle for typical families trying to purchase a home. At the same time rents have not come down despite a recent jump in available inventory. It seems like just about everything in the market is still expensive. This is good news if you are a seller, but less fun if you are a buyer or renter.
The FBI raided the Atlanta office of multifamily developer Cortland Management back in May. It appears the Department of Justice is finally waking up to potential antitrust abuses in the multifamily housing space. Lina Khan and The Federal Trade Commision are apparently taking a closer look at Richardson-based RealPage and their involvement with multifamily rents.
“Khan also addressed the impact of rental pricing by an algorithm used by the Texas-based company RealPage, in response to a question from the AJC. President Biden’s Justice Department has reportedly deepened its price-fixing probe into RealPage over its rental pricing software and whether it colluded with landlords to raise rents.” Atlanta Journal-Constitution
The June Apartment List report for Denton Texas shows average rents are still up 1.2 percent from last year. This is despite a big influx of new supply in 2024. It would be very interesting to see exactly how many of Denton’s multifamily property managers are utilizing the services of Richardson-based RealPage. Perhaps this is something Denton City Council and the mayor should look into. If they are serious about solutions for affordable housing, it seems like a reasonable place to look.
Leave A Comment