areiusa.com DALLAS-FORT WORTH MARKET REPORT

areiusa.com DALLAS-FORT WORTH MARKET REPORT

Overview The Dallas-Fort Worth real estate market is not slowing down as it flips the calendar to 2019. People are migrating to the area at impressive rates for work and affordable housing. Even though the Dallas metro housing prices are increasing above the national pace, they still haven t peaked. DFW is home to a couple dozen Fortunate 500 companies and a hub to financial and technology-driven businesses that fuel the metro. Will 2019 be the year DFW lets the other major metros catch up? Statistics say no. The area leaders have big plans to improve the infrastructure, add housing options, create jobs and boost the local and state economies. The Emerging Trends in Real Estate report for 2019 listed Dallas-Fort Worth as the no. 1 market to watch, with the potential for strong future growth but also with the liquidity of a gateway market. Source: https://www.pwc.com/us/en/asset-management/real-estate/assets/pwc-emerging-trends-in-real-estate-2019.pdf p. 36 of report Statewide North Dallas Dallas is split into two regions: north and south. North Dallas includes smaller cities like Plano, Frisco, and McKinney, all of which are big draws for families. It s a short drive to the central business center, the DFW International Airport or downtown Dallas. The location paired with the highly quality of properties puts North Dallas in a position of high demand. 2 South Dallas In South Dallas, DeSoto, Lancaster, and Duncanville are gaining momentum in the real estate market as frugal buyers are looking for deals. The southern region of Dallas is perfectly set for rehab investors who want to snag properties at a below market price, put in some work, and place renters to turn a quick profit with room to grow. The renaissance of South Dallas is just beginning; the formerly disregarded neighborhoods, although rich with civic history and colorful culture, are finally rising.

Jobs & Economy The unemployment rate in the Dallas-Fort Worth metro area started to dip during the second-half of 2018. By October, it was 3.2 while the state of Texas hit a new record low at 3.7 the lowest in 42 years, and it matches the national rate. Looking back at the halfway point of 2018, a total of 55,500 new jobs were fulfilled. Additionally, 9,500 more jobs were added in October. Even with the aforementioned job growth, the labor market is still tight. The first-half of 2019 is set to showcase the same job openings in a more attractive light (signing bonuses, stock options, hourly wage increases, and so forth) to maintain the downward trajectory of the unemployment rate. Source: https://www.dallasfed.org/research/indicators/dfw/2018/dfw1811.aspx 7 Unemployment Rate Oct 2013 to Oct 2018 6 Unemployment Rate 5 4 3 2 1 0 2013 Oct 2013 Dec 2014 Feb 2014 Apr 2014 Jun 2014 Aug 2014 Oct 2014 Dec 2015 Feb 2015 Apr 2015 Jun 2015 Aug 2015 Oct 2015 Dec 2016 Feb 2016 Apr 2016 Jun 2016 Aug 2016 Oct 2016 Dec 2017 Feb 2017 Apr 2017 Jun 2017 Aug 2017 Oct 2017 Dec 2018 Feb 2018 Apr 2018 Jun 2018 Aug 2018 Oct Source: https://data.bls.gov/cgi-bin/surveymost 3

Dallas is known for its high-tech industry that acts as an umbrella to financial services, professional business ventures, even defense. There is a notable increase in the professional and business sector from October 2017 to 2018, and a steady increase in hospitality and education and health. The real showstopper, though, is the mining, logging and construction sector that incorporates oil and gas jobs. Despite the e-commerce giant, Amazon, passing over Dallas as a possible location for its second headquarters, the metro area is still primed for big business. The success of pharmaceutical companies is opening a lane for biotechnology to emerge as a chief industry in years to come. The Dallas metro area also houses nearly two-dozen Fortune 500 companies, including Exxon Mobil and AT&T. Other companies, like Builders FirstSource Inc. and Integer Holdings Corp are quickly accelerating with revenue growth above 70%. Non-Farm Employment Oct. 2017 Oct. 2018 YoY % Change Total NonFarm 3,643.4 3,752.4 + 2.9% Mining, Logging, Construction 216.6 229.9 + 6.1% Manufacturing 273.8 279.5 + 2.1% Trade, Transportation, Utilities 778.1 786.7 + 1.1% Information 82.6 83.6 + 1.2% Financial Activities 296.8 302.8 + 2.0% Professional & Business 600.3 623.5 + 3.9% Education & Health 446.6 457.3 + 2.4% Leisure & Hospitality 382.9 392.4 + 2.5% Other 124.0 126.8 + 2.3% Government Services 441.7 438.3-0.7% Source: https://www.bls.gov/regions/southwest/tx_dallas_msa.html https://healthcare.dmagazine.com/2018/11/19/we-may-have-lost-amazon-but-biotech-could-be-dallasnext-big-move/ https://www.dmagazine.com/publications/d-ceo/2011/special-report-dfw-technology/how-north-texaswill-become-a-biotech-leader/ https://www.bizjournals.com/dallas/news/2018/05/22/these-north-texas-companies-made-the-latest.html 4

Population Growth From 2016 to 2017, the Dallas metro area recorded a population increase of 146,000 new residents. The US Census recorded the top 10 counties in the nation, and six of them belong to Texas, and four of them are within the Dallas-Fort Worth area. The metro area is home to 7.2 million people, which earns a 4th-place spot on the nation s largest metro list. A Dallas-based publication, The Star Telegram, noted it s on track to explode like Los Angeles did in the 1980s. More than one-third of the population resides in the big cities of Arlington, Fort Worth, and Dallas. Population of DFW 2010 vs. 2018 Dallas Fort Worth 2018(est.) 2010 Arlington 0 500,000 1,000,000 1,500,000 Source: https://www.star-telegram.com/news/business/growth/article212129739. html https://www.census.gov/newsroom/press-releases/2018/popest-metrocounty.html https://datausa.io/profile/geo/dallas-fort-worth-arlington-tx-metroarea/ 5

Infrastructure & Development With an ever-growing population, the metro area is constantly building up the infrastructure to support the public. In June 2018, the North Central Texas Council of Governments accepted a mega metro plan for the Dallas metro area, calling it Mobility 2045. The plan covers transportation needs for the next 25 years with a budget of $135 billion. Most of the infrastructure is based on public transportation in and around the city and in connection to other Texas metros. Where Cost Plan Mobility 2045 $135B Remove traffic congestion, improve public transportation to match growing population Dallas-Houston Bullet Train $15B (private) 240-mile route; projected $36B from direct spending and $3B from tax revenues plus construction jobs Texas Live! In Arlington $1.1B Texas Rangers owned ballpark with hotel, convention center and retail. Source: https://archpaper.com/2018/06/texas-15-billion-bullet-train-roll-out/ On the south side of Dallas, a strategic plan to boost sustainable growth is now in full swing. It s called Grow South. It outlines methods of improvement from infrastructure and capital projects to new potential sales revenue to drive economic growth. The program aims to build 1,500 new homes ranging between $150,000 to $500,000 by 2021. The revitalization of South Dallas is happening right now. The 2018 GrowSouth Indicators Report shows significant progress since its launch: Population growth of approximately 15,000 in 5 years Residential investment is up with a median sales price of $155,000 versus $63,000 5 years ago School performance is up 2.6% from 2013 South Dallas is certainly an investors market for 2019, whether residential or commercial. Source: http://www.dallasgrowsouth.com/wp-content/uploads/2015/12/2018_focus-areas_annual_report.pdf 6

Housing Data From October 2017 to 2018, the Dallas metro home value average increased by 10.9% and is expected to increase another 8.7%. The city of Dallas noted the largest increase while Plano held tightly to the highest home value of all the metro major cities. Rental prices are rising in consistent increments year over year and might be settling around the $1,600 mark to begin 2019. Dallas MSA Median Sale Price May-19 Oct-18 Apr-18 Sep-17 Mar-17 Aug-16 Median Sale Price Jan-16 Jul-15 Dec-14 Jun-14 Nov-13 $202,000 $219,000 $235,000 $248,000 Source: https://files.zillowstatic.com/research/public/realestate/zhvi.dallas-fort%20worth.394514.pdf https://www.zillow.com/dallas-fort-worth-arlington-metro-tx_r394514/home-values/ North Dallas is primed for buy-and-hold investors looking for higher-end tenants. South Dallas is in a state of revival where both residential and commercial investments are approaching the sweet spot: other investors properties are showing increased value, but the buy-in point is still low enough to negate major risk. South Dallas could be the perfect location to exercise private money lending. 7

Conclusion The Dallas-Fort Worth metro is still among the top 5 fastest growing metros in the nation. Since 2010, more than 555,000 people moved to the area. Many Fortune 500 companies have roots in the area, which makes the economy strong. DFW ranks no. 2, just behind Houston and Phoenix, with a 3.2% growth year over year from August 2017. Housing values are consistently on the rise and real estate investment opportunities are accessible. While single-family home rentals are still a low-risk option, the real estate market is likely to present the perfect environment for private money lending in 2019. 8

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