I was visiting with some bankers at lunch recently, and they asked what I thought of the current real estate market.
I think the Dallas-Fort Worth property market is great — on fire.
But I wonder how long it will last.
This late in the cycle, there are signs that the real estate market is slowing. Not that North Texas’s economy isn’t still growing like crazy.
The D-FW area added more than 100,000 jobs in the year ended in March, according to preliminary figures from the Bureau of Labor Statistics. So far in 2018, D-FW has has stayed near the top of the list of U.S. cities with the fastest-growing employment sectors.
Only New York City beat Big D for annual job creation in March.
Job gains in North Texas have topped 100,000 a year for more than four years — an unprecedented economic boom. As long as companies keep bringing so many new jobs to the area, the real estate market will continue to thrive.
Add to the jobs, the surge in population growth.
Last year, D-FW grew by more than 146,000 people — more than any other major U.S. metro market. More than half of that population gain was from people moving to the area to fill all those newly created jobs.
Every one of those newcomers needs someplace to live, work, shop and eat. That means more building and construction, and real estate is again a winner.
Still, all that could quickly change if there is a national economic jolt and if companies stop expanding.
The U.S. economy is currently tied for the second-longest expansion in history. There are subtle signs that 2018’s property market is different from the last few years.
Home sales are down slightly in many local neighborhoods this year. New construction projects in D-FW fell in the first quarter after several years of record building.
The biggest cutback was a March decline of 22 percent in nonresidential construction. Residential building was off, too.
Office building vacancy rates have crept higher in the last year. And first-quarter office leasing activity in D-FW lagged recent levels.
North Texas will need another Toyota, State Farm Insurance or Liberty Mutual move to keep office space demand near the pace it’s been keeping over the last few years.
The outlook for more corporate job moves to D-FW is still good, and Amazon still has Dallas on its shopping list.
But this late in the real estate game, it’s time to worry about what’s next.
Top U.S. job gain markets
Increase in employment for 12 months ending March.
1. New York 121,800
2. Dallas-Fort Worth 101,200
3. Los Angeles 87,100
4. Houston 62,500
5. Seattle 60,200
6. Phoenix 65,600
7. Riverside, Calif. 45,900
8. Atlanta 45,200
9. Washington, D.C. 38,000
10. Austin 36,800
SOURCE: U.S. Bureau of Labor Statistics