Jessie Wyant recalls there were some anxious moments when she and her husband began facing the likelihood of being transferred here from their jobs in suburban Chicago, in the wake of a corporate merger.
The two, married only last July, were unsure exactly when it would be time to make the move.
What’s more, they faced the prospect of selling their recently acquired house in Lake in the Hills.
But one aspect of the move made the uncertainty a lot easier to accept.
“This is definitely a buyer’s market,” says Wyant.
And how. By one recent measurement, the Ft. Worth-Plano-Dallas region of North Texas is the most affordable major housing market in the United States. It’s a virtual bargain basement for real estate values.
Wyant and her husband, Dan Jesse, were transferred here in late winter from Schaumburg, as part of the railroad combination that created Burlington Northern Santa Fe Corp.
On a per-square-foot basis, Wyant says, their new home in suburban Grapevine, located near the airport between Fort Worth and Dallas, cost about 15 percent less than the home they sold.
Pete Riis, another executive transferred here by the railroad, said the new five-bedroom, five-bath house he bought for $248,000 at nearby Colleyville would cost appreciably more in Naperville, a comparable Chicago suburb.
“I’d say the difference would be at least $100,000,” he says. “Land values here are lower, and the workmanship is better because of cheaper labor costs.”
However, to such unalloyed joy over picking up a bargain, analysts add a touch of realism. Not everything about real estate in the Southwest, they say, is tinged with gold.
Indeed, for those in the business of selling real estate, the region’s descent into the nether world of property pricing has proven more than slightly painful.
And for those trying to unload a house, being told that the local market is, in effect, the cheapest in the U.S. has provided scant cause for cheer.
Nonetheless, there is plenty of good news for buyers.
Ed Isbell, another Burlington Northern Santa Fe transferee, said he sold his home in Carol Stream for $160,500.
His family’s three-year-old home in Keller, just north of Ft. Worth, cost only $152,000, “but it is much bigger,” says Isbell. “It has 700 square feet of additional living space.”
With money left over from the sale of their house in Illinois, he and his wife, Kim, are building a swimming pool for their three children, the oldest of whom is in sixth grade
Riis and his wife, Debbie, also are building a pool for their four offspring, the oldest of whom is 17.
“Consider it a bribe for them moving to Texas from the Chicago area,” Riis said. He said family members “have made a good adjustment. Our new area is just like Naperville–very transient,” with numerous corporate relocations.
Affordability of real estate aside, some Santa Fe employees balked at moving to Ft. Worth, he said.
“There was some downsizing, and the railroad offered buyouts. Some people just didn’t want to leave the Chicago area,” Riis said. “They had too many hometown ties.”
For Isbell, who has been transferred eight times in his railroad career, moving to Texas was no big deal.
“The kids love the weather change–they got to walk around in shorts in February,” he says.
Further, in his 21 years with the Santa Fe and now the merged railroad, “this is the first time I have come out ahead financially on a move,” he says.
Exactly which U.S. metropolitan area has the lowest house prices has excited claims and counterclaims in the real estate industry.
For instance, a widely published survey showed Oklahoma City to have the least expensive price for an “executive” four-bedroom home, at $97,125. Ft. Worth finished second in that survey, by Coldwell Banker Corp., with a price of $104,166.
Brokers in the Ft. Worth-Dallas region hauled out another survey, which included the cost of rentals, to claim the crown of most affordable as their own.
That survey was conducted by the National Real Estate Index of San Francisco and E&Y Kenneth Leventhal Real Estate Group.
The Coldwell Banker survey, done in last year’s fourth quarter, found the most expensive market in the U.S. to be Beverly Hills, Calif. There, an executive home cost an eye-popping $745,666. It was followed in the survey by Greenwich, Conn., and San Francisco.
The most expensive Chicago area market was in Lincoln Park on the city’s North Side, where a 2,200-square-foot home–the average size used in the survey–was priced at $425,535. That made it the 13th most expensive in the country.
Chicago economist Diane Swonk says that the Southwest isn’t typically considered the most affordable market, when adjustments are made for how much a buyer is making.
“By region, if you roll incomes into the equation, the most affordable market remains the Midwest,” she said, noting that listings of affordability usually point most favorably to mid-sized cities, not giants like Chicago.
For instance, the most recent affordability survey by the National Association of Home Builders rated Lima, Ohio, as No. 1, while the Midwest had more than half the nation’s 25 least-expensive markets in the final three months of 1995.
Swonk, deputy chief economist of First Chicago NBD Corp., said those who buy in Texas after moving from the Midwest may be in for a rude shock when it comes time to sell.
“In the Southwest, an existing home is considered used–it is like a used car elsewhere,” she said. “Because there are few zoning restrictions and lots and lots of land, construction has continued to outpace demand. The result is very little price appreciation when it is time to sell.”
She said a similar situation exists around Atlanta.
By comparison, in the Chicago area, Swonk said, “there isn’t enough land, so older homes retain their value.”
In Texas, “it is very easy and fast to put up new housing whenever prices go up, even slightly,” said Professor Richard Green, of the University of Wisconsin-Madison’s School of Business.
“When you land at Dallas-Ft. Worth on a plane, what is striking is that you are arriving in a region of 4 million people where there is virtually no housing density,” he said. “There are huge tracts of open space so people can build when and where they want.”
The abundance of multifamily housing in the region, he said, is an aftermath of the savings-and-loan construction boom of the 1980s, when apartments were thrown up with precious little regard for rental demand.
Analysts of Texas real estate also place blame for the weak pricing in their region on the oil bust of the mid-1980s, which had a devastating and persistent effect. Crude oil prices collapsed within months from $35 a barrel to about $11 a barrel.
“Pessimism seemed to set in overnight, and people stopped spending,” says Allen Clanton, a mortgage broker whose office is in the hard-hit east side of Ft. Worth.
“The drop in home prices was sudden and the region has never fully recovered,” he says. “There are houses that cost $70,000 to build in the late 1960s that are worth only about $50,000 today.”
The mortgage broker who heads Allen Mortgage Co., showed a reporter several expansive brick homes in the Eastern Hills area of Ft. Worth, replete with fireplaces and, in some cases, swimming pools, that are on the market in the under-$70,000 range.
Condominium apartments go for even less, with some luxury units unable to fetch $40,000, Clanton said.
An abundance of apartments and other multifamily construction, as well as modest rents, are important factors in the affordability of the real estate market in the Southwest, analysts said.
Economist A. Gary Shilling says many Americans have lost faith in real estate as an investment, although few prefer to live in rental housing.
“We no longer have the demographics to support a housing boom,” says Shilling, head of a consulting firm in Springfield, N.J.
In the wake of the savings-and-loan crisis, lending standards for housing have risen in much of the country, making the creation of sprawling developments less likely, he says.
“Demographics also are working against the real estate industry, because the Baby Boom generation now is entirely housed,” he says.
Meanwhile, those transplanted to Texas by the railroad merger admit they sometimes have pangs for Chicago.
“When the Santa Fe had its offices downtown, I loved it, especially having Taste of Chicago right at the front door,” says Wyant.
And Riis says he was gladdened to discover that the local cable system that serves his new Texas home includes WGN-TV, which means he’ll be able to see the Cubs.
“What’s more, I’ve got my favorite Chicago pizzamaker, Lou Malnati’s, phone number behind a magnet on the refrigerator door,” he says. “I just make a phone call, and they send down a rush shipment.”
