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Why Preston Hollow prices will come down more…

You know there use to be a saying: “Home Pricing in the bubble is immune to the rest of the market, it just doesn’t happen here.”  Well, that might have been true up to a couple years ago but that has all changed.

What I mean by the “bubble” is the Park Cities and neighbor Preston Hollow.  Sales have been dreadful the last two months – say 50% more or less.   Pricing are holding in the Park Cities due to location and namely the exemplary school district.  It’s a different story in Preston Hollow. Average pricing is down 20%.

The problem is not so much the pricing but the huge inventory and excess of $1 million dollar homes, which in my opinion will cause pricing to come down some more on these absolutely beautiful VACANT homes.

The math is pretty simple: Absorption rate is the length of time it would take to sell the inventory of a given area at the current sales rate.  Let’s take all of Area 11 which is North Dallas, total homes on the market are 840 units, only 29 sold last month, so when you divide units into sales, that’s a 28.9 month supply, yes, over two year supply.

Now lets do the same for North Dallas zip codes 75230, 75225 and 75220. 656 homes are for sale, only 24 sold last month so we have a 27 month supply, still over two years.

Next are properties over $1million, same zip codes and area.   Over 218 homes for sale! only 4 sold last month!
That’s a 54.5 month supply of homes over the million mark.  Almost a 5 year, yes..5 year supply!  I have spoke to several builders this week that have already taken 100K to 200K price reductions and aren’t budging. They are at an acceptable $235 to $280 a sq ft.  And that is sooo last year, as I write this there are two beautiful homes pending (builders foreclosures) that are under $200 a sq ft.  Will it go down further? That depends on the seller’s situation but I don’t think anyone can hang onto a property for 5 years to sell it for their price – they would lease it first, if they can.  Last July,  I went to a Realtors open house in Preston Hollow and a home was under $200 a sq ft, one agent gasped and said “Do you think it’s going to go down more?” My answer is, it already has.

The point is I think some builders will be willing to negotiate more now so go ahead and try, I certainly will.

About Terry W. Smith

Passionate about real estate, positive problem solver, specialty boutique real estate brokerage that does things your way! A full-time Broker & REALTOR®, helping people buy and sell homes in the Dallas - Plano area. Whether you're a buyer just starting out or someone with luxury properties to sell. I have extensive knowledge and experience to help you with your real estate transaction. I am a native Dallasite & know stuff, ask me...

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