A huge co-working craze took off during the 2010s. Soon, companies like WeWork were all over the news. In my area, on the eve of the pandemic, there were no less than 200 places that represented some form of co-working, or what many refer to more generally as “flexible office space.” Typically in urban locations, these bustling locations were often in areas thought of as millennial hotbeds, close to the hubbub of urban activity and social environments that young people craved.

To some, they were a blessing – a way to get a collegial, interesting work environment at relatively low cost. Sometimes, these offered a short, or even walkable commute for an urban dweller. To others, they were a fad. How could one get meaningful work done in an open office environment?​

​Then, the pandemic changed the dynamic. Remote work become commonplace, and many believe a sizeable number of jobs will stay that way forever. Urban settings — and urban co-working spaces — quickly fell out of favor as many people left the city to escape population density and minimize health risks. As work moved online in era of Zoom, they could go wherever they wanted.

​Suddenly, you had millions of people working out of single-family homes in suburbia or exurbia. Large, suburban homes often have ample space to set up a home office — perhaps an extra bedroom, or even a dedicated office room. The original co-working locations, in the city, became far away and impractical.

Only about 27% of single-family homes in my metro area are within 2 miles of some form of co-working facility (if you include executive suites), according to our calculations. This means the other nearly three quarters of Dallas homes require travelling some distance to reach one of these facilities. These are shown in grey below.

But there was another problem: working from home is not a complete solution. There needs to be a close-by “third place” that forms a bridge between home and the occasional office visit, even if that office visit is infrequent. Someplace to do focused work, use expensive office equipment, and get a break from the house.

​The coffee shop craze of the 2000s is no longer pandemic-friendly. Even post-pandemic, these have their limitations due to noise and shared, insecure Wi-Fi, among others. Not to mention, suburban co-working spaces are often trailing in quality compared to their urban counterparts.

This brings us to the co-working spaces of the future: close to suburban remote workers, affordable, and a step up from what’s out there today.

We set out to form a starter framework for where these new co-working space might go:

1. Shopping centers. Some are under-utilized and have elevated vacancy. Retail has taken a bit hit during the pandemic. They are close to homes and have ample parking.
2. Close to remote workers. We looked at job statistics from one of the major job portals and were able to derive a work-from-home index that is based upon educational levels.
3. Close to suburban apartments. Many of these were built to house workers in suburban office parks. Now, apartment dwellers are forced to work at home. Many apartments are cramped and lack space for a home office. Therefore, proximity to apartments is a boost. Apartments with slightly higher rents are preferred, as they will have a greater concentration of remote workers.
4. Close to new single-family home construction. This is a leading indicator of demand.
5. Higher home value and household income preferred. It does not need to be super high, but this helps select for the remote-worker occupations.
6. Close to restaurants – food options make a place a lot more attractive.
7. Limited competition – of course, voids or (white spaces) in the market help, but are not a must.
8. Limited conventional office space – these areas are too expensive and too busy.

Development has moved quickly in the last 20 years. By our estimates, about 40 square miles of land per year get developed in the Dallas-Fort Worth area. This is an area larger than the massive DFW airport, or about 20,000 football fields. Every single year*.

That means the urbanized area has grown by almost 50% in the last 20 years from 1,400 square miles to 2,200. Therefore, Dallas-Fort Worth has added one additional New York City, in terms of land, in 20 years. We calculate this using satellite images.
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The northern fringe of the city expanded at about half a mile per year, on average, since the early 1950s.

​And yet today, inventory in the housing market is extremely low. We wrote about this last year and the market has since tightened even further. Houses that get listed on the market are snapped up quickly, sometimes in hours. There are simply not enough houses.

Developers are scrambling to buy land to build more houses. Some cities that were mostly grass and dirt a decade or two ago are increasingly built out with housing.

Based on today’s city limits, cities like Prosper went from 9% built-out to about 55% today. Buildable space in these markets is getting snapped up quickly. Below, we compare some of the Collin County markets, which are growth hotspots:

Of course, not all undeveloped land is buildable, but this gives a starting point. Some cities have become heavily urbanized in a short time.
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As search for land continues, there always a tradeoff of buildable space vs price vs location. In our analysis, we account for these tradeoffs by looking at job access and future job growth.

Homebuyers and investors can look forward to a greater supply of new housing in the future, but this may take several years. Until then, competition may be fierce. Our Locate Alpha system can help you find the best of what is available, so you can avoid making too many compromises when choosing among what's available. Meanwhile we also can help developers identify suitable land plots as well.

*Using a more conservative estimate, the number could be 15,000 football fields per year.

The 30-year fixed mortgage rate, the most popular loan product, fell to historic lows at least 14 times in 2020. Mortgage rates are lower than they have been since the government started tracking them in 1971. This is good news for you as homebuyer, whether you are an investor or looking for a place to call home. 

​Lower rates result in lower monthly payments. Thanks to these lower payments, more houses are affordable now compared to just one year ago. In 2020, 73,000 more homes in the D-FW area became affordable to households making $50,000 per year. Similarly, in 2019, 67,000 new homes became affordable. 

Many of these newly affordable homes are concentrated in Garland, Mesquite, Irving, Grand Prairie, and the city of Fort Worth. ​Many of the homes are in areas on strong footing, with 42% of the total, or 33,000 houses, located in areas that score a 6 out of 10 or higher on our Locate Alpha Homeowner Index. This index is heavily weighted on school performance, crime and amenities. Some homes do even better, with 14% of of the total in areas scoring 7 out of 10 or above.

There are opportunities for investors too. 77% of these homes were in areas scoring a 6 out of 10 or higher on the Locate Alpha Long-Term Investor Score, which is heavily weighted on rentability: access to jobs, and potential for cashflow.

​Similarly, for households earning $70,000 per year, 106,000 more houses in Dallas-Fort Worth became within reach in 2020, thanks to lower mortgage payments. 

​For those buying homes on the Dallas side of the Metroplex, newly affordable opportunities entered the scene in areas such Allen east of US 75, parts of Little Elm, Carrollton. On the Fort Worth side, they appeared in areas like Saginaw and Arlington. Many of the homes were in neighborhoods with strong fundamentals, with 72% of the houses, or 76,000 units, located in areas scoring 6 out of 10 or above on the Locate Alpha Homeowner Index. 43% scored a 7/10 or above.

For investors, 54% of the homes scored a 6/10 or higher for long-term investment.

​For those following the Dallas real estate market, lower rates have contributed to rising prices in many parts of D-FW this year. When we did this analysis, we assumed prices in previous years were the same as they are today, in order to properly isolate the effect of interest rates from rising prices. This helps us show that there has in fact been a net gain in affordability.

​However, the challenge remains that inventory is very low, and while many houses are affordable based on their value, the ones that do get listed on the market are snapped up faster than ever before. This requires you to be vigilant and responsive, ready to snap up the right opportunity when it appears. LocateAlpha can help you do this.

Our assumptions:

We calculated the PITI required for every house in the metro area, based upon prevailing 30-year fixed mortgage rates for each year, valuations of the houses at present, and a debt-to-income ratio (DTI) requirement of 25% for a house (which allows some room for other debts that may take it up to 35%, generally the higher end of what is acceptable for lenders). Also a 25% down payment is assumed. If assuming a 20% downpayment, total houses involved are 6-10% lower, but the change from year to year is about the same. Conventional, conforming loans only. Other programs are not taken into account.

Updated 11/5/2020
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100+ degrees and nary a cloud in the sky. These are typical peak summer conditions. The shade under a tree during a Texas summer can certainly take the edge off the heat. During most of the day, you might tend to avoid going outside altogether. But your house, and your neighborhood are going to feel very different if they are under a canopy of leaves compared to just sitting out there baking under the direct sun.

Excess heat means more energy costs

Areas without shade tend to accumulate a lot more heat during the day and radiate it back out at night, keeping an area much hotter than it is supposed to be. This means more energy costs. Not to mention wear and tear on your foundation from the famously "expansive soils" of Texas that can crack the foundation slab supporting your house.

A recent series of New York Times articles described big differences in shade and vegetation within a city and linked those differences to the history of those neighborhoods, and by extension, their income levels.

First, the rankings

By using data from satellites, it is possible to measure the amount of greenery in a location.

Which cities in the D-FW region had the most shade? The tree-lined enclaves of the Park Cities rank highly but don't make the top 10. Interestingly, the south side of the Metroplex has some very dense foliage: Cedar Hill and Duncanville, thanks to the green hills adjacent to Cedar Hill State Park.

The "Cross Timbers" cities of Colleyville, Flower Mound, Keller, Denton and Southlake rank highly thanks to the narrow band of forest that led to plentiful trees in these cities. On the other extreme we have the cities in more of a prairie setting, and newer neighborhoods with fewer mature trees: Allen, Frisco, Plano, Carrollton, and The Colony. To make this comparison fair, we focus on neighborhoods only (with single family homes), excluding all other land uses, and excluding flood plains.

 Zooming in

Let's get detailed. Showing the greenery index by Census block, we can see a lot of intricate differences between neighborhoods at a micro level.

Relationships to factors like income
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We set out to see what location factors influence the level of shade in Dallas-Fort Worth city blocks. We looked at relationships between greenery and the age of the community, as well average home prices.

We went into this thinking that greenery should simply be proportional to the age of the neighborhood and proximity to a creek or flood plain. After all, decades-old neighborhoods more often have mature trees, and homes closer to a creek have clusters of trees taking advantage of the year-round water source that is not reliable on higher ground. Also, certain areas of the Metroplex have more trees due to soil differences. The Eastern Cross Timbers are a 15-mile-wide belt of woodland that extend through areas like Flower Mound, Southlake, Colleyville, and Arlington. That belt of woodland tends to be greener, on average.

More greenery = $$$

Also, higher priced homes tend to have more greenery, especially in the Blackland Prairies and Grand Prairie eco-regions, suggesting greenery commands a premium. This makes sense when you consider the mature, close-in neighborhoods of Dallas tend to be greener. This seems to be less true in the Cross Timbers belt, where a higher price does not clearly equate to more greenery. This makes sense as homes in Arlington, parts of which are in the Cross Timbers, are not too expensive. We put all of the houses on a 1-10 price scale to account for the long tail of expensive homes that run into the millions. Those get condensed into the 9-10 category.

Is there clear cause-and-effect?

​What if we test for true cause-and effect? We looked not just at age of the neighborhood but a a whole host of potential greenery predictors: population density, household income, home prices, demographics, gentrification, age of the homes, retail development, and growth levels. Even with all of these factors considered, taken together, they only explained about 35% of the variance in greenery. Age and housing price were the most powerful predictors out of this group, but even these were imperfect. Therefore, while things like price and age do matter, there are many exceptions.

Highly granular voting data for the 2016 election was compiled a few years ago and made public online via websites operated by Harvard and MIT. For the first time, this made precinct-level data across the country relatively accessible. "Voter precincts" are fairly small, at about a third of a square mile to one square mile in a typical urban area. But the people living within a given precinct can vary widely. From one neighborhood or subdivision to the next, there are different types of housing for different income levels and family sizes. These differences contribute to different political preferences.

What if we wanted to estimate what is happening at the city block level? You may want to do this when screening blocks that you want to live in, if it is important to you to find the prefect niche for yourself to live where you feel most comfortable. Or, it is valuable for other purposes, like campaign planning. Referring to our favorite diagram, we can see just how much more detail we can get by taking it down to the block level.

Let's get detailed!

​About Spatial Laser

We are building a software-as-a-service offering to help real estate investors discover where to buy rental properties, down to the exact block and individual opportunity. We use machine learning to model investment returns, risk, and market conditions at the hyper-local level using proprietary ranking and scoring. We display this visually in a colorful map-driven system. Investors get recommendations they can act upon immediately.

As we build our product, we are looking for early adopters and test users. Be the first to know about product updates by signing up here: https://mailchi.mp/spatiallaser/prelaunch

Have you ever noticed all the big houses in the Dallas-Fort Worth suburbs? They are a reflection of changing consumer tastes over time, as well as dramatic growth in high-paying professional jobs. 

Big houses weren't always so common. If we look at the data, a noticeable jump in average home sizes happened in the mid-to-late 1980s. This coincided when everything was getting bigger in Dallas — most of today's high-rise skyline also sprouted up in the '80s.  The size of new homes surged from 2,100 sqft to 2,500 sqft. Sizes have crept up only slightly since then, to about 2,600 sqft on average today.

Even before that, there was a jump in size from the modest homes of the 1940s and 50s, to the larger and more luxurious homes of the '60s. The size of new homes took off in the 1950s, rising from 1,500 sqft on average to 2,000 sqft by 1965.

Meanwhile, lot sizes for newly built homes seem to be getting smaller.

• After a peak in 1965, lot sizes have been in decline, with a significant drops in the 1980s and again between 1995 and 2005.
• New homes tend to be larger and on smaller plots of land.

What might the post-COVID future look like if more people work remotely and demand larger homes that can accommodate home offices? We may see another bump in average sizes soon.

Continuing on our theme of improving neighborhoods in Dallas, we decided to look at the question from another angle: code violations.

What are code violations?

They are things reported to the city's "311" hotline system that affect the quality of neighborhood life. According to the Dallas Open Data website, "The most common are high weeds, litter, junk motor vehicles, and bulky trash."

These are all areas that are worthy of a closer look for future investment potential. Taken together with other indicators we have explored, like renovation activity, building permits, and others, we can pinpoint with a good degree of confidence where things are headed.

About Spatial Laser:

We are building a map-driven system and app called Locate Alpha to help investors quickly screen investment locations to avoid making investment mistakes, using advanced mapping techniques. To sign up for updates, please visit our home page www.spatiallaser.com.

How can we identify neighborhoods that are on the up-and-up? Places that are rapidly improving, where money is pouring in to keep houses fresh and up to date?

These are often the type of areas that are going to see significant uplift in price over time.

One way to do that is by changes in economic indicators, but what if we want something that's a little more "up to the minute"? We decided to check MLS listings for the number of times the word "upgrade" or "renovated" is mentioned, and put that on a map.

In Northwest Dallas, an arc of renovation is clearly pushing westward into areas that were historically cheaper.

South of I-30, renovation activity is radiating north and west of the Bishop Arts district.

If the word "renovation" in an MLS listings is telling us that renovation has already happened, that makes it a kind of lagging indicator looking at the recent past. What if we wanted something forward-looking that might tell us a hint of the near-future? Building permits can help. We took building permit data from the Dallas Open Data Initiative and filtered out major public works to identify areas where construction is happening "now."

There are some overlaps but also some important differences. Construction permit data are picking up major redevelopments happening north of I-30. But they also identify some activity happening outside the core Oak Cliff zones, in places further east like Cedar Crest, where home renovation is at an earlier stage and happening at a smaller scale. These changes vary widely from block to block. But this helps us find which blocks might be the hot blocks of the future, and help us hone in on buying opportunities there in order to benefit from the upward trend, whether it's for flipping or a buy-rehab-rent strategy.

​What is the cost to buy into a 10/10 elementary school zone in Dallas-Fort Worth? Check out the 20 cases where this is still possible for under $300k