Past Plano and McKinney on North 75 is the town of Sherman, about 60 miles north of Dallas and lately a favorite of industrial and residential developers alike.
Despite several big projects in the works, this small Texas city of less than 44,000, has caught the attention of experts who suggest it’s headed for a cliff. Sherman was added last week to Moody’s Analytics’ list of “overvalued” housing markets likely to see home prices fall over the next year.
Sherman was the only Texas submarket to make the list and Moody’s chief economist Mark Zandi specifically named Sherman as one of the most “juiced-up” regional housing markets in an interview with Fortune Magazine. While Zandi predicts that the year-over-year rate of U.S. home price growth will flatline by this time next year, he expects markets like Sherman to see home price declines between 5 and 10 percent over the next 12 months.
“The housing market has peaked…everything points to a rolling over of the housing market,” Zandi told the publication. “In terms of home sales, they’re falling sharply. Housing demand is coming down fast. Home price growth [will] go flat here pretty quickly; we will see [home] price declines in a significant number of markets.”
Heritage Ranch is the latest master-planned community planned for a North Dallas submarket. Located at the intersection of FM 1417 and U.S. Highway 82, the 440-acre mixed-use development will be dropping 750 new homes into Sherman.
Covenant Development, in partnership with Rockhill Capital & Investments, is behind the project, according to the Dallas Business Journal. Covenant said it expects homes to hit the market starting in late 2023 to early 2024.
Last year, Sherman snagged the development project of a lifetime when it beat out Singapore for Texas Instruments’ almost $30 billion phased investment consisting of up to four semiconductor plants. The development will offer 3,000 jobs upon completion, which is expected some time in 2025.
“They said, ‘Here’s the thing: It’s going to be between Sherman and Singapore,” said Kent Sharp, president of Sherman Economic Development Corporation, about his meeting with TI representatives last Summer. City Manager Robby Hefton told DBJ that his team celebrated for about 24 hours before getting back to work after closing the deal with TI.
“We’ve really given legs to incentives for our home developers using different tools in our toolbox,” said Sherman Mayor David Plyler. “Cities have to encourage developers to come and develop neighborhoods because, with a facility like this, people need a place to live.”
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A study by Florida Atlantic and Florida International universities found that Dallas-Fort Worth homes sell for 48.4 percent more than the price of $256,878 that would be expected under long-term trends. Sherman’s housing market was measured to be 60 percent overvalued.