We have been reiterating for months now that the market is in a shift. The shift happened because we were in the midst of unsustainable price appreciation and something had to give. So the Feds increased interest rates and the market has come “crashing” back to more normal levels of appreciation.
Fortunately, the period of high appreciation means everyone gained tremendous value in their homes over the last couple of years – in many cases, your home increased in value by at least 60 to 70 percent in just two years. Now, it means we are moving towards a more normal price appreciation rate again, where your home will continue to gain in value by a more normal rate of 3 to 5 percent versus 35 to 40 percent a year, which is unsustainable long-term because it gets too unaffordable for buyers.
In fact, the most recent numbers shows that in Dallas-Fort Worth, price appreciation is now closer to around 10 to 15 percent over last year than the 30 to 40 percent numbers we were seeing just a few months ago. This is a good thing. Again, we aren’t “crashing.” We are moving back to the normal before COVID times rearranged and spiked everything for a while.
The chart below shows a perfect picture of how exactly we are “crashing” back to normal. It gives you a 10-year-look at how much buyers have been paying of the original list price to purchase a home. You can see it’s steady for nearly 8 years before the 2020 to 2022 COVID era spike we saw where we had 103 to 105 percent of list price as the average and norm for buyers to pay.
The Crash Back to Normal
The true norm is closer to what we are getting at now, where most buyers end up paying around 95 percent or so of the list price on a home. We may see price appreciation fall even more, back to more normal numbers of 3 to 5 percent before we begin to truly level off and steady again.
The good news for sellers? Your home still has tremendous value and current statistics on “months of inventory” indicate we are still in a sellers’ market, albeit on the cusp of a balanced market. So, it’s still a great time to sell!
The good news on the buying side? Prices are falling, you have a lot more options than you did just a few months ago. While interest rates have risen, there are many programs and incentives out there right now as well as sellers who are willing to owner finance, buy down your interest rate and the like, in order to get their home sold and make the deal happen.
As always, we at M&D Real Estate are here to guide you, advise you and help you with any of your real estate needs.
If you have questions on the market, about the value of your home or would like us to set up a search for certain types of homes or properties, our 5-Star Agents are always here to assist you however they can.
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