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Home prices are correcting, by as much as 15% in some areas of the Dallas-Fort Worth Metroplex. Meaning…On a home valued at $450,000 this time last year, the value today is $67,500 less — or now worth $382,500. So, what’s going on?
Basically… The Fed’s policy and interest rate hikes have created the scenario and environment that was originally intended. Quite simply, it’s all working. Inflation was a major issue, and prices had to come down – and not just come down then go back and forth the way they were doing, but come down consistently and even accelerate.
And even though the interest rate environment is doing its job, believe it or not, we are actually still not correcting as much as the market needs to in order to stimulate more market activity. The culprit? A lack of inventory and available homes for sale in an area full of high demand…
Home prices are correcting, by as much as 15% in some areas of the Dallas-Fort Worth Metroplex. So, what’s going on?
Basically… The Fed’s policy and interest rate hikes have created the scenario and environment that was originally intended. Quite simply, it’s all working. Inflation was a major issue, and prices had to come down – and not just come down then go back and forth the way they were doing, but come down consistently and even accelerate.
And even though the interest rate environment is doing its job, believe it or not, we are actually still not correcting as much as the market needs to in order to stimulate more market activity. The culprit? A lack of inventory and available homes for sale in an area full of high demand…
If you are a homeowner and reading this update right now, please do not panic. Understand that while home prices are coming down, in comparison to this time last year, the huge amount of equity you built up over the past few years is still mostly all there – meaning, you still have about a 30%+ gain in equity in your home from just over the past couple of years! If you do intend to sell in the near future, keep in mind that’s the good news for you.
Overall, the supply of homes is actually up compared to this time last year, which you will see when we break down the numbers below. However, last year was still completely anemic in terms of the number of the available homes for sale. In fact, the supply of homes is still 30% below what is typically considered a normal supply.
Why is this? Well, a lot of people are simply not moving right now. This is because about 70% of homeowners in the United States currently have an interest rate on their home mortgages under the 4% mark. So, why would they want to move and increase to a higher interest rate? Right? That’s the scenario we are in right now and why inventory is still so low.
But ultimately, it won’t stay that way forever. The way of the world is that people move – they have to move sometimes for jobs or they want to move in order to be closer to family and for a myriad of other reasons. As people get more used to the current interest rates being the new normal, and they get tired of waiting to make their next move, they will eventually make the decision to sell which will create more inventory in the market.
So now, let’s take a look at the most recent numbers, the housing market stats and breakdowns in the North Texas / Dallas-Fort Worth market. Today, we are going to focus purely on resale numbers, since that is the most pertinent information for you as a homeowner.
Home values and averages sales prices have decreased across the board in the Dallas-Fort Worth area. Especially for resale properties (which excludes new construction homes). In Rockwall County, prices fell by 8.6%, in Kaufman County they fell 10.6%, and in Dallas County, homes prices came down by 3.1%. Hunt County saw the biggest correction with homes prices dropping 15.2% from where they were in April 2022.
The price per square foot is also down in general. Current price per square foot is $201 in Rockwall County, $171 in Kaufman County, $165 in Hunt County, and $235 in Dallas County.
The length of time homes are sitting on the market has also increased recently – as much as 233% in Rockwall County, 215% in Kaufman County, 58% in Hunt County and by 133.3% in Dallas County compared to this time last year. On average for the area, homes are sitting about 48 days on the market before going under contract.
However, number of days on market has decreased slightly over the last two months, coming down by about 13 days from where it was in February.
New Listings fell across the board as well, by 3.5% in Rockwall County, 17% in Kaufman County, 13.4% in Hunt County, and by 22.1% in Dallas County. Again, this shows that people are staying put mostly in order to not have to take on a higher interest rate by moving to a new home.
Months Supply of Inventory – the determing factor of whether we are in a sellers, buyers or balanced market, actually increased for the first time since October 2022 when it first started falling and market activity picked back up. Right now, months supply of inventory sits at 2.6 months in Rockwall, 2.9 months in Kaufman, 3.3 months in Hunt, and 1.5 months for Dallas. On average, supply is up about 100% since last year – but as I mentioned, we are still 30% below a normal supplied housing market.
Closed sales are down an average of 20% across the North Texas area. In Rockwall County, they are down as much as 33% whereas in Hunt County, they are only down 6% year over year.
Pending Sales are a leading indicator for the next month’s closed sales. And these are also down – and by an even larger margin. On average, pending sales are down 21.8%. We are still in a down market in real estate – the level of activity has slowed and it’s predominantly due to the higher interest rate environment and lack of inventory.
Ultimately, if you’re a seller, you’re still in good shape. We are actually still in a seller’s market – even if it’s not quite as a strong a seller’s market as we were in before. In addition, even though we are seeing these price corrections, you still retain a majority of the major equity you built up over the last few years, leaving you in a good position if you’re looking to make a move soon.
For buyers, our advice is to make that offer. See if you can get the seller to the table. More sellers are becoming fatigued with the increased days on market and are ready to make their move. So, make an offer. Because sellers are agreeing to lower prices and more concessions here lately than they had been at any time in the previous few years.
That about sums it up for where the housing market is right now…
If you have questions, please don’t hesitate to reach out.
As always, if we can help you run comps to determine your home’s current value, help you search for a property or list your property if you’re looking to make a move soon, please do not hesitate to give the residential team at M&D Real Estate a call!
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