To kick off this housing market update, I can sum up what’s going on in one word. We are still in a… PAUSE. The market is shifting, and it is shifting hard.
We’re seeing a lot of price reductions, and we have much more of that to go before we really get past this pause we are in right now.
If you can remember from the last market update, the pause is what occurs when we are waiting for the sellers’ and buyers’ expectations to come together.
Right now, the seller is still up here, expecting 30 percent year over year price appreciation growth. And then you have the buyer down there, saying, “No more, seller. My borrowing cost has doubled basically, and you’re going to have to come down on that price before we come together and start transacting business as normal.”
So that’s what’s going on in the market in general right now. We’re feeling the pressure of the high interest rates.
Dallas-Fort Worth home prices rose in the second quarter 20.5 percent year over year.
Home prices are beginning to fall. We’re seeing tons of price reductions. I watch it daily. And that’s what we need to happen.
That, in addition to rising inventory, is the combination that is really going to get us through this shift so we can see our North Texas real estate market pick up in activity again.
The median sales price for a home in Dallas-Fort Worth is at $425,000, up 15 percent from July of 2021. So we’re starting to see some correction there. Instead of the 20+ percent rise, we are seeing 15 percent.
And for the first time, we have actually seen a decline from June to July in prices of 3 percent. That is the first time we have seen that in a good, long time.
The number of existing homes sold in Dallas-Fort Worth saw a 14 percent rise year over year.
The number of active listings in the metro area reached nearly 15,000, which is up 81 percent…
But to key in on that number – while it seems like a big inventory increase, it is and it is not. Because actually, coming off of 2021, that was in itself a period of anemic levels of inventory. So we are still a good ways away from a normal market here in this metroplex.
An 81 percent rise in inventory is still good, of course. It means we are headed in the right direction on inventory.
Mortgage rates are running at about 5.5% — anywhere from 5 to 5.5 percent.
There are a lot of incentives that mortgage lenders are offering to ease the pain of the higher interest rates. Builders for new construction are also offering buy-down rates for buyers as an incentive.
So there is a lot of ways to offset those higher interest rates to be able to make a purchase.
Additionally, a recent report from Realtor.com showed that 27 percent of properties had price reductions last month. So that’s huge. We were used to price increases. Now, we’re seeing price reductions.
And again, to summarize where we are right now in this market… We are not in a correction. We are in a slow down. We’re going from 30 percent-ish price appreciation, depending on your area, to now around 20 percent.
And we really need to get to a more normalized level of around 4 to 5 percent before we will get to see activity tick back up. But you are not dealing with a correction. You are not losing the value that you’ve earned over the past few years. So that’s the good news.
Buyers, what’s really good news about selling and buying– is you can buy a home and get a contingency contract now. Homes are just sitting on the market right now. So you can get a contingency contract. And whereas before you didn’t know where you were going when you sold your home, now you can sell your home and then buy your new home with the contingency of the sell of your home. Then when your home sells, you close on the new purchase.
That is the way we used to do it on a regular basis, which was much less stressful for home sellers and buyers even. So that’s good news for the market.
As a business owner, I will admit it is painful to see business transactions go down. But I know that for the long haul, this is healthy for our market and for stability over the long-term.
Now, let’s break it into counties.
We have Rockwall County, Collin County, Kaufman County and Hunt County numbers we would like to give you for additional insight into what’s happening in this housing market right now.
The average sales price in Rockwall County is up 23 percent, up 19 percent in Collin County, 26 percent in Kaufman County and 7 percent in Hunt County.
You are seeing less price appreciation the further out you go.
For Rockwall, the price per square foot is up 24 percent, up 21 percent in Collin, up 27 percent in Kaufman and down 9 percent in Hunt County.
Days on Market is up 40 percent nearly in Rockwall, 36 percent in Collin County, up 20 percent in Kaufman County and down 9 percent in Hunt County.
What I am seeing is this… You look at Kaufman and Hunt County and just don’t see those homes sitting on the market as long.
Why? This is because people are still chasing after value. They want to be able to find a home they can afford… And Kaufman and Hunt County still offer a good value proposition—versus a Rockwall County or Collin County, which are two of the wealthiest counties in Texas.
Here, we are seeing months of supply of inventory jump up by 100 percent in Rockwall and Collin County, to almost 3 months of inventory now – and then make a jump of around 50 percent in Kaufman and Hunt Counties.
We are still in a sellers’ market, in case you were wondering. We are not even in a balanced market just yet. When we get past 3 months supply of inventory is really what indicates more of a balanced market. Then, it will be six months plus before we get into a buyers’ market.
But if you look at this particular chart, it’s crazy. The line just jumps straight up. The buyer is fatigued because of interest rates and is pulling back.
This is an interesting one because as I mentioned, we need prices to come down but we also need more inventory for that to be able to happen. So, this is where we need to do some more work. If you look at the amount of inventory here, we’re just now getting to levels that were pre-COVID, that being the lowest point of pre-covid.
So we need more inventory. We have more people living in the metroplex. And that’s part of the wait and stall we are in right now, part of this extending of the pause is that we in need of more inventory to come on the market.
Listings are up, yes, but not up by what we need yet. As of right now, listings are up 13 percent in Rockwall, down 3.5 percent in Collin County, up 13.2 percent in Kaufman and up 1.8 percent in Hunt County. So everyone is just continuing to see this pause mode right now. I am seeing a lot of cancelled listings. People will put their house on the market, and then they will pull it right back off when they have no activity, instead of just lowering the price.
This is an indicator for going into August.
Sales are down nearly 20 percent in Rockwall, 24 percent in Collin County, up 10.9 percent in Kaufman and down 11.2 percent in Hunt County.
These are big numbers. We are a bit numb to these types of numbers because of this crazy North Texas market. But, seeing all of these double digits numbers – that’s not normal. Those are huge shifts going on in the market right now.
For July, Rockwall County closed sales were down 3 percent, Collin was down 27 percent, Kaufman down 6.5 percent and Hunt County was up 8.6 percent.
So again, people still chasing value and that’s why we are seeing the numbers we are in Hunt and Kaufman Counties.
I really believe we will continue to see this stall, this pause in the market, for the next 30 to 60 days. As a business owner in real estate, I would love to see this change sooner than later. But I don’t think that it will.
The good news is we are going to have a healthier market, and you aren’t looking at some major correction in your home price – again, because of the job growth and amount of people moving to our area. We’re insulated to a major correction.
Other parts of the country will feel this dramatically in their home values. But thankfully, because of where we are in North Texas, we are very fortunate to be insulated to that.
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