Dallas Metroplex Residential Real Estate Market Update
Published: July 14, 2022
Founder and Managing Director of M&D Real Estate, Danny Perez, has put together a phenomenal housing market update for you during this time of major changes in the Dallas real estate market. He sums up what’s happening right now with one word, relief. That’s what buyers are getting right now. So let’s dive in!
I am excited to give you this update. It’s been crazy over the past two years, with all the influx of people coming from outside of our area moving into the DFW Metroplex. First, we are going to give you a general update on what is happening and then go into a deeper dive to show you exactly, county by county, what is really going on and what all the key indicators are showing.
In June of this year, 9,133 homes were sold in DFW. That’s down 8 percent year over year. Active home listings are up 60 percent. Not 6 percent, 60 percent! As we key in on the different areas in North Texas, you will see certain areas with inventory even higher than this.
There is a huge shift in the market going on right now. The part of the shift we are in currently is what I call, the pause. I call it the pause because on one hand, there is a seller up here expecting 25 percent year over year growth like we had been seeing. Then on the other hand, there’s a buyer down there saying, “Hey, wait a minute.” And what happens, is until both the buyer and seller expectations meet in the middle, we are going to have this temporary pause. From what I have seen recently in this rising interest rate environment, the pause is indeed temporary. It’s going to come together soon. We are in a great market in DFW. Buyers want to be here and then sellers still want to sell, because we still have a ton of appreciation in our homes right now.
I do not think a huge “correction” is coming. That’s what everyone always asks. “Is a correction coming?” No. Buyers do not expect a correction in DFW because we have too many people coming here, and too many businesses coming this way. But I do believe we have relief in the 25 percent appreciation coming, maybe getting closer to single digit price appreciation.
On another note, builders are also slowing down their production, too. What’s happening there? They are slowing down because they see the buyers slowing down. That will help to free up some labor shortages for builders. That will also help to free up supply issues we have been seeing – windows, for instance, if you’re trying to build a house, you know what I am talking about…trying to get in the windows and find the appliances has not been easy. So really, all of this is pretty healthy for our market.
The Federal Reserve rose interest rates a few weeks ago three quarters of a point and that, in my opinion, is what finally just pushed the buyer over the edge. Because what we have since then, here in our business even, is residential contracts and activity come to a pause. Now, what we are still seeing is a lot of listings still coming in, people saying and thinking, “Oh, I don’t want to miss out on the big opportunity!” And that mentality is what really begins to increase the inventory. But again, we have a buyer vs. seller spread right now that is causing a pause in the current market… which makes sellers that have houses on the market just a little unsettled right now.
Now let’s dig into the update on what’s going on in our area on a county by county basis looking at the breakdown of numbers that is a big indicator of this shift and pause I have been discussing. Specifically, we are going to look at the numbers in Rockwall, Kaufman, Dallas and Collin Counties. And these are just mind-blowing shifting numbers we are seeing right now.
Let’s start at home prices. The average prices are still up right now. In Rockwall County, they are up 26 percent, 15 percent in Dallas, 25 percent in Kaufman County and almost 28 percent in Collin County. So the price appreciation has not changed…yet. That’s part of that shift and pause happening right now. Price appreciation has not changed to date because inventory is just now coming in, and we are right in the middle of that shift on the sales that have actually sold. So the pause has to happen for a little while, which means the seller has to have their homes sit on the market for a while. Then, what happens next is the seller has to start coming down to meet the buyer’s expectations. This is always the case, in every market like this one. The sellers will have to be the ones to come down from those 25 percent appreciation number expectations to more normal numbers to meet the buyers where they are at. Not all the way down to correction territory, I don’t believe that is going to happen in this area. But down to a more normalized expectation. These are still crazy numbers on price appreciation for last month, and continuing on that note, let’s take a look at square footage price.
On average, price per square foot is also still going up. It went up 13.5 percent in Rockwall County, 17 percent in Kaufman County, 20 percent in Dallas County and 31.5 percent in Collin County. So still crazy numbers here, too on price per square foot appreciation.
Now, this is where we start to really see the shift. Looking at average days a home for sale remains on the market, Rockwall County is still down year over year by 5 percent. Kaufman County is up 9 percent, then Dallas County is down 23 percent and Collin County is up 6.7 percent. You see what’s happening here. These numbers are all over the place. But what it means, is the overall undertone is portraying a shift in the market and showing an increase in number of days homes are sitting on the market.
This is the big tell-tell right here. If you look at the curve on the chart below for right now, you don’t see anything else like it in previous years. That curves signals a huge shift in inventory of homes on the market right there. A couple of months ago, we had less than a month of inventory. Now, we are at 2.3 months inventory. This is still a strong seller’s market because a normal market is around 6 months inventory. And we’ll still have a strong market. It is just shifting towards a more balanced market. On inventory of homes on the market, we are up 92 percent in Rockwall County, 86 percent in Kaufman County, 7.1 percent in Dallas County and 100 percent in Collin County. There’s the shift. Boom. This is huge, just a straight up shot of inventory.
In number of homes for sale, we see the same thing. Look at the huge curve. You don’t see that in previous years either – a curve like this one. For number of homes for sale, it’s up 84 percent in Rockwall County, 89 percent in Kaufman County, only 3 percent in Dallas County because again, you’re not building new houses in Dallas County, and then up 80 percent in Collin County. Increases across the board and almost double the inventory now, basically. Year over year, what was on the market then and now, it is crazy to see the difference. That’s a huge, giant shift. It’s buyers saying, “I’m out and done now, and you’re going to have to sit on your inventory, Mr. Seller.” That is what is creating the pause and the lack of activity, or lower activity.
For the number of new listings this month, you can see Rockwall is up 33 percent, Kaufman is up a whopping 64.5 percent, Dallas County up 6.8 percent and Collin County also way up at 24.7 percent. So, new listings are up significantly. These are huge increases in new listings year over year. For you buyers, that’s good news for you. Inventory is coming your way, and a lot more of it!
This is a leading indicator into this month. We are in the busiest month of the year, so we should be seeing increasing sales. But right now, pending sales are down 4.1 percent in Rockwall County, down 8.1 percent in Kaufman, 14.2 percent in Dallas and also down 24.6 percent in Collin County. What you’re seeing again is the shift where inventory is coming up and sales are going down. That’s what creates a “pause.” Again, this is because you have sellers up here at one point and buyers down there with different expectations below that. We really don’t expect it to majorly correct – even though it will in other areas of the country for sure.
But expectations will become more realistic and things will normalize a bit. So for sellers, the good news is you aren’t losing any value. The upside isn’t as high as it used to be, but you’ve gotten all the appreciation you already had and still might even get a little more than that on the sale of your home. And the really good news for sellers too is, when you sell it, you’ll actually have inventory to be able to buy!
For buyers, the good news is the market is coming your way. It’s not there quite yet, but we are beginning to see a lot of price reductions across the board. Don’t be too patient in waiting for it either. People are moving here and will continue moving here. But you have room to negotiate now and won’t have to give so much. You might even be able to get in at under-asking with a house sitting that’s been sitting there. So good news all around.
Just like with pending sales, closed sales are also down. Last month, we were down 6 percent in Rockwall County, it was up 3.1 percent in Kaufman County, but also down 13.8 percent in Dallas County and 22.4 percent in Collin County. So your sales are looking flat to down.
Inventory is up. What the Fed wanted was to create an environment that would slow down the activity of the buyers, therefore bringing down asset prices and then home prices to normal appreciation standards…versus this 25 percent type of appreciation.
What’s going on right now is really exciting news for the entire real estate market. For those in real estate, it’s a little rough at the moment because contracts stopped coming in and to be honest, that’s how we all make money. But I’m super excited about it, because the fact is…it will open up much more activity as the buyer and seller come back into the market.
So that’s the residential market update for this month and where we are today.
If you have any questions, please feel free to reach out. And if you need any assistance in setting up a search for a new home or in selling your current home, we hope you will give us a call at (972) 772-6025.