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We’re going into the busy buying and selling season right now.
From April to August is the prime season for our area. But, right now, we’re still in the “locked-in” phase where inventories are still low, and buyers are increasingly fatigued with home prices and interest rates.
Yet, there is still strong demand out there for homes in this popular DFW area.
Our biggest and main issue in the housing market today is that prices are not correcting.
Ultimately, either a price correction or falling interest rates is what it’s going to take to get this market moving back to normal condition.
And, I really don’t believe interest rates are going to be falling anytime soon.
That’s my personal opinion.
It’s what I’ve been saying since we started going through this shifting environment. And so far, it’s held true.
I really believe the seller is ultimately going to have to be the one to come in with a sales price correction for affordability to come back into the DFW market, at least relative affordability, to get more transactions to start happening again at a more normal pace.
Honestly, it will never be as affordable again here in DFW as it was pre-COVID, before everybody started moving here to the DFW Metroplex. And, you’re talking people moving in at a rate of 100,000+ people a year. It’s just never going to be like that again unfortunately, as far as affordability goes.
Interest rates have bounced up, then they’ve come back down just a little bit.
Currently, rates are holding somewhere in the low sevens mostly. You might be able to get a high six percent right now, depending on what you can negotiate.
But in general, that’s the 1,000 foot view of the residential marketing in DFW right now.
Now, let’s dive into our individual counties so you can see the close up view of how we came to those conclusions and just where housing prices and inventory is at today.
Let’s start with the biggest one – and that’s average home sales price, or the median sales price for you, the seller.
This is what you care about. What is the value of your home doing right now?
In general, prices are flat to moderately down year over year. In Rockwall County, prices are down 4%, Kaufman County’s down 4%, Dallas County is up 6%, and Collin County is up 2%.
So, your home price really just depends on exactly where you’re at in the metroplex and what market you’re in. But overall, prices are basically flat year over year to down.
Raising interest rates is to supposed to do this typically. It’s supposed to bring affordability back into the market.
But the good news is that inflation is slowly coming down. Prices at the grocery store are a little less outrageous than what they were at one point. Same thing, used cars are coming back down, too. You can actually buy a used vehicle at a reasonable price now. And if you haven’t noticed, there’s some 0% financing incentives out there on vehicles because inventories are rising.
Next, let’s discuss days on market. The average days on market are all up in Rockwall, Kaufman, Dallas and Collin Counties. Days on market is up around 30% in Rockwall and Kaufman County from this time last year. Homes are sitting longer in general. The exception being Dallas County. Then, in Collin County, days on market is about 10% higher sitting right around 30 days on the market.
So, it’s still really good. It isn’t as if homes are sitting on the market for months. This is not 2008, 2009.
So, this one is really skewed, the months supply measurement. The months supply measures how long it takes to move the inventory on the market, and it tells you whether you’re in a seller’s market, balanced market, or a buyer’s market.
And basically, all counties are getting right around a balanced market now. Either they’re right at a balanced market or they’re at the end of being a seller’s market. Rockwall County is at 3.8 months of inventory, Kaufman County is at five months. Dallas County is at 2.8 months and Collin County is at 2.6 months, both of those still seller’s markets.
But, even in Kaufman County where it looks to be more like a balanced market, it’s kind of skewed because it’s off of a very anemic amount of transactions. Since there is so little inventory, this is a small sample size of transactions to go off of. So, while it is a balanced market, you can’t necessarily go in there and just make whatever offer you want.
However, I am encouraging buyers in general to be optimistic because homes are sitting on the market longer. So, you should make those offers and just see what happens. Whatever makes sense with you, at your interest rate, make those offers. Because we are seeing deals get done in the market right now with buyers coming in and offering tens of thousands of dollars under the asking price in certain areas and ending up under contract in that home.
So the story with inventory is that it’s building and increasing. Again, it’s like what I just said about the car inventory increasing… Inventories everywhere are increasing. That’s what interest rate hikes are supposed to do so that prices can begin to come down.
And inventories are increasing in DFW. Rockwall County is up 21%, Colin County is up 35%, Dallas County is up 45%, and Collin County inventory is up 52%.
So, those are some good increases in inventory, aka, the amount of homes for sale.
But you know, it’s still 20% to 30% below what a normal market has for listed for sale.
That’s why we’re in the “lockdown” phase as far as transactions go… It’s because we still don’t have enough inventory to really begin to move the market to a place where sellers begin to have to adjust their prices. Typically, when the inventory increases, their prices fall. That’s the market cycle.
And that’s why we’ve been here so long because we have not been able to get that big inventory increase to shift substantially and move the market cycle. That’s why we’ve been stuck here for two years in a period of stagnant and historically low numbers of transactions taking place (aka, people buying and selling homes). As a buyer, it’s very frustrating. And as a broker or agent, it’s very frustrating.
New listings are down 4% in Rockwall County, up 18% in Kaufman County, up 30% in Dallas County and up 36% in Collin County.
So again, the good news is that we are steadily getting more and more new listings, more inventory.
We need to see a really huge infusion, though.
It’s going to be pretty interesting over the next 60 days to see how much inventory comes to market during the typically busy buying and selling season when people are making their move in between school years.
Pending sales, our indicator for what May closed sales will look like, is showing down by 6% in Rockwall County, down 1% in Kaufman County, down 1% in Dallas County and up 10% in Collin County.
So, for all practical purposes, it looks like we’re going to be flat year over year.
And then, home sales for April were up just a little bit actually. So, it looks like that inventory increase is beginning to help transactions – it’s been looking like that over the last couple of months now. But, it’s very, very market driven where things are moving at.
And, you may be saying, “Well, I’ve been sitting on my house for six months, what are you talking about 30 days?”And so, my coaching for this update would be to tell you as a seller that it can be difficult being a seller right now.
You want to capture as much of your largest investment as possible. But even still, my coaching to you is that if your home is sitting for a long time, you’re going to have to begin to bring that price down.
Yes, you’re giving up some equity… But the reality is, the market is only going to pay so much with these interest rates the way they are right now. And ultimately, the way things are going, interest rates aren’t coming down south.
So, logically what has to happen is prices have to come down and ultimately you get ahead of that curve before the price really comes down for that correction to shift the market back to affordability.
And at the at the same time, the good news is when you lower the price (versus in 2008-2009 when it still wouldn’t move), the home will sell if you lower the price because fundamental demand in this area is definitely there.
When you lower the price to where it hits the affordability meter, the whistle bells go off. You’ll ultimately see multiple offers in a lot of cases. And again, it’s because we have a fundamentally really good market in DFW. We just have an affordability issue.
In other words, there’s a buyer out there waiting to buy your property.
And that’s the difference between the Great Recession and what we’re dealing with right now. We just have to get it to that right price, and then you can make your move.
Ultimately, you’ll then be able to go in and make an offer on something else. If you’re making a sale to purchase, then you’re going to reap the same discount on the purchase of the new home. So, then you go and you make the offer lower, don’t be afraid to do that.
I can’t say it enough about just making those offers to see what happens. It’s nothing personal. It’s just a business decision for you and your family, and the same thing for the other side. Some people take it personal, but you know, that’s just what people do. But, the reality is, you have to do what’s best for you and your family. And so, I encourage you buyers to make the offers!
You would be amazed at what is happening. What we’re seeing in our firm is the sellers are like, “OK, let’s make a deal.” They’re getting what we call seller fatigue.
So, that’s the market update for this month.
As always, if you have any real estate needs whether it’s residential selling or buying a home, property management or commercial, we would love to help you here at M&D Real Estate and give you a five-star service.
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