The Post-Election Real Estate Market: What Now?
November 12, 2024
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There are so many moving dynamics in our market right now. Predicting the market and trying to understand the market is nearly impossible. But I’m going to do my best based on what I know from running a real estate firm, doing a lot of transactions personally, and then from pulling all the most recent data we have from the North Texas Real Estate Information System (NTREIS).
To summarize, we are at the end of a real estate market cycle right now and hitting the hyper-supply side of the cycle. One of the problems we’ve had in DFW is not enough housing inventory, i.e., not having enough supply of homes for sale. And in every market cycle, before the start of a pricing correction, there must be hyper-supply.
So, we’re beginning over the last three to four months to see that phase of the market cycle – hyper-supply – begin to happen.
So, the question is, what happens next?
Always, in every cycle, the next part is that prices then must adjust. And the question everyone has next, then, is just how much will they adjust?
And that depends. Back in 2008-2009, we saw huge price adjustments downward. I don’t believe we’re in that type of cycle today because we have a different economy here in North Texas than we did then. So, we’ll be insulated to some major price correction barring any huge catastrophe politically or in our stock markets.
However, we are beginning to see signs of a slowdown as a nation in our economy – where the consensus is that we’ll see a recession in the next six to nine months.
So, how do you as a buyer or seller capitalize on the market we’re in right now?
After all, that’s what these market updates are about – guiding you through the current environment.
So, to answer your question on, “When do I sell?” or “When do I buy?” Here is my answer…
Ideally, you think, “I want to buy a house when the recessionary environment comes into play because there will be more distressed sales.”
But the issue with that is that as soon as prices correct in DFW, you’ll most likely be coming into a lot of competition because there’s not enough housing here. Especially with so many people moving to this area.
I talked to an agent today who had two sales with a seller in distressed situations recently. They couldn’t sell their homes conventionally because their mortgage was too high. And I think we’ll see more and more of that, which will begin forcing transactions.
We have seen an uptick in transactions in some areas, while transactions are still down in other parts of the metroplex. But overall, DFW is mostly flat in the number of transactions year-over-year.
And prices may fall, but it’s going to be more competitive in that environment. When you do see prices start to fall, you’re going to start to see a lot more competition, including multiple offer situations, etc.
And I’ve said it every month to sellers… If you price your property right, you’ll sell it in this market because we still have fundamental demand. That demand may go down a little bit in a recessionary environment, but not to the point where we’re seeing what we dealt with during 2008-2009 with huge, massive price reductions.
We have a great job economy in DFW, and we are in the top three in the nation for population growth.
So, with that being said, there might be an opportunity to buy lower, but it’ll be more competitive when everyone else is buying houses too in the next three to six months once prices are dropping.
So how do you as a buyer and seller capitalize on this market we’re in right now?
After all, that’s what these market updates are about – guiding you through the current environment. So, to answer your question on, “When do I sell?” or “When do I buy?” Here is my answer.
Ideally, you think, “I want to buy a house when the recessionary environment comes into play because there will be more distressed sales.”
But the issue with that is as soon as prices correct in DFW, you’ll most likely be coming into a lot of competition because there’s not enough housing here. Especially with so many people moving to this area.
I talked to an agent today who had two sales with a seller in distressed situations recently. They couldn’t sell their homes conventionally because the mortgage was too high. And I think we’ll see more and more of that, which will begin forcing transactions.
We’ve seen some uptick in transactions a little bit in some areas, and transactions still down in others. But overall, DFW is mostly flat in the number of transactions happening year over year.
Prices may fall, but it’s going to be more competitive in that environment. When you do see prices start to fall, you’re then going to see a lot more competition, including multiple offer situations, etc.
And I’ve said it every month for sellers, if you price your property right, you’ll sell it in this market because we still have demand. That demand may go down a little bit with a recessionary environment, but not to the point where we’re seeing what we dealt with during 2008-2009 with big, massive price reductions.
We have a great job economy in DFW, and we are top three in the nation for population growth. So, with that being said, there might be an opportunity to buy lower, but it’ll be more competitive with everyone else too buying houses in the next three to six months when prices are dropping.
So, my strategy for you is to get out and make those offers now while homes are sitting.
Interest rates might be higher now than at the end of the year – that is, if they start lowering them as we go into a recession. But you’re going to get about the same value. Interest rates are already down to 6.34%, which is a full point below what it was a month ago.
And thinking that the Fed will lower rates even more by the end of the year, well, the markets have already priced that in and factored that in right now.
So, the opportunity in my mind, is to buy now instead of waiting. Because properties are sitting (those that are overpriced), and there is seller-fatigue going on there. And those sellers are getting tired of waiting.
Even if it’s $50,000, $100,000 under asking, make those offers. You’ll know what offer to make based on the guidance of your REALTOR who will factor in how long that home has been sitting, what the current price point is, etc. and based on what the seller is most likely to accept.
So, make your offers now. See if you can get traction on your dream home and ultimately capitalize on what is a market stand-still right now.
Yes, we’re still in a standstill. Just as we have been for a while now. And that’s why supply is building, and homes aren’t moving. Prices have moderated, and in some areas, we’ve seen double digit price drops. And as expected, the areas with price drops by double digits have seen transactions pick up.
As I said, though, if you wait for prices to drop, transactions will pick up and you’ll be in a much more competitive environment when that happens. So, take advantage now. Make an offer that makes sense and that’s affordable for you.
Huge steals in DFW are gone – the economy is too strong for that. But you can be strategic and come in 10 to 20% below what they’re asking and see if you can get traction on an offer.
Sellers, you get to make it up on the buy side. Recently, I saw where we were under contract with a seller for many months and it was for a higher price. So, they had to lower their price by $15K, but then they immediately got the home under contract once they agreed to the price reduction.
There is still plenty of price appreciation built in for most people. And so, by them being willing to be strategic and sacrifice a little to get their home under contract, they are now able to move, and they’ll realize savings on the buy side.
And sellers, it’s much easier to do that now (drop price by a little to meet the market) than when everyone else starts lowering their prices in the next several months. Because then, you’ll have more competition.
The median price in Dallas County is down 1.4% compared to this time last year. The median price in Tarrant County is down 1% year-over-year. Collin County is down 2.9% since September 2023, and Denton County is up 5.3%.
Looking at single-family new construction, you’ll see home builders are typically quicker to lower their prices. That’s because as a business, they need to move units.
In Collin County, the price of new construction homes was down 14.7% year-over-year in August, and is down 7.5% as of September 2024. Then, if you go to actual pending sales for Collin County, they were up 50% in August and are still up 11.2% year-over-year for September. So, you see what happened. You get the price down, and then the number of sales goes up.
This shows the market is still strong. You just have to get it priced right. And when you get the price down typically by at least 10 to 15%, you’ll see the home move.
In Kaufman County, it’s the same thing. The sales price is down 6.8% year-over-year. And new construction prices were down 15% in August and are still down 9.6% as of September. But, Kaufman County pending sales in August were up 50% and are still up 36% this month year-over-year.
The moral of the story: If you price your property right, you can still make a move.
So, to summarize what’s going on in the market right now, homes are still moving. Prices are all flat mostly. Transactions jumped up last month. But, that’s heavily based on what prices did in that area as to whether or not home sales were up.
As a strategy, ask yourself: Am I good with 10-20% less on the sell side, and then making it up on the buy side? Or, if you’re a seller, another option is you may just want to take it off the market right now and wait a couple of years to see if you can capitalize and get more down the road.
It’s going to be interesting to see what our real estate markets do in the next six to nine months.
With interest rates, I don’t expect that any small drops or changes by the Fed will make a huge impact to the market. Again, we’ve already seen some drops and the market has not picked back up drastically yet…But the recession to come, that’s the big question mark.
If you have any questions, please reach out to one of our agents.
Our agents are all market experts, and we would love the opportunity to advise you and provide you with all the information you need to make a good decision on your next move.
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