There is always something dynamic going on in the Dallas-Fort Worth market, and this month is no different.
The biggest news in Dallas-Fort Worth real estate right now is that prices are finally, steadily beginning to correct.
Year over year prices are starting to drop from the peak. The peak of price appreciation was June 2022. We saw 30% price appreciation at that time.
This month, the latest news from a regional perspective, is that the average sales price has fallen by 5%.
So we’re in corrective territory.
If you’re trying to sell a home right now, you’re feeling that. Your home may be sitting or you’re not getting as much activity as you thought you would be getting.
But the good news is that prices have appreciated so much over the past couple of years that your price appreciation is still up about 40%, even as high as 70 to 80% depending on the area and home.
So, we’re still in a growing DFW real estate market. That’s the biggest thing to take away today before we get into the details and the numbers.
Fundamentally, when you see price correction like we’re seeing now, you typically have a demand issue. But that’s not the case right now in this area. We have tons of demand here. Because the pendulum shift of everyone wanting to be here hasn’t shifted back. Over 120,000 people came here last year, and we still are seeing that trend continue today. So, the demand for housing is still very strong.
But the buyer has only so much bandwidth to pay a certain price. And with interest rates still bouncing around between 6 to 7%, you’re pricing the buyer out of the market. So that’s why you’re beginning to see prices adjust downward. Because sellers are ready to make a move, they have plenty of appreciation, and so they’re lowering their price to sell their house.
What is astonishing is really just how strong the demand is – I can’t iterate that enough. The demand is so strong, that when you drop that price of the home 5% below what last year was and get in the corrective territory we are in today, it’s multiple offers. We’ve seen it over and over again in our firm. The demand is there. We’re coaching our sellers, and if you’re a seller right now, we’re coaching you, too. You can sell your house. You just have to price it correctly. And then you can make that up on the purchase when you move.
So, the general message is market prices are finally correcting, as they needed to for a healthier market. But… we need more supply. And demand is there. You just have to have it priced right in order to make things start moving.
For Average Sales Price, Rockwall is down 11.5%, Kaufman is down 9.9%, Hunt County is up 7.3% and Collin County is down 4.1%. We are seeing prices moderate, except in Hunt County, where everything is more affordable so there is more demand.
People are going for the value proposition. So now, you the consumer see, we’re in a correction.
Real Estate is still technically in a recession, as seen by the 60,000 agents who have left the real estate business in the last six months.
That’s how much things slowed down the past year in terms of transactions.
Homes are sitting longer, by about 100 to 200% than they were a year ago. It’s about 40 days on the market vs. a few days on the market. Homes are sitting longer because there is a buyer/seller spread in terms of pricing. The seller still wants to get that 30% appreciation from last year, but the buyer is down here saying they can’t afford it.
So, what happens is that it brings about a standoff and homes sit longer. In every market, when that happens, the seller has to eventually come down in price for homes to move and activity to pick up.
Right now, Rockwall County is at 3.4 months, Kaufman is at 3.6, Hunt is at 3.8 and Collin is sitting at 2.1 months. Basically, an average of about 3 to 4 months supply across the region. So, we are working our way towards a more balanced market now.
That’s going to make it a better environment for selling and buying a home in general right now. We’ve been in a sellers’ market since 2019.
But now, you can actually sell your home and have a place to buy. So truly, this is much better for everyone.
This is the amount of inventory available. We’re seeing this pick up. But it is still the big culprit of our housing issue in D-FW. Because we still don’t have enough inventory.
That’s due to the fact that 70% of America has a 4% or less interest rate, and they simply don’t want to give that up. So, homes are not being listed because people don’t want to take on that higher interest rate. It’s getting somewhat better, but we still have a shortage of inventory in the metroplex. You can see in the below chart that looking back at 2019, you had almost double the number of homes on the market – and it was more of a normal market in terms of supply than what we have now.
The amount of new listings that have come in are down – by about 20 to 30 percent compared to this time last year.
Again, people are still getting used to the “new, new” and haven’t been wanting to list their homes and then have to buy at these current interest rates.
We’re still in a recession in real estate – what I mean by that, is transactions are down. The amount of business being transacted is down.
That’s why you’ve seen mortgage people and title companies leaving the business, and 60,000 agents leaving the business.
Everything is down 20 to 25 percent, meaning closings will most likely be down by this much in July.
Again, Hunt County is flat, but the rest of the areas are way down.
Closed Sales are down across the board for June — by 30% in Rockwall, 10% in Kaufman and 26.9% in Hunt, and nearly 15% in Collin County.
So, that’s the market update. If you’re an agent and watching this market and you’re hurting, it’s because of these numbers we just talked about. But it’s all about education and understanding the market, so that you can make a good decision for yourself – whether you’re an agent, buyer, or seller.
But right now, it is a much better time to sell and buy than it was a year ago. We’ll probably continue to see price corrections in the next few months. And will they be steep?
I honestly don’t know – so, it’ll be interesting to see what the price correction looks like over the next few months. I personally think it will stabilize most likely, as the market adjusts and as everyone gets used to the new, new and higher interest rate environment.
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