Sellers: The Market is Shifting, But DFW Remains Strong
Many sellers are worried right now. And homeowners are asking themselves, is now still a good time to sell? Here’s the outlook and rundown by the local experts, based on the most recent market data.
The market is in a shift. Price appreciation skyrocketed across the country the past two years, especially in the Dallas-Fort Worth Metroplex. So in the midst of this shift, while tensions are running high, we want to provide you, the potential or current home seller, a look at how things are changing, and let you know that your property still has tremendous value if you are in the market to sell right now.
As of July 2022, the median home sales price was up an average of 17 percent compared to June 2021 in Rockwall, Hunt, Kaufman and Dallas Counties. Days on the market has increased, which is why inventory is building and more homes are sitting longer, up an average of about 65 percent in the area year over year.
However, according to the most recent census data, DFW’s population increased by 97,300 from July 2020 to July 2021 due to continuing in-migration. The metroplex saw the second highest gains in the country during that time. Though there is talk of recession, employment numbers that came out recently also indicated a strong employment market, with the economy adding 528,000 jobs in the month of July and the unemployment rate falling nationally to 3.5 percent.
While the housing market has shifted, and entered a pause and turnaround, this is more so due to extreme price appreciation that occurred over the past two years, at an unsustainable pace, and the market is now settling down to a more normal price appreciation rate (with you still retaining the gains you realized these past two years).
So, the good news? The value you have accrued in your home, about 60 to 75 percent on average in the DFW area, is still there. Even for 2022, price appreciation remains positive.
The other good news, according to Founder & Managing Director of M&D Real Estate Danny Perez, is that, “Once you sell your home, there are much better opportunities out there with the increased inventory. You will also realize that relief when you purchase your next home in the purchase price. Not to mention, there will be opportunity now for you as a buyer to get repairs, when inspections are happening, to ask for more concessions and the like.” According to Perez, “This market shift is not bad news. It is only that price appreciation, and the market is moderating and coming back to normal, which everyone will reap the benefits of.”
The truth is that price reductions are happening, and properties are sitting longer right now than they were previously. So what does this mean? The 30 percent increase in price appreciation, which we saw again in just June of this year, is unsustainable combined with a rising interest rate environment, where we have seen an increase on average of about two percent since January 2022, pushing many buyers out of the market.
“What has to happen now is that price appreciation from 2021 is going to back up and reduce to more normal levels, such as five to 10 percent price appreciation,” predicted Perez. “This still gives you a total of about 70 percent price appreciation in your home for the past 2.5 years — not a bad outcome at all.”
Experts predict that mortgage rates have now peaked for the year. As homes are sitting longer on the market, sellers are beginning to adjust and reduce prices to a more normalized price appreciation gain year over year. This is already evident when you compare June 2022 price appreciation of 30 percent in the area having backed down to an average of 17 percent as of July 2022. This pause we are seeing in the market is the adjustment taking place that is getting us back to that normalized appreciation level.
Once everything balances out and adjusts, we will see an uptick in buyer activity over the next 60 to 90 days again, where homebuyers begin jumping back into the market and picking off the inventory that is building.
“Don’t panic in the least,” says Perez. “If you’re looking to sell, expect that your home could sit a little longer or see a price reduction or two right now, especially if you are looking to sell quickly – to accommodate the new normal — which is still positive gains in your home, even if the rate is reduced to more normal year over year gains.”
So, keep your eye on the long-term look, which is very positive for homeowners and people looking to move and sell in the DFW area, especially if you have owned your home at least two years.
This metroplex remains a hotspot of activity and growth, with high demand for single-family homes. If you are looking to sell right now, you are in the right place and it’s still the right time.