D-FW Real Estate Market Thaws - Activity Ramps Up After a Year of Freeze

Real Estate Market Thaws: Activity Ramps Up After Almost a Year of Freeze

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The big news this month I am excited to say is we have finally seen real estate transactions pick up. How did it happen? Well, home price appreciation slowed down and even corrected in some areas. In December of 2022, price appreciation even fell below 0 or remained completely flat for year over year.  

Now, home prices are bouncing back somewhat and we have seen a little price appreciation these last couple of months.

But for the last 11 months, transactions were down every single month as far as year over year data. For the first time in nearly a year, we saw an increase in transactions.

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What that means is a couple of things…

First and foremost, it is more apparent than ever that prices must come down for people to be able to afford to buy, especially with interest rates increasing the way they were over the past year. Some people will say that it was purely the interest rates falling slightly that caused activity to pick up.

But I say, first and foremost the price has to come down. And it did in December/January. Then, that’s when we saw an infusion of activity in the market (more people buying and selling), and we saw a little moderation in the interest rates around that same time when they decreased to that 6% level at the end of January. And that’s when we really saw a big infusion of transactions beginning to come in – both here at our firm and in the market in general.

But the thing is, it’s really just more normalized transaction activity — even though we’re calling it a big infusion.  

It is actually still pretty slow as far as transaction activity goes overall. But still, activity did increase and pick up from what it had been the previous 11 months. Prices came down, interest rates came down, and that finally gave some relief to buyers, so the activity increased.

And also, sellers are now getting okay with the “new, new.”

They are ready to make that upgrade or that downsize now. Because people just aren’t going to sit in their home forever. We are discontent by human nature, and eventually we get used to the current environment and then that’s when we make our move.

Even when it doesn’t make sense, we still make that move after a certain amount of time passes. Some people might be thinking, “Well I have an interest rate of 3 to 4% on my current home, so why would I move and have to have a 6-7 percent interest rate?”

But even then, we still do it. Because ultimately, we’re humans and we have our ways.

So, between all of those things coming together, that’s what has pushed us up in number of transactions finally over the past couple of months.

We also saw the median price come up last month for D-FW by 1%. The prices have really just flattened out year over year lately in the area.

But still remaining, there is a persistent problem which will not get us back to normal transactions anytime in the near future. And that problem is, we are in one of the top three markets in the nation.

We have businesses coming here, day after day, relocating their headquarters here – moving here from all over the nation. And, putting jobs here. So, what that means, is people are coming here – and that in this environment where things are frozen up, we will continue to see a lack of inventory.

We did not see listings increase these past couple of months… So, effectively, what we saw was a big infusion of buyers come in and then it pushed inventory back down and so prices came back up just a little bit. I believe that we’ll see this type of bouncing back and forth throughout the year. The activity is going to just come in waves based on that cycle.

But the fundamental thing is that we have an unemployment rate below 4%. We don’t have enough people for the jobs here basically. So, demand is here.

We are not in a 2008-2009 market, we’re in a market that has strong demand. So, if you want to sell and make a move, the ultimate truth comes down to the fact that it is all about pricing it right.

You price it right, at 1% appreciation, and we still see multiple offers and homes go under contract within a week on the market… The demand is fundamentally there if you hit that price right.

So, if you’re sitting there trying to sell your home and not getting any activity, I will tell you with confidence that it is definitely the price.

If you lower the price to the market, the market will come and see you — and it works every time. It might not be what you want to hear, but it is the truth. And then, you can make that move that you want to make. And then remember, too, that on the buy side, you’re also getting to pay market price, which is nice.

Now, I’m going to give you a county by county breakdown of some of the biggest stats and indicators for the housing market in Rockwall, Kaufman, Hunt and Dallas Counties.

County by County Breakdown of the Housing Market in North Texas

Average Sales Price

For February 2023, Rockwall County home prices were up 3.4% year over year. I have been saying for almost a year now, we will have to get to that 3-4% price appreciation, this more normalized level, in order for activity to pick up. And so, that is what has happened lately.

Price appreciation is up 2.9% in Kaufman County, 7% in Hunt County (where there is even more room for prices to grow and go up), and then Dallas County is up 5.7%. So, it’s a little all over the place right now. But everywhere, price appreciation is down in the single digits now.

Average Sales Price in DFW 3.23

Average Price Per Square Foot

If we look at this data, you will also see we are at more normal price appreciation growth. It is basically flat to slightly up across the board. Average Price per Square Foot is up half a percent in Rockwall County, down .6% in Kaufman County, up 3.8% in Hunt County, and up 3.6% in Dallas County.

Average Days on Market

We are certainly seeing homes sit longer now. Ultimately, what’s happening, is we are getting to a more normalized market as far as days on the market goes. As of February 2023, we are seeing a 216% increase in Days on Market in Rockwall County, 97.1% up in Kaufman, 85.7% up in Hunt County and also up 66.7% in Dallas County.

Average Percent of Original List Price

Closed price to original list price is down. We are going back to a more normalized pricing now – where we are getting less than what’s even considered normal actually because many sellers are still pricing too high, hoping they can get the prices we were getting in 2020 and 2021, with that same level of 30% price appreciation. 

We are no longer getting over 100% like we were those last couple of years. Right now, in Rockwall County, sellers are getting 92.8% of the original list price, 92.6% in Kaufman County, 93.4% in Hunt County, and 95.4% in Dallas County, which is all down about 8 percent from last year when people were still getting 100% of the list price on a regular basis.

Months Supply of Inventory

The big news this month I am excited to say is we have finally seen real estate transactions pick up. How did it happen? Well, home price appreciation slowed down and even corrected in some areas. In December of 2022, price appreciation even fell below 0 or remained completely flat for year over year.  

Now, home prices are bouncing back somewhat and we have seen a little price appreciation these last couple of months.

But for the last 11 months, transactions were down every single month as far as year over year data. For the first time in nearly a year, we saw an increase in transactions.

Months supply of inventory indicates whether you’re in a seller’s, buyer’s or balanced market. 

You’re in a seller’s market at about 3 to 4 months of inventory. 

And for all practical purposes, it’s still a seller’s market here in North Texas. That’s because of the lack of inventory. Rockwall County is at 2.6 months inventory, Kaufman at 2.8, Hunt at 3.4 and Dallas is at 1.7 months inventory.

Number of Homes For Sale

This is the big culprit here. While the number of homes for sale is up 100% over last year in many areas, last year was truly already at anemic levels. If you look at the last five years, you’ll see the inventory used to be far, far higher. 

Months Supply of Inventory in DFW 3.23

But with all of the people coming to this area, we just don’t have enough places for everyone to live. There is a housing shortage in this area. It will improve over time, but how much it will improve we just don’t know. Which is why we won’t go back to a normal market. Because every time we get inventory really starting to come in, and more of those listings hit the market, they get bought up quickly, and then inventory goes back down again.

New Listings

So, same thing here. We need more listings. This is beginning to happen – but people don’t want to sell their 3 to 4% mortgage to go and get a 6 to 7% mortgage. However, people are starting to get used to this, and price reductions are making it make more sense.. And mortgage lenders are getting creative on buy-downs and other creative programs. 

In fact, reach out to me if you have questions. Because there are ways to get interest rates down and have the seller pay for that right now. But for new listings, we just don’t have enough is what the data shows right now. Listings are down 3.8% in Rockwall County, up 18.6% in Kaufman County where they are building a tremendous number of homes right now, it is up 35.7% in Hunt County and then down 6.9% in Dallas County.

Pending Home Sales

So, this is going to be leading indicator into March. Rockwall is up 29%, so we can see a boost there in transactions. And then Kaufman County is up 7.8%, Hunt County is up 4.9% and Dallas County is down 11.5%. It’s all over the place, but mostly up year over year.

We’re seeing more transactions – again, that’s because pricing is coming down and the little interest rate drop we saw in February has caused more transactions in the market. And for the simple fact also that people are ready to make a move – and they won’t just sit tight forever.

Closed Sales

Closed Sales were also up in Rockwall County by 11%, down in Kaufman County by 6%, down in Hunt County by 2%, and down in Dallas County by 19.4%.

Final Thoughts

The good news for us as sellers and buyers wanting to move our families is that more inventory is coming to the market. Slowly, but it’s coming. And prices are adjusting downward so that transactions can happen. You as a seller may not want to take a hit on the sale, but the reality is you’re winning it on the purchase side so it creates an offset there.

That’s the residential market update for what’s happening in the local housing market right now. If you have any questions or need any advice, please feel free to call or reach out anytime

We have all 5-Star Reviews and would be happy to help you make the move and get the most from your sale and then the best deal possible on that new home purchase.