Real Estate News: Is a Slowdown a Catastrophe or a Rebalance?
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Where did Dallas fall in a list of metro areas experiencing a market slowdown? How did home sales in Dallas and Fort Worth compare to statewide numbers?
We have all this and more in this week’s roundup of real estate news.
DALLAS IN TOP 10 METROS EXPERIENCING BIGGEST SLOWDOWNS
After a spate of headlines about a slowdown — or even sputter — in the housing market, Realtor.com took a look at the 10 metro areas experiencing the biggest shifts. On the list, Dallas comes in at No. 8.
“To be clear, prices aren’t always dropping in these places, which are predominantly located on the West Coast,” the piece reiterates. “Mostly, they’re decelerating, coming back down to earth. So bargain hunters can put their wallets away.”
However, the report also says that things like surging amounts of inventory and number of days on market could also signal market adjustments are happening — list prices rose this year (from October 2017 to October 2018), but only by 7.3 percent nationally, less than the 10 percent increase in 2017.
“There’s a rebalancing that needs to happen,” says Freddie Mac deputy chief economist Len Kiefer told Realtor.com. “Prices have risen so high in some of these markets that it’s very tough from an affordability perspective [for buyers]. … It’s not surprising to me that we’re seeing a little bit of a leveling off.”
In other words, the bubble isn’t popping — but the bathwater is leveling.
How does that look for Dallas? The median list price is $335,050 this year, which equates to a YOY change in list price of -1.4 percent, and a 15.5 percent increase in inventory. It also means about a 14 percent increase in listings seeing price reductions.
By comparison, the top MSA on the list, Stockton, California, the median list price is $397,050, and while the list prices are up, there is an almost 35 percent increase in inventory, and an almost 300 percent increase in listings seeing price reductions.
The report points to four reasons we’re seeing a slowdown.
- Mortgage rate increases;
- Prices got too high;
- Sellers wanting to take advantage of the favorable market means more homes for sale;
- New construction is good for buyers, but slows down sales.
HOME SALES REBOUND, BUT TRAJECTORY REMAINS FLAT
State home sales rebounded 11.8 percent in October after a September slowdown, but the trajectory for sales remains flat, The Real Estate Center at Texas A&M University’s latest housing report revealed.
“The shortage of homes priced below $300,000 and rising interest rates continued to weigh on overall activity. Inventories inched forward but at an insufficient rate relative to demand, and housing starts fell for the fifth time in six months,” the report said.
Current construction activity reached its highest level since 2007 thanks to elevated construction employment and wages, but the center’s economists warned that the momentum may moderate in the fourth quarter thanks to rising interest rates and a dip in housing starts.
“Dallas overtook Houston’s top ranking with more than 3,000 permits issued, led by growth in Collin and Tarrant Counties,” the report said of single-family housing construction permits.
However, total housing starts fell for the fifth time in six months.
Although a sales slowdown gave most metros some breathing room, statewide the months of inventory remains below four months (six months is considered a balanced housing market).
“Listing inventories of single-family homes priced more than $400,000 exhibited the largest uptick this year, reaching 6.4 MOI after bottoming out below 5.9 MOI in February,” the report said. “In the $200,000-$300,000 range, the MOI reached an annual high of more than 3.2 months. The market for homes priced less than $200,000 remained the exception, where the MOI held at 2.8 months with constant pressure downward.”
New MLS listings buoyed the MOI in Dallas, where it reached three months. However, Fort Worth’s MOI fell below 2.4 months.
“Rising interest rates, declining affordability, and supply shortages continued to hinder activity on homes priced less than $300,000, which accounts for nearly 70 percent of sales through an MLS,” the report said. “Despite the housing market’s moderation, closed listings above the bottom price cohort ($200,000) hovered around record highs.”
Days on market continues to hold at less than two months statewide, with an average of about 50 DOM in Dallas, and 40 days in Fort Worth. Demand for homes priced less than $200,000 remains robust statewide, and accounts for the largest proportion of sales through the MLS. Demand was strongest, however, in the $200,000-$300,000 range in most of the major metro areas.
“In Dallas and Fort Worth, the repeat sales indices stabilized at 4.0 and 5.2 percent YOY growth, respectively,” the report said. Statewide, the median home price increased to $235,200. In Dallas, the price dipped below $281,600 after breaking records the month prior. Fort Worth saw its median home price hit $236,700.
