Low inventory, meet high buyer demand. According to Zillow, 2020 is shaping up to what could be the most competitive home shopping season in years. The real estate database company expects home value growth to finally gain some traction, after slowing for nearly two years. For that, you can thank low mortgage rates and a housing inventory down 5 percent from the prior year here in the Metroplex.
“As the economic storm clouds on the horizon in early 2019 cleared up, we saw buyers return in droves, taking advantage of ultra-low mortgage rates,” said Zillow economist Jeff Tucker. “Our first look at 2020 data suggests that we could see the most competitive home shopping season in years, as buyers are already competing over near-record-low numbers of homes for sale. That is likely to mean more multiple-offer situations, and that buyers will have a harder time finding the perfect fit for their families. The good news for buyers is that low mortgage rates are helping to make homeownership more affordable, and home builders are responding to the hot housing market by starting construction on more homes than at any time since 2007.”
Low Mortgage Rates Mean More Buyers and Home Value Growth
Nationally, home values grew 3.8 percent year-over-year (to $245,193) according to the January Zillow Real Estate Market Report. And in the biggest drop since 2018, inventory is down a whopping 8% on average. That consistently low inventory is a major contributing factor to the growth in home value. With a healthy economy and low mortgage rates sending more buyers out into the market, Zillow predicts heated competition for an increasingly smaller inventory of homes this spring.
Mortgage rates hit a high of 3.77 percent on January 31, 2020. Per Zillow, mortgage rate data is are based on “thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgages site by third-party lenders and reflect recent changes in the market.”
The Dallas-Fort Worth Housing Market
Some Dallas-Fort Worth metro highlights from the Zillow report (see our own analysis of new home building here):
- The typical home value grew 2.2% to $253,300.
- Inventory is down 5% from a year ago. There were 1,700 fewer homes for sale than in January 2019.
- Rents have grown 2.2% annually, and the typical rent is now $1,465 (for comparison, the average rent nationally is now $1,602, up 2.3% year over year)