Last year in 2017, the word on the street was that Plano was in a seller’s market. Frustrated buyers ran around trying to be the first into viewing any went up for sale and offers were multiple and competitive for any home that worth anything. Real estate articles covered the chaos and warned that a housing bubble like that of 2007 could be just around the corner.
That future turned out to be a bit different, buyers soon began to cool the offers they were putting in and staying put if they could at all do so. that had and were putting The media is abuzz with news of a declining housing market that is only going to get worse.
The slowdown in Dallas-Fort Worth’s housing market may be worse than at first glance.
Sales of preowned single-family homes dropped 1 percent annually in August in all of North Texas, according to the latest numbers from the Real Estate Center at Texas A&M University. Those numbers include data on more than two dozen counties stretching from the Red River to Waco.
Now, if that wasn’t bad enough, some statistics are even worse:
Sales last month were down almost 31 percent in Far North Dallas. They dropped 24 percent from August 2017 totals in Allen, and were off 21 percent in Coppell. Plano had a 16 percent year-over-year sales decline and sales were down more than 11 percent in Richardson and about 9 percent lower in Frisco.
A different view
The numbers are there and no matter how you look them, there has definitely been a shift in the market, but it’s not necessarily all doom and gloom.
There are many reasons why a slow down in the market can seem worse than it is, and that is what we’re dealing with here in the DFW area.
When you look at the figures and compare them to last year, we have fallen in sales and pending sales, but remember those figures were from when we had an artificially high number of sales. Looking at normal years, we’re not extraordinarily falling as hard as they seem.
Are we smarter now?
Now that we know that our figures aren’t totally horrible, we can also look at other numbers that influence housing sales.
Mortgage rates are very low. They’ve been low for quite a few years now. Many buyers remember when homes were at 11% or higher and everyone ran out to start buying homes as they dropped and nearly flooded the market in a buying spree when they got as low as 8%.
When they dropped even lower around 2004, there was a national rush to buy homes. Add to that some unethical mortgage brokers who could find a way to give your dog a mortgage and the party was, as they say, ‘on’!
Thus we have part of the reason for the housing bubble. We can’t blame the buyers though, these low mortgages were incredible when you compare the rates to the earlier housing markets of the 1990’s when the average mortgage could be as much as 13% for a regular FHA loan.
Now we have these historically low mortgage rates, and they are incredible, but look at the length of time we’ve had it. There are millennial buyers out there who couldn’t even conceive of a high-interest rate. They would shudder at the thought of it.
Could it be that we’ve gotten smarter about our economy? Did the recession in the early 2000’s teach us that creating a frenzied housing market is not in anyone’s benefit?
Mortgage rates won’t stay where they are, that’s for sure. History has shown us that these rates are cyclical and play a large role in how active the housing market is.
The difference a point makes
The moment the rates start climbing, there may be a rush to get into a home before they rise even higher. Right now is a great time to buy or sell because of interest rates. Why? Let’s look at it this way, for every point, a mortgage rate goes up and depending upon your asking or selling price. you could end up paying more.
On a $400,000 loan, if you owe $360,000 a one percent rise in mortgage rates could raise your monthly payment by around $200. Double that on an $800,000 home and you’re at around $400 and so on and so forth.
That isn’t a conversation many mortgage brokers have had to have with their clients, but for anyone who’s gone through the high-interest rates of the ’90s and the recession caused by the housing market, we know that having it is sound advice.
There doesn’t seem to be a reason that interest rates will go any lower and many reasons that they’ll continue to move up. This may mean that selling or buying a home right now just might be in the best interest of many.
Is it in your best interest? That’s where you need a good team of real estate professionals behind you, giving you advice. Everyone has different needs and wants so starting with the conversations.