As we get into 2024 many are asking: is the market slowing down? After years of skyrocketing property prices and crazy competition among buyers, the real estate landscape is changing. This article will dive into the current state of the market and the indicators and trends that point to a slowdown.
For homeowners and buyers in Texas especially in the DFW and San Antonio areas, this information is important. Whether you have property tax liens in TX or are just a homeowner, this will help you make informed decisions on your real estate investments.
Is The Housing Market Slowing Down: Indicators
To see if the market is slowing down we need to look at several key factors that affect real estate.
Median Sales Price Trends
The median sales price is a key indicator of market health. We’ve seen housing prices skyrocket across the country in recent years. But recent data shows that growth is slowing. Prices aren’t dropping dramatically but the rate of increase is slowing in many areas.
In the Texas market, the median home price is stabilizing. While still higher than pre-pandemic levels the growth is slowing. Good news for buyers priced out of the market in recent years.
Texas Realtors are reporting the median home price in the state has gone down in the last few months which means the market might be shifting towards a more balanced market. But home values in many areas are still way higher than a few years ago.
Housing Supply and Inventory
One of the main reasons for the crazy seller’s market of recent years has been the low supply. But inventory is slowly increasing. More homeowners are listing their properties and home builders are working to add more new construction homes.
In Texas, the housing supply has gone up, especially in major cities like Dallas, Fort Worth, and San Antonio. This increase in active listings is giving more options to buyers and easing some of the competition in the market.
The inventory shortage that has plagued the market for a few years is easing with more homes listing in many areas. This trend is more pronounced in the 2nd half of the year as more sellers enter the market.
Mortgage Rates and Affordability
Mortgage rates have been high for a while and have played a big role in cooling the market. After a period of super-low rates the Federal Reserve Bank has been raising rates to combat inflation and it’s made borrowing more expensive. These higher rates have affected affordability and some buyers are waiting to buy.
For first-time buyers, the combination of high prices and persistently high mortgage rates is a big challenge. Many are finding it hard to get into the market and that’s reducing overall buyer demand.
The skyrocketing mortgage rates are putting downward pressure on sales as prospective buyers are dealing with reduced purchasing power. Rates have more than doubled from pandemic lows and that’s affecting affordability for many would-be homeowners.
Home Sales and Days on Market
Number of homes sold and days on market are also indicators of market health. In many areas including the Texas market, we’re seeing a slight decrease in the number of homes sold compared to the crazy pace of recent years.
And homes for sale are taking a bit longer to sell. We’re not seeing huge increases in days on the market but the days of homes selling within hours of listing are fading away in many areas.
The days of multiple offers and bidding wars for every property are becoming less common. Buyers have more time to think and sellers need to be more patient to find the right buyer.
Median Sale Price:
Knowing what median sale price means is important to understand housing market trends. The median sale price is the middle point of all sales where half of the homes sold for more and half sold for less. This is a better indicator of the typical home price than the average sale price which can be skewed by extremely high or low priced outliers.
National Median Price
Nationwide the median sale price is stabilizing after years of growth. Prices in many areas are still higher than pre-pandemic levels but the growth is slowing down. Some areas are even seeing price drops but that’s not uniform across all areas.
The national median home price has gone down in recent months which means the market is moving away from the extreme seller’s market of the past few years. But prices are still higher than pre-pandemic levels.
Texas Market
In the Texas market, the median price is following the national trend but with some variations between housing markets. Texas’ strong economy and continued population growth are keeping demand strong and prices stable even as other markets are cooling more.
Texas housing market forecast says while the growth may slow down a crash is unlikely. The state’s diverse economy and continued population growth will support housing demand in the future.
Texas Housing Market: A Tough Cookie
The Texas housing market has always been a resilient one, outperforming the national average during recessions. Here are some of the reasons why.
Economic
Texas has a diverse and strong economy with big sectors in technology, energy, healthcare, and manufacturing. This economic diversity brings in new residents and job seekers which in turn supports housing demand.
Despite the slowing economy nationwide, Texas is still seeing job growth and economic expansion. This economic strength is a buffer against more severe housing market corrections.
Population Growth
The state is still attracting new residents from other parts of the country, for job opportunities, lower cost of living compared to coastal cities, and no state income tax. Plus property tax exemptions in Texas make homeownership more attractive for many and that’s fueling more demand in the housing market.
The new residents are putting upward pressure on home prices and rents, especially in the major metros like Dallas-Fort Worth and San Antonio. But this population growth is supporting continued demand for housing even as the market is cooling.
Property Taxes and Affordability
While Texas has many advantages for homeowners, it’s worth noting that property taxes in the state are higher than the national average. These taxes can add up to the overall cost of homeownership and may be a consideration for some potential buyers.
Despite home prices dropping and the high property taxes, Texas is still more affordable than many coastal markets and that’s still attracting out-of-state buyers. But the combination of rising home prices and property taxes is starting to pinch affordability for some local buyers, especially in the fast-growing areas.
Housing Market Crash
With talk of a housing market slowdown, some are asking if we’re headed for a housing market crash. While it’s true the market is cooling, most experts don’t see a crash anytime soon.
Here are the differences between this last housing market predictions, and the 2008 housing crisis:
- Lending standards are stricter so there are more qualified buyers and fewer bad loans.
- Housing supply is still tight in many areas which is supporting prices.
- The job market is strong which reduces the risk of mass foreclosures.
While a crash is unlikely, it’s reasonable to expect a period of price stability or minor declines in some areas as they adjust to higher interest rates and economic changes.
Interest Rates
The Federal Reserve Bank’s actions to combat inflation have had a big impact on the housing market. As interest rates have risen, the cost of borrowing has gone up big time for potential homebuyers.
These higher mortgage rates are affecting the market in several ways:
- Reduced buying power for many potential homeowners
- Higher monthly payments make homeownership less affordable
- Some current homeowners are hesitant to sell and give up their lower interest rates
The effects of these higher rates are being felt across the market and that’s why we’re seeing slower sales and moderation of price increases.
Navigating the Changing Market: Tips for Buyers and Sellers
Whether you’re buying or selling in this market, understanding the changes is key. Here are some tips for both buyers and sellers:
For Buyers
- Be patient and prepared: With homes staying on the market longer, you may have more options and time to decide.
- Get pre-approved: In a market with higher interest rates, having your financing in order is critical.
- Consider up-and-coming areas: Prices are still high in many popular neighborhoods so look into emerging areas for better value.
- Work with knowledgeable real estate professionals: Local expertise is key in navigating market-specific trends.
- Explore alternative options: In some cases working with cash home buyers in Granbury or other Texas cities may be a quicker and more straightforward process.
- Don’t expect prices to crash anytime soon: While the market is cooling, a big crash is unlikely. Make your buying decision based on your circumstances and long-term plans.
- Consider property taxes: When budgeting for a home factor in Texas’s high property taxes.
- Look into first-time homebuyer programs: Many programs help first-time buyers get into the market even in tough times.
For Sellers
- Price realistically: The days of extreme price increases are over. Work with your real estate agent to price your home right.
- Prep your home to stand out: With more inventory on the market, make sure your home is in top shape to attract buyers.
- Be flexible: You may need to negotiate and consider buyer-broker commissions to close the deal.
- Consider timing: If you have flexibility, talk to your agent about the best time to list your home based on local market conditions.
- Explore all selling options: If you need to sell fast, companies that advertise “sell my house fast in Texas” may be worth looking into especially if you have time constraints or a property that needs repairs.
- Don’t expect multiple offers on every property: The crazy bidding wars of the past few years are dying down. Be prepared for a more normal selling process.
- Consider your mortgage rate: If you have a low interest rate on your current home, factor that into your decision to sell and buy another property.
Home Construction
As the market adjusts to the changes, home construction is key to solving the housing supply problem. In Texas, new home construction has been strong and has helped alleviate some of the housing inventory shortages.
But builders face:
- Rising material costs
- Labor shortages
- Regulatory obstacles
- Uncertainty about future demand with higher interest rates
Despite these challenges, many expect home construction to continue at a steady pace, especially in the high-growth areas of Texas.
Real Estate Professionals in a Changing Market
As the market changes the role of real estate professionals becomes even more important. Experienced cash home buyers or agents can provide local market knowledge to both buyers and sellers.
In a more balanced market investors or agents can help:
- Sellers price their homes right to attract buyers without leaving money on the table
- Buyers understand the value of the property and make smart offers
- Both parties navigate the negotiations in a less crazy world
Texas Market Insights for Homeowners and Buyers
Before we conclude, here are some key points for those navigating the Texas real estate market:
- The Dallas-Fort Worth area continues to see strong demand, but the market is showing signs of balancing out.
- For those needing to sell quickly or avoid the traditional selling process, some of the best home-buying companies in Fort Worth, such as Four19 Properties, offer fast and convenient options.
- While Texas housing market predictions suggest a cooling trend, the market is expected to remain relatively strong compared to other parts of the country.
- The state’s economic diversity and ongoing population growth are likely to continue supporting housing demand in Texas.
- Buyers may find opportunities in the slowing market, with potentially less competition and more room for negotiation.
- Working with experienced real estate professionals or reputable home-buying companies can help navigate the changing market conditions effectively.
Conclusion: Changing Market
As we’ve seen there are signs the housing market may slow down in 2024 and beyond. The combination of moderating house prices, increasing inventory, and higher interest rates all point to a more normal market than the crazy one we’ve seen in the past few years.
Key points:
- Real estate markets are complicated and influenced by many factors
- Trends can vary greatly by location, property type, and individual situation
- Stay informed and work with experts
- Whether buying or selling consider your financial situation and long-term goals
- The market is changing but with the right approach, you can navigate it.
Remember, understanding market dynamics will help you make informed choices in the ever-evolving world of real estate, whether you’re a first-time homebuyer, a seasoned investor, or a homeowner considering your options.