Welcome to the next edition of the Fort Worth Market Update. For this update, we will be looking at homes between $150k and $200K. This price range tends to have the fewest number of homes available compared to the buyers looking in that price point. Before we get into the numbers, we have an interesting news piece to share. The Wall Street Journal officially announced the Housing Boom is over, starting in Dallas. It is time for buyers and sellers to set their expectations differently when entering this market.
Our methodology for this Fort Worth market update is straightforward. We use the North Texas Real Estate Information Services (NTREIS) to present you with a broad overarching look at Fort Worth for this price range. For those who do not know, this multiple listing service is the place real estate agents advertise their houses for sale. Each listing will have certain required data. NTREIS then compiles and manages this data to allow for use by its members to keep buyers and sellers appraised of the market conditions in the Dallas-Fort Worth area.
If you are looking for a specific region to get numbers, please let us know. We can focus specific areas from certain neighborhoods, zip codes and draw specific areas We will work with you to give you the data you need.
With this Fort Worth market update, we would first like to show you the spread of the location of houses in this price range. (as of November 2018)
Homes for Sale
The number of homes for sale in this price range have gone up over the last two years by 21.2%. We have seen 347 homes for sale in this price point, which is up from 326 in 2017. If you think about it, however, this number is staggering low in a city of 800k or more residents. Buyers will have very limited options when it comes to this price range, and affordability will not get much better in 2019 as realtor.com indicates in their 2019 predictive report. Affordability will only get worse as we go into the new year. Homes prices will continue to rise because of the low inventory (although it should get better). Sales appreciation coupled with higher interest rates means many buyers will be shopping for cheaper homes. Sellers should expect homes to stay on the market longer than we have seen the past, even in this price range’s limited number. Buyers are not coming back to the market, hesitating to see what happens to it.
After seeing a nice increase in new listings in October 2017, we actually went back down, losing all of our gains from the previous year. We had 270 new listings in this price range in October. Once again, a staggering low number for a city as large as Fort Worth. Buyers should go into the house hunting with clear expectations of it taking months to find a home. With it taking this long for buyers to find anything, it will take self-discipline to keep the lifestyle in check to avoid any changes in your interest rate (beyond what the market brings…). Buyers should take a spending vacation with no large purchases or do anything to cause any major changes to their credit report. If you interest rate should expire, you want to be in a position to get something comparable to what you had before. Black marks on your credit report will not help your cause. It also makes sense for buyers to shop around if their interest rate does expire over time. Many lenders are offering some nice programs to help attract buyers to their coffers. You should at least take an hour or two to see if you can get another lender to give you a rate quote.
Average Sales Price
The most prevalent price point in this price range for the last three years has been in the $170k level. As one can see by the graph below, the average price in 2018 is $178K, which means more homes are falling around this number than other in the price range. Buyers should take note of this statistic to help them determine their budget. If they know most of the homes are going to be in the $170K range, they can set their expectations to most likely spend that much on their home. With every Fort Worth market update, it is good to take this statistic for what it is, a general broad indication of what buyers and sellers will get in this price range.
Average Sales Price per Square Foot
With this statistic, we can see that the average price per square foot has gone up 17% since 2016. This statistic should be another broad general indication of the market in this price point. With higher averages per square foot, one possible cause is smaller homes are coming on the market at high prices. If you are a seller in this price range, you should take note that a smaller home does not necessarily justify the same list price as one that is 500 square feet larger. Most buyers are well versed enough to know that a smaller house should get a lower sales price than the larger house. Sellers are having to lower their sales prices much more frequently than we have seen in the last four to five years. Sellers should work with their realtors to ensure that list price is correct for the market at the time of the sale.
Remember, our writings about how insane it is for a city the size of Fort Worth to have so little on the market in this price range. This statistic shows just crazy this epidemic is for buyers and sellers in Fort Worth. We have actually seen a 49.5% increase in our inventory in this price range over the last two years, but that just means the entire stock of homes will sell out in 1.4 months versus less than a month (as it was in 2016). With 30,000 people moving into Fort Worth annually and many of them not having high enough salaries to afford higher price points, one has to be concerned what city leaders are doing to help rectify the affordability issues. What incentives can the city give to developers to build more affordable housing? Are there ways for the city to help some homeowners buy fixer uppers and help them with the repair work needed to make it livable? The private market has not shown any indication of being able to do anything about the affordability issue so the city needs to stand up to help with the issues facing many new residents.
With closed sales, we have seen a decrease of 17% from this time last year. With 240 homes closing in October, one would think buyers would be in a position to take advantage of homes being on the market longer However, this is only one likely cause of lower closed sales. One should also consider that some buyers have simply given up on the market and decided to keep renting their current homes. With the raising interest rates and no real tax incentives to purchase a home, no one can blame buyers for taking a step back from the market at this time. As any good realtor will tell you, you shouldn’t be so quick to walk away if you truly want to purchase a house for yourself. Every period in the real estate cycle has it different challenges to both buyers and sellers. Are interest rates higher? Yes, but this does not mean that they will not fall back down in the future allowing buyers to refinance their mortgage to lower rates. Are the tax incentives gone for housing? Sure! However, the fiscal advantages to owning a home still far outweigh avoiding home ownership because you can’t save as much on tax payments every year.