May is always an exciting time in real estate as buyers and sellers gear to start the busy season with a bang. This year seems to be no different. I have been so busy my head is spinning. I barely find time to write my monthly musings about all things real estate in Fort Worth and surrounding areas. I spend this time going over with you how the industry is looking and share some important numbers with you.
Industry experts have all been about the crazy real estate market and how long it will take for us to see a change. Michael Brush, over at Market Watch, is already beginning to see signs of another looming collapse. He states in his column that several seeds have been planted similar to what we saw a decade ago before the last downturn. Flipping is becoming popular again, which has too much speculation in it to be good. Property pricing continues to escalate at a alarming rate while we are seeing signs of easy, no down payment mortgage coming back on the market(Quicken’s Rocket Mortgage). He does note that the full repeat of what happen a decade ago does not seem likely since no one is packaging high risk mortgages into “risky investment instruments.” Of course, this opinion piece could not end without taking a poke at the favorite scrape goat, the federal government. Too much competition from the various agencies are making for some very “sloppy” lending practices.
The Texas A&M Real Estate Center took a look at the market as well. In their article, they attempted to predict the next downturn based on the historical data of previous ones. Texas seems to be a in a good place right now.
The supply side of Texas’ housing market is more flexible than the nation’s as well as California’s and New York’s. Currently, the state’s housing supply is in the growing phase of a construction cycle that began after the recovery from the Great Recession of 2007–09.
Of course, they warned against getting too lax.
The relative ease of Texas’ land acquisition process and abundant supplies of land have been important factors contributing to the flexibility of the state’s housing supply, reducing the risk of a home price bubble followed by a major home price collapse. But the housing supply flexibility has brought the risk of a housing supply bubble, which may be avoided in the current phase of the state’s housing supply as long as the state’s building industry has not forgotten the painful lessons learned in the turbulent 1980s.
Steve Brown over at the Dallas Morning News wrote a great piece about how the Dallas- Fort Worth market continues to be a severe seller’s market with house inventory being down throughout the area. In this article, he pretty much sums up my last three monthly Three Number posts. We have too many buyers, too little inventory which is driving up property prices way too much. Buyers are having to scramble to find houses and have to make multiple offers before they see one get accepted. Many buyers are waiting another year hoping things will change. Let’s keep our fingers crossed that we will see this change as a healthier market bodes well for everyone.
Now, onto the numbers. Please remember that these number cover my farming area which you can see below. Although, I do real estate in Fort Worth and surrounding areas so don’t be shy about touching base if you have questions.
April Inventory of Homes
As all the experts have been telling us about real estate in Fort Worth, the inventory is very low in Texas (and across several other areas in the nation). Builders are not building fast enough to make up any difference in the inventory number as it has not changed in the last year. It seems to be stuck at 2 months or below. For those who need to know, a good healthy market has a six months supply of inventory available for buyers. We have been at 2 or below now for months. Sellers are having a difficult time justifying moving out of their current homes into something newer, because of the fantastic rates they received when they refinanced. There is also a huge fear coming from sellers that they will not have a place to move once their house sells. Many sellers have been telling me lately that they remember a decade ago when house prices appreciated at a huge rate, only to fill the sting of seeing them fall back down to earth. Sellers are just not willing to move in this unhealthy market. If you can get over all these fears facing sellers today, you should give serious consideration to putting your home on the market. Most houses go on the market and usually gone by the end of the weekend. Many listing agents are now telling buyer’s agents when final and best offers are due, before they even get an offer. They do this because they know the offers will come. If you have any inclinations towards selling, let’s chat on how Integrity 1st can get you going.
April Days on Market
As with inventory, we are seeing similar numbers that we did last year. The average time on market for homes in my coverage area is about 33 days. Believe me, most homes move much faster and it is the few that remain on the market for a lengthy time that makes this number as high as it is. Sellers are seeing buyers lining up in front of their homes in order to see it. It is not something that was common until a couple of years ago. Buyers had the luxury of waiting and really analyzing which home they liked the best. Today, you have to move very quickly with offers and be aggressive on the offers. Your agent should be ready to move on a property in a moment’s notice. I have even seen blind offers, offers where the buyer has not even seen the property, get more serious attention by listing agents. Before, if a buyer had not seen the property, the seller did not want to waste time with the buyer because they could easily change their minds during the option period. Some of the blind offers are so attractive with quick closes, large earnest money deposits and taking several items, like a survey and title insurance, off the seller’s plate, that sellers are having a difficult time saying “no.” In my opinion, the seller would be better off waiting to see what other offers come in from buyers who have seen the house. It could be that you get offers just as good as the blind offer and you know they are more likely to stay in the deal during option. Buyers are getting very frustrated by the lack of success in getting offers accepted, but this does not excuse hasty behavior on the part of the seller to accept the first strong offer to come along.
April Median Sales Price
Once again, I leave the most interesting number to the last. How much can I expect to sell my house? Good news for sellers is that it is still going up with another appreciation of 4.5% from this time last year. It seems incredible to believe but we are nearly 19% higher in average sales price than we were this time two years ago. This kind of appreciation cannot be maintained. When will it end? No one knows for sure, but I wouldn’t wait to find out. You should get your house on the market now if you want to take advantage of these higher prices, because I am not sure how much longer the market can keep going up without burning up. Assessments are also much higher than they have been in the past with many homes seeing a 10 percent or higher increase in their property taxes because of this market. Of course, you can protest the increased assessed value, but I wouldn’t rely much on the sales prices of nearby properties, because they are probably not going to support you to the degree you were hoping.