A market rebalance is underway, with more home inventory and manageable prices, experts say.
About 54 percent of agents nationwide said the market will start to resemble pre-pandemic times within the next year, said Caroline Feeney with HomeLight real estate research team.
Only 51 percent of the agents surveyed for HomeLight’s fall 2022 agent insight report said it’s a seller’s market in their local area, compared to 95 percent the previous quarter.
“For two-plus years, we were seeing a nationwide seller’s market,” Feeney said. “It’s interesting to compare that stat to 2019, when about 55 percent of agents at that time reported that it was a seller’s market. We are starting to see some parallels to the pre-pandemic type of real estate market, where there is some equilibrium between buyers and sellers.”
It is still challenging to afford a home because of high construction costs, inflation, and a 7 percent mortgage rate, so some potential buyers have backed off for a while. That creates more inventory — and it indicates that prices may eventually decrease, Feeney explained.
“Homes are staying on the market longer, and when supply and demand start to even out, prices get a little more manageable,” she said. “Price reductions have become more common. All signs point to this shift happening.”
“Intelligent pricing is key in this market.”
Kelly Boulton
Close to Home
The prices are definitely becoming more manageable in Dallas-Fort Worth, said local Realtor Kelly Boulton.
“I am seeing more inventory,” Boulton said. “Compared to January 2022, which had two weeks of inventory supply in North Texas, we are now at over two months’ supply. I am seeing price reductions and fewer buyers. However, I am seeing multiple offers on homes under $400,000 in certain market areas.”
When it comes to the pre-pandemic normal, what goes up must come down, according to the HomeLight report. More than half the surveyed agents nationwide said markets that heated up the quickest, such as Austin, are likely to be the first to cool down and will see the biggest decreases during a market correction.
“D-FW’s population grew by over 21 percent between 2010 and 2020, which far outpaced housing growth, creating a definite sellers’ market,” Boulton said. “However, buyers had more choices. Lower pricing made homes more affordable. Many buyers sought homes within a reasonable commute of their work, which drove competition closer to central Dallas.”
What’s Next
People from other states are still moving to Dallas, Boulton said.
“The D-FW job market continues to grow, driving housing demand,” she said. “Texas now holds almost 50 percent of the nation’s Fortune 500 companies, with D-FW holding approximately 25 to 50 percent of them. I believe the D-FW housing market is steadily moving toward normalization rather than a slowdown. We will still see annual appreciation of values, but more likely in the single digits rather than the double-digit gains of the last two years. Interest rates are also normalizing. A recession, if it comes, is less likely to affect the housing market compared to other industries.”
Post-Pandemic Housing Needs
The No. 1 wish list item for home buyers these days is a home office, according to HomeLight research.
“The pandemic wasn’t a blip on the map,” Feeney said. “It was a significant moment to fundamentally change what people need out of their living spaces. Remote work is booming. Federal data shows that the number of Americans working remotely has nearly tripled since 2019. When it comes to real estate, everyone wants a home office space.”
Because so many people spend the majority of their time at home now, they also want outdoor amenities.
Backyard decks are now worth 65 percent more than they used to be, adding more than $7,000 in resale value, Feeney said. More than 60 percent of buyers want a front porch, and outdoor kitchens and fireplaces also have risen in popularity.
“Buyers are looking for extra bedrooms or additional office space,” Boulton said. “Therefore, higher bedroom counts beyond homes that feature offices are highly valued now. People are more likely to find these larger homes farther from the city.”
The good news for Dallas, Boulton added, is that buyers have more choices, which creates market stability.
“Balance equals longevity,” she said. “Intelligent pricing is key in this market.”
