This was a report I have been predicting because it was what I have been hearing ever since July 15. Our market is cooling. It’s cooling because low interest rates have driven up prices to a point where folks are now saying, “I’m not going to pay that!”
North Texas home sales were off by 2 percent in July, 2016 compared to July, 2015 levels.
Two percent is nothing to write home about, certainly nothing to freak about, but it was the first recorded dip in recent years. August numbers seem to be headed in the same direction, that is, south a scootch.
But prices are still, well, pricey. I know of several families out-bid for a home. They had their existing homes on the market, targeted a buy-up, then lost as they were out-bid by cash buyers or those who simply offered more than asking price. So off the market comes the home they are in, out come the bids to remodel or just make it more comfy for the time-being.
The median price of single-family homes sold by North Texas real estate agents was up 9.4 percent from July 2015, according to data from North Texas Real Estate Information Systems. The median price of a home in NTREIS is now $229,800. Just two years ago, it was $180,000.
Agents are still killing it: they have sold 58,865 homes during the first seven months of 2016.
Year-to-date home sales in North Texas are up 6 percent from last year’s record.
The problem is, we are getting near to eliminating our once affordable housing. With median home sales prices 9 percent higher than they were last year, it is becoming nearly impossible to find homes priced at or below $200,000 unless, seriously, you are talking impoverished neighborhoods.
Affordability is getting to be quite an issue. And the affordable market is where most buyers are coming in. Just ask our Senior Writer Leah Shafer: poor girl wears her fingers to the bone every week trying to find a Tuesday $200,000.
In fact, we have created a new weekly category for homes, the Saturday $700,000, because we are seeing homes that would formerly be in the $600,000 range scooting up to this price category.
As Leah wrote a few weeks ago:
Luxury homes are still in good supply in the region, according to the DBA study, as anything priced higher than $500,000 has five or more months of supply. Homes costing more than $1 million have about a 14.3 months’ supply.
Of course, lest we fret, we are still not Denver, San Francisco or Seattle. Don’t know if we ever will be. Home inventory is definitely higher the higher up the price level chain.
“The peak was reached in June of 2015,” veteran appraiser DW Skelton told me. “Homes over $1.5 to $2 million are not moving as fast.”
That’s because there are fewer buyers at those price points. Fewer, too, at the mega levels of $10 million and above. And the white elephants just keep on coming as the wealthy build their dream environments then wonder why the next mega baron doesn’t want to buy another rich person’s dream.
“I wouldn’t be surprised that with the higher house prices consumers are experiencing some sticker shock,” said Ted Wilson with Dallas-based housing analyst Residential Strategies Inc. “As prices continue to rise, they can’t keep on going like this without some pushback from buyers.
David Brown with MetroStudy says “the chronic shortage of homes in North Texas is a significant factor in July’s home sales decline from a year earlier.” I’m not so sure the hot weather and election madness isn’t playing a role as well. Then, too, you have investors buying in the lower priced neighborhoods, snapping up affordable housing as fast as they can find it to flip.
“New listings of single family homes were down 9 percent and inventory was down 4 percent during July compared to a year earlier,” Brown said. “The low inventory is providing a governor on the growth in sales.
“The decline in sale is due to the lack of available attractive inventory in desirable locations at the most affordable prices.”
Maybe: days on market averaged 36 days in July, just over one month. Heck, the Bachelorette and her fiance found a place to lease after being on the market only 21 days!
The priciness of the real estate market overall has even the most savvy investors declaring that the drop in interest rates over the last few years has created an inflation in real estate.
Food for thought: as Andy Chase, Barron’s top financial advisor says in this CBNC interview, companies will be able to grow earnings better than landlords have the ability to raise rent over the next few years:
