If you haven’t heard, there’s a bit of a trade disagreement between the U.S. and China. That has yet to be resolved and its lingering uncertainty has started to make the market a little shaky. While mortgage rates are starting to react as well, it’s not by much. They’ve gone up .06 percent from last week.
What does .06 percent rise in interest rates mean on a loan? If you have a $250,000 30-year mortgage, your monthly interest payment will go up $12/month.
Prospective buyers have tapped the breaks a bit on mortgage applications. Applications decreased 11.9 percent on a seasonally adjusted basis from the week before.
Hot Real Estate Areas
Every month the Real Estate Center at Texas A&M University and the North Texas Real Estate Information System compile a list of the hottest areas based on pending sales as a percent of active listings.
The top five areas based on their hotness ratio are
Some other top areas with less than one and a half months of inventory are Arlington Central Southeast, Watauga, and Arlington Southeast. This means that if no new listings came on the market, given the current demand, the current inventory of homes for sale would be depleted in six weeks or less. Not bad, Arlington.
So to sum it up and answer the question, how’s the market? Well, it depends.
If you’re a seller, the flurry of activity may start slowing down considering the response buyers have to increasing interest rates. However when you look at the data, there are 3.3 months of inventory on the market which means the market currently favors sellers. Overall, it’s still a good market.
If you’re a buyer, rates are still low but they’re beginning to get affected by outside economic forces. If you’re on the fence about buying, you might consider going ahead and applying for a mortgage to lock in a rate. Ask your lender about your ability to relock if rates go down during the time you’re searching for a home.
Did you know you can easily get the fastest listing alerts, directly from the MLS so you can be the first to know when your dream home hits the market? Just CLICK HERE.
If you like hearing these stats and want more detailed data on your neighborhood, head over to our NEIGHBORHOODS page.
If you’re looking to buy or sell real estate in DFW, let’s talk.
See you next week.
Interest Rates went up a little and are now at 3.69% with .6% in fees and points. That’s only an increase of 12 basis points (or .12%) from last week. Even though we keep hearing unfavorable economic news about manufacturing and trade, the employment and homebuilder sectors are positive.
Mortgage Application Data
The homebuilder sector economic data aligns with the news from the Mortgage Bankers Association that mortgage applications for new home purchases increased 34.2 percent when compared to this time a year ago. While they’re down 8 percent from August, it’s still an incredible jump when you compare it to last year. It’ll be interesting to see how homebuilders deliver on this increase in interest as more and more talk about seeing a shortage in labor.
When we look at mortgage applications overall for any type of home purchase (not just new construction), they are up half a percent from a week ago.
WalletHub states two DFW Cities are Among Fastest Growing in U.S.
A study conducted by WalletHub concluded that Texas is home to eight of America’s fastest growing cities. Of those eight Texas cities, two are in the metroplex. Frisco ranked number five on the list and McKinney came in at number 13. WalletHub used a data set comparing 17 factors to make this determination. Interesting to note that Frisco and McKinney had some of the highest job growth.
September 2019 Closed Sales Data
Year-to-date for all home listed on the North Texas MLS, most of the numbers for 2019 are more favorable than 2018. We have more homes sold, a higher median sales price of $265,000 (that’s a 2.9%), and sellers have to negotiate less off their list price. The only negative when you look at year-to-date sales data from last year is that homes are spending seven more days on the market before going under contract. The months supply of inventory of homes for sale is 3.4 months. That means if no other homes were listed on the market, given the current demand, it would take 3.4 months for the current supply of homes to sell.
To sum it up and answer the question, how’s the market? It’s still a good market for sellers. Demand, supply, interest rates, and the economy are all at levels that benefit the seller.
If you want to dial-in the data more with neighborhood specific information, head over to our neighborhoods page.
Interest rates decreased slightly from last week and currently average 3.57 percent with .6 percent in fees and points. With that news, it should be no surprise that mortgage applications increased 5.2 percent from last week. Refinance activity has increased 10 percent from last week and is up 164 percent from this same time a year ago.
The national economic news reported weakening manufacturing and corporate investment, though, on the bright side, it did not affect the consumer side of the economy. Add this to the fifty-year low in the unemployment rate and near-record-low interest rates, it’s easy to understand why more buyers are entering the market. Freddie Mac reached a twenty-year high in the number of first-time homebuyer loans they’ve purchased this year at 46 percent. Typically, this buyer is at a more affordable price level in the market, thus adding to the strain of supply for entry-level homes.
NEW CONSTRUCTION NEWS
There’s some interesting data on new construction in Texas. The Real Estate Center at Texas A&M University summarized that current data suggests there will be higher levels of construction in the coming months. If that’s true, buyers may see a slight surplus in builder spec homes come spring. Single-family construction permits state-wide are up 6.3 percent year-over-year. According to the Dallas Morning News, DFW saw a 4.6 percent increase in housing starts from the third quarter of last year. Builders are scaling back their construction of homes over $500,000 and increasing inventory for homes in the $250,000 to $350,000 window.
THE DFW REAL ESTATE MARKET: NEW CONSTRUCTION HOMES
New construction homes selling in the $200,000 range are selling closer to list price with about 2.8 percent being negotiated off the list price for the sale. New homes over $500,000 are a different story with 5.1 percent coming off the list price for a sale. That’s about $25,000 off a $500,000 home. So keep that in mind if you’re in the market for new construction.
The months supply of inventory for new homes over $500,000 is six months. This is considered a balanced market. However, when you look at that next to new homes in the two hundred thousand dollar range where the months of inventory is only 3 months, it looks like a long time.
Based on all we know, it’s no surprise more homes sold in the $200,000 range than homes in the $500,000 plus range. How much more? About 62% more.
So to sum it up and answer the question, how’s the market? If you’re a buyer looking for a new home above $500,000, the numbers are in your favor and you can be a little more aggressive in your purchase negotiations. If you’re a buyer under $500,000, it’s still a seller’s market. You can still negotiate some but sellers still have a stronger hand.
Since August of last year, the Case-Shiller Dallas Home Price Index has steadily increased. Not by much, which is fine. Slow and steady wins the race. It’s increasing at about the same rate as the 20-city composite Home Price Index. I like that we’re seeing an upward trend overall and feel this is encouraging news for sellers in today’s market.
What does this index measure? It looks at the total value of the existing single-family housing supply in a given market. If the value of the supply goes up, it means sellers can justify stronger asking prices. If the value of the supply goes down, it means buyers have more leverage in negotiations.
We’re seeing an ever-so-small uptick in mortgage defaults on a national level. Since June of this year, the monthly increase in default rates has risen from .59% to currently .69%. To put this in perspective, the default rate in July, 2009 was 5.32%. A far cry from where we are now.
The headline this week from the Mortgage Bankers Association is that mortgage applications increased 8 percent from one week earlier on an unadjusted basis. Refinance applications are up 14 percent from the previous week and are up 133% from the same week one year ago. We can thank interest rates below 4% for this activity.
If you think jumping on the refinance bandwagon is a good idea, here's a tip from Tish Ashley at Highlands Residential Mortgage, "Low interest rates are not the only criteria to determine if a refinance will prove beneficial to the homeowner overall. While a lower payment and/or interest cost can be very alluring, other factors also play into the equation such as PMI amount, desired payoff term, and remaining time of ownership anticipated. When all of these variables are evaluated by a loan advisor and presented to the borrower, then the homeowner can make a fully informed decision about whether a refinance is the right move or not.”
For the most part, mortgage rates were steady this week compared to last week. Rates currently average 3.65% with .6% in fees and points. According to Freddie Mac’s Economic & Housing Research group, the expectation is that mortgage rates will continue to hover around this level for the rest of this calendar year.
THE DFW REAL ESTATE MARKET
Data for single-family homes in the entire North Texas MLS system.
Before we jump into the numbers and graphs, we'll give you the general overview.
While prices are slightly declining, it’s not substantial enough to cause concern. Sellers have to wait a little longer to get a contract and be more flexible when negotiating their contract. The number of homes selling is at a good pace and we don’t have a glut of inventory on the market. The market tends to slow a bit in the fall, so this activity is to be expected.
Average Sales Price
The average sales price fell to $316,092. It has been on the decline since peaking at $335,961 in June of this year.
Average Days on Market
The average days on market before going under contract has increased to 49 days. The low for 2019 was 44 days on the market in June.
Average Sales Percent of Original Price
Home sellers have to negotiate more off their list price and homes sell for an average of 4.4% less than list price.
Months of Inventory
We are holding steady at a 3.3 months supply of inventory. Most consider 6 months to be a balanced market, so we are still in a Seller’s market.
Everyone always asks, “Is it a seller’s market or is it a buyer’s market?” When you look at price and time to sell, it’s a seller’s market. Though it’s important to state that it’s a great market for buyer’s too because interest rates are nice and low.
If you want to dial-in the data more with neighborhood specific information, CLICK HERE.
Jennifer Shannon is a Texas real estate agent and broker, licensed since 2006.