Wow. What a week it has been. The best way to sum this up is from a meme I saw online. It said, “Anyone else feel like life is being written by a fourth grader right now? ‘And there was this virus and everyone was scared. And then the world ran out of toilet paper. Yeah, and there was no school for like a month!” Sound about right? I hear ya.
So what does this crazy environment we’re currently in mean for real estate? The challenge with reporting data is that most data has weeks of lag-time before it’s reported. So we won’t start to see a real picture on how Covid-19 is affecting real estate for a few weeks.
Mortgage rates went up again this week. Why? Turns out people love to refinance when rates are low and that bogged down the system. Lenders couldn’t process the demand. So, they increased prices to help decrease the demand. It’s likely only temporary as they work through the backlog.
Rates are currently at 3.65% with .7% in fees and points.
If you recall, a few weeks ago I said that I’d start paying close attention to the mortgage application numbers to see how the coronavirus was affecting home buyer demand. This metric is one that has the smallest gap from when the data is collected to when it’s reported of only five days. That means this report that was released on Wednesday covers numbers up through last Friday. It’s one of the reasons I love looking at this data.
Mortgage applications decreased 8.4% from one week earlier. Keep in mind interest rates also ticked up. So the decrease in applications could be from people avoiding buying a home right now or it could simply be a result of the rise in rates.
Joel Kan, Associate Vice President of Economic and Industry Forecasting for the Mortgage Bankers Association said, “Purchase activity was flat but remained over 10 percent higher than a year ago. The purchase market was on firm footing to start the year and has so far held steady through the current uncertainty. Looking ahead, a gloomier outlook may cause some prospective homebuyers to delay their home search, even with these lower mortgage rates.”
National Market News
Today the National Association of Realtors released their Existing-Home Sales report and it showed that on a national level we had an increase of 6.5% in February after a decline in January. We’ve seen eight straight months of increased year-over-year sales data and February was no exception. Sales increased 7.2% from February 2019. In fact, February was our strongest February since 2007. The report revealed that the median existing home-price was up 8% from February 2019 is at $270,100.
I’ll point out the obvious in stating this data comes from February, which is before the Covid-19 news started affecting our day-to-day lives. It’ll be interesting to see how this number changes next month.
Local Market News
In local market news, here are some key takeaways from February’s Monthly Indicators Report provided by North Texas Real Estate Information Systems
If you’re a seller, take comfort in a few facts:
1.If a buyer applied for a mortgage when rates were at record lows and they locked it in, they only have that rate for up to 60 days, depending on the terms of their rate lock. That gives them an incentive to move forward with a purchase.
2.We are hearing that the number of new Covid-19 cases in China are decreasing, giving us hope that we will soon follow that trend.
If you’re a buyer, you’re in a great position. Rates are still very low and sellers may be more negotiable when selling for fear of having to sit on the market while we ride out Covid-19.
That’s the update for this week.
Well, you’ve probably heard the big news by now: The average 30-year fixed-rate mortgage hit an all-time low at 3.29% this week with .7% in fees and points. It’s now the lowest it has been in its nearly 50-year history.
What you’ve also probably heard was that the Federal Reserve cut rates on Tuesday in a knee-jerk reaction to fears of what the fallout from the coronavirus will do to our economy. On Wednesday it looked like we might possibly be on the trend up in the stock market but Thursday ended with the Dow down nearly 1,000 points. It’s been a bit of a rollercoaster ride for stocks and that might continue if more news of new cases in the US keep being reported.
Mortgage Applications showed a sharp increase of 15.1% from one week prior. The refinance index increased 26% from one week prior and was 224% higher than the same week one year ago.
How does the coronavirus affect new construction? There are two events home builders are preparing for. The first is that there may be supply-chain issues on building materials that may cause holdups in the upcoming months. The second thing they’re bracing for is a rebound. According to the National Association of Home Builders Chief Economist, Robert Dietz, we tend to see an economic rebound following “black swan” events such as natural disasters and health epidemics. We’ll have to see what happens to the supply chain and demand in the upcoming weeks and months to get a clear picture on how home builders will ultimately be affected.
This week CoreLogic released their Home Price Insights report with analysis through January 2020 and forecasts from February 2020. It’s designed to give us the heads-up on home price trends.
Some key takeaways from the report are:
Local Market News
The Case-Shiller Dallas Home Price Index is down 21 basis points to 192.81 for December compared to November 2019. When you look at the numbers year-over-year, you get a modest increase of 2.6%. The areas with the largest year-over-year price gains were Phoenix at 6.5%, Charlotte at 5.3%, and Tampa at 5.2%
This index measures the average change in value of all existing single-family housing stock. There’s a two-month lag in publishing the index levels, so that’s why we just now have numbers for December.
Based on the news and the conversations I’m having with other real estate folks, we’re not sure how long the low interest rates will offset the economic issues that might linger from the effects of the coronavirus. While we hope that people will take advantage of the low rates, economic uncertainty does tend to have buyers press the pause button on home purchase activity. The mortgage application news isn’t showing that happening yet, so I’ll keep watching that metric closely to see if the momentum begins to shift.
Interest rates fell this week on account of the recent volatility of the ten-year treasury yield. It’s possible they may keep falling as fears of the spreading Coronavirus make the markets more volatile due to the economic slowdown in China. There’s a lot of pressure on the federal reserve to lower interest rates and the vice chairman of the fed, Richard Clarida, said the Central Bank is monitoring the situation closely but it’s too soon to know exactly what should be done.
Mortgage applications increased 1.5% from one week earlier. Next week’s numbers will show just how much the drop in the U.S. Treasury yields will affect mortgage activity.
Pending Home Sales Report
Yesterday the National Association of Realtors released the Pending Home Sales report for January and reported a climb of 5.2%. This is the second-highest monthly figure in over two years.
It’s interesting to note the west saw a small drop in month-over-month contract activity, the other three major regions saw pending home sales grow. All four regions are up year-over-year. The south saw the highest pending home sales growth of 8.7% in January.
The Housing Supply Shortage
The housing supply shortage is something we’ve been hearing about for a while. This week, Freddie Mac released a report on the shortage and provided some startling numbers. Estimates show that we are undersupplied by 3.3 million units and the shortage is rising at 300,000 units per year.
Local Market News
Every month I like to take a look at the hottest areas on the MLS and see what areas of DFW have the tightest supply and lowest months of inventory. This month you’ll hear some familiar areas that seem to always make the list.
Coming in at under 1 month of inventory and the hottest areas on the MLS we have:
We will have to see what happens to rates as the spread of the coronavirus keeps making the headlines in the news. If this continues and the world economies keep on their downward trend, it’s likely rates will see another drop.
That’s the update for this week. Thanks for spending the last few minutes with me and I’ll see you next week.
Interest rates are up the tiniest bit to 3.49% with .7% in fees and points for a 30-year fixed-rate mortgage. What’s happening in the market with these low interest rates? Well, homebuying activity is increasing to the tune of about 15% from a year ago when you look at mortgage applications. Residential construction activity is picking up to now be at a pace that’s the highest it has been in a decade.
This week a report on the State of Luxury 2020 was released from Coldwell Banker. It takes an in-depth look at emerging luxury markets and buyers and what’s driving those markets. Today’s luxury buyer now considers things like lifestyle preference, job opportunities, property value differentials, and the desire to reduce taxes.
The top 2020 luxury markets to watch are now Boise, Idaho, Charlotte, North Carolina, Colorado Springs, Colorado, Cincinnati, Ohio, and Fort Worth, Texas.
A few other interesting stats for you, Raleigh-Durham, North Carolina had the shortest median days on market at only THREE days on market. Collin County, Texas provides the most affordable price per square foot for luxury single-family homes at a median price of $164 per square foot. And the place with the most expensive price per square foot? Hold on to your seats folks. It’s Malibu, California with a median price per square foot of $4,269.
In local market news, January sales data is in. The main takeaways for single-family home sales in Dallas-Fort Worth are:
Unless we get a major economic shock from out of the blue, I predict the next few months will be a continuation of the current trend we’re in. That’s the trend of low interest rates, increasing demand, and increasing prices.
For the third week in a row, rates have dropped and the experts over at Freddie Mac say the signals all point to home purchase demand continuing to rise over the next few months. Rates are currently at 3.45% with .7% in fees and points for a thirty-year fixed rate mortgage.
The lowest on record was the week ending on November 21, 2012 when interest rates for a 30-year mortgage were at 3.31%.
One theory on what’s driving mortgage rates lower is, believe it or not, the coronavirus. How? Well, experts predict the coronavirus will begin to slow economic growth in China. That uncertainty brought down the 10-year treasury yield, which then brought down interest rates.
Mortgage applications increased from the week before by 5% and they’re up 11% from this time a year ago. Applications are currently at their highest levels since May 2013.
In other mortgage news, credit availability decreased in January. It wasn’t by much but the Mortgage Credit Availability Index fell by 2 basis points in January. This means that lending standards are getting stricter. This decline came from the reduction of low credit score, high-LTV programs.
The Texas Real Estate Center at Texas A&M University released their Texas Housing Insight Report. The big takeaways from the report are:
The numbers from 2019 show, at least to me, that growth was pretty controlled last year. I’d predict this year builds on that growth a little more since there was a lot of hesitation last year with buyers due to economic uncertainty. Rates appear to be a good driver of getting buyers back in the game for purchasing a home this year.
Surprise, surprise, mortgage rates have dropped again! We haven’t seen a rate this low in three years. For a thirty-year fixed rate mortgage the average is 3.51% with .7% in fees and points.
In the latest weekly survey, mortgage applications rose 7.2% from one week earlier.
On Thursday, January 30, the U.S. Census Bureau released their Quarterly Residential Vacancies and Homeownership report covering the fourth quarter of 2019.
About 88.5% of the housing units were occupied, leaving vacancies at 11.5%. Owner-occupied units made up 57.6% of the total housing units and renter-occupied units made up 30.9%.
The homeownership rate is on the rise after a major dip in 2016. In 2005 the homeownership rate was at its highest it has been this decade at 69.1%.
The Case-Shiller housing price index for November was released on Tuesday. The index is currently at 212.56, a change of 15 basis points from last month.
The Case-Shiller housing price index looks at the value of the housing supply in twenty individual metro areas and compiles those int a merged index. Of those metro areas, the ones with the highest year-over-year gains were Phoenix, Charlotte, and Tampa. Dallas had a year-over-year change of a positive 2.8%.
In more local news, Texas is the second most popular state for relocating according to the Texas Realtors’ 2020 Relocation Report. The data tracks numbers from 2018. The metros bringing the highest volume of residents to DFW are Los Angeles-Long Beach-Anaheim, New York-Newark-Jersey City, and Chicago-Naperville-Elgin. DFW had the highest number of incoming residents from out of stats at 200,966.
What’s also interesting to note is that we had 462,140 residents move out of state in 2018. Where’d they go? California, Oklahoma, and Colorado mostly.
With homeownership on the rise, low interest rates, a positive economic outlook, and an upcoming spring market, my crystal ball tells me that it’s about to get busy for Realtors.
Interest rates sank to the lowest level in three months. They’re about a quarter point away from being at all-time lows.
Rates are now at 3.6% with .8% in fees and points for a thirty-year fixed-rate mortgage.
In addition, some are saying that interest rates may even go lower this year and will stay low until the election in November.
Also at a near record low is the number of mortgage delinquencies. The national foreclosure rate is the lowest on record over the last 14-years.
Even though interest rates dropped, mortgage applications did not increase. They were down 1.2 percent from one week earlier.
The data is in for December’s existing-home sales. On Wednesday, the National Association of Realtors reported that existing home sales grew 3.6% in December. The total number of home sales ended at the same level in 2019 as it did in 2018. However, the median sales price was up 7.8% in December 2019 compared to December 2018. According to NAR’s chief economist, Lawrence Yun, to help with the affordability issue plaguing many buyers, price growth needs to get in line with wage growth, which is currently at about 3%.
In local news, Dallas is getting a new hotel that will have 39 micro rooms. A micro room is 100 to 200 square feet. That’s a 10’x10’ room up to a 14’x14’ room. In other words, the size of a secondary bedroom in most homes here. Supposedly the hotel amenities and designs make up for what that they lack in size.
Galleria Dallas is losing an anchor tenant, Belk, after only 5 years of being at the Galleria location. At the time we don’t know what might go in its place, but a comment from the management said The Galleria is working on “a strategic plan to evolve the property in the face of the rapidly changing retail climate… Great changes are on the horizon for Galleria Dallas, and we look forward to sharing those with the public.” This news comes just three days after it was reported that close competitor, Plano’s Shops at Willow Bend is late on its loan payment.
While interest rates did go up one basis point this week, they’re still holding relatively steady and are at 3.65% with .7% in fees and points for a thirty-year fixed rate mortgage.
In the latest Mortgage Bankers Association weekly survey, mortgage applications increased 30.2% from one week earlier on a seasonally adjusted basis. It was a strong start to the year for the mortgage industry. In fact, it was 8% higher than the same time a year ago. Refinances were also way up by 43%.
National Market News
The National Association of Home Builders released the Wells Fargo Housing Market Index yesterday. This index measures builder sentiment of current single-family sales conditions and expectations for the next six months as “good,” “fair,” or “poor.” A number over 50 means more builders view conditions as good. This month’s index is at 75, which is one point lower than last month. However, these last two months are the highest sentiment levels since July 1999.
Other metrics from this index are:
What’s fueling this positive wave of the industry? It’s interest rates, the steady rise in single-family construction, a healthy labor market, and the need for additional inventory.
Local Market News
There are a few places that ended the year with less than one month of inventory available. The availability is tight in:
For the next year we will keep hearing about inventory shortages and a lack of affordable housing. So if you have a home to sell that’s at a more affordable price, you’ll be in a great position to sell this year.
If you like hearing these stats and want more detailed data on your neighborhood, head over to CrestEdgeRealEstate.com/neighborhoods. For any questions or feedback on this podcast, you can contact us on our website.
If you’re looking to buy or sell real estate in DFW, let’s talk. Contact us on our website or call us at 214-803-4444.
Mortgage rates hit a 13-week low and rates are now at 3.64% with .7% in fees and points. These low rates and a strong labor market should increase homebuyer demand.
Mortgage applications decreased 1.5% from two weeks earlier. It’ll be interesting to see how that number changes if these great interest rates and job numbers continue come the spring selling season.
Last week the Federal Reserve Bank of Dallas released their monthly Economic Indicators report. The report covers November’s data.
From January 2019 to November 2019, the job growth rate for Dallas was 2.2% annually and the rate for Fort Worth was 2.8%.
The unemployment rate is holding steady at 3.2% and is below the state and national rates. What’s really impressive is how it’s hovering around the lowest rate it has been since the last ten years.
Single-family construction permits fell a little in October and November after a strong summer. There were 4% fewer permits issued year-to-date in November 2019 than the same time in 2018.
Home-price appreciation rose 1.3% in the third quarter and year-over-year were up 3.8% in Dallas and 5.9% in Fort Worth. State-wide and nationally, prices increased 4.9%.
Home inventories are still tight and still leaning on the side of a seller’s market. For November we were at 3.1 months of inventory. If you have a home to sell that’s under $200,000, that’s the tightest supply of inventory at only 1.6 months of supply. If you’re selling a home from $200,000 up to $300,000, the inventory is still tight at only 2 months of supply.
The year is off to a good start with numbers and it’s looking positive to be a seller and a buyer.
Rates are currently the same as last week at 3.73% with .7% in fees and points. According to Freddie Mac, the economy is in a “Sweet Spot.”
Applications decreased 5% from one week earlier. Even though applications were down compared to the week before, they’re 10% higher than the same week one year ago.
DFW Market News
The numbers from November are in. When we compare this year-to-date data on single family homes to last year’s we get the following changes:
The hottest areas are pretty close to where they were last month:
#5 – Bedford
#4 – Grand Prairie (area 271)
#3 – Dallas Southeast
#2 – Arlington Central SE
#1 – Arlington Central NE
The inventory in these areas are six weeks or less. Meaning if no new listings came on the market, it would take about six weeks to sell all homes for sale given the current demand.
We’re closing on the end of the year and things are steady. Sellers still have the market, especially for anything in an affordable, more average price-point.
Jennifer Shannon is a Texas real estate agent and broker, licensed since 2006.