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.
Mortgage rates increased a little from last week due to the overall positive economic sentiment. The economy is growing at a steady pace, fears of an economic downturn have diminished, and the job market is strong. Generally positive economic news leads to a slightly higher interest rates. Rates are up 5 basis points from last week and average 3.73% with .7% in fees and points for a 30-year fixed-rate mortgage.
Due to the positive economic outlook, the slight increase in rates did not deter prospective buyers from applying for a home loan. Mortgage applications increased 3.8 percent from a week earlier.
In other mortgage news, CoreLogic released their home equity report for the third quarter of this year and it shows that homeowners who owe more on their mortgages that what their homes are worth is down to just 3.7% of all mortgaged properties. To put that in perspective, at the height of the great recession ten years ago, that number was up to 25% of all mortgaged homes.
DFW Market and Economic News
The National Association of Realtors released their Housing 2020 Forecast, making predictions into what the market will look like in 2020. The forecast predicts that on a national level, home price growth will flatten, inventory will remain constrained, mortgage rates will stay under 4.0%, and that preferential treatment will be given to mid-sized markets that have more affordable products.
Here’s a crazy stat for you:
The largest population cohort in the country is those who were born in 1990. That group will turn 30 this year. Millennials will account for more than half of all mortgages next year.
Here’s where NAR’s report starts to break down for me.
They predict that sales growth in Dallas will be down 4.9% and the price growth will be down 0.5%. Now I’m not an economist and I don’t have all the data that NAR used to create their predictions. But I know what I see in the field.
I’ll start with saying that it is possible we will see fewer homes listed next year as sellers might resist listing their homes since prices aren’t growing at break-neck speed and sellers aren’t making money hand over fist. However, I think buyers would want to take advantage of low interest rates and less aggressive pricing scenarios, bringing up the demand
And for prices to go down? I just don’t see how that makes a lot of sense for what’s happening in DFW. If we look at the past as an indication of the future, we keep hearing about businesses choosing to relocate to DFW because of the corporate friendly environment we have with our tax structure and overall cost of living. We also have a good job candidate pool with multiple universities feeding into the local labor market. Just a few weeks ago we learned that Charles Schwab will move its headquarters to DFW. They’re currently building out their campus that holds 1600 employees to hold up to 6000 employees.
We have a strong multifamily housing market with an apartment occupancy of 95.5% according to the Dallas FED. Builders aren’t building enough inventory to keep up with the demand. Considering housing options are tightening while more people are coming to the area, I struggle to see why prices wouldn’t increase at all next year and why we’ll sell so fewer homes. Only time will tell whose crystal ball is correct.
If you’re a seller looking to sell a moderately-priced home in 2020, you’ll have a good amount of demand for your home. Buyers, if you’re looking for a home that’s above the affordable range, it will be a great time for you. With interest rates projecting to be below 4% and pricing to cool at the higher levels, you might have more buying power in 2020 than you would’ve in 2019.
Mortgage rates are holding steady with no change from last week. They’re currently at 3.68% with .5% in fees and points for a thirty-year fixed-rate mortgage.
Last week Freddie Mac’s economic and housing research group released their housing market forecast. They predict the average 30-year fixed-rate mortgage rate will be 3.8% for the rest of this month.
Looking beyond, they expect rates to average 3.8% in 2020 and 2021. For home sales, they expect the number of homes sold to increase each year but they predict the growth of prices will slow over the next two years. They’re forecasting prices to increase 2.9% next year and increase only 2.1% in 2021.
Mortgage applications are down 9.2% from last week. The Mortgage Banker’s Association Vice President of Economic and Industry Forecasting, Joel Kan said, "The purchase market overall looks healthy as we enter the home stretch of 2019. The seasonally adjusted purchase index was at its highest level since July, as a combination of wage gains, slower home-price appreciation, and slightly easing inventory conditions continue to support increased activity."
One last tidbit on mortgages, credit availability increased in November. This means that lending standards are loosening. Investors are becoming more willing to purchase loans with lower credit scores and higher LTV ratios.
DFW Economic News
The Dallas FED released their Economic Indicators report that told us economic expansion has slowed a little and unemployment went up a little, though it’s still near historic lows.
The apartment market is strong and is second for demand in the nation behind New York. Occupancy is high, at 95.5% and rents increased this quarter 2.9 percent from last year. If you want a little perspective, rents have increased 65% since 2010.
DFW Real Estate Market News
Here’s a look at the initial numbers for October sales for all properties listed on the MLS.
All indicators keep pointing that the market is going to stay about where it is for the foreseeable future.
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.
Jennifer Shannon is a Texas real estate agent and broker, licensed since 2006.