Dallas/Fort Worth Real Estate Update: August 2022
Hi there, Dallas/Fort Worth.
We’re starting to see a big buyer pull back in this market. How much is this affecting prices?
And buyers, how have these interest rates affected your purchasing power compared to the market of this last year?
We are going to talk about all of that and more for the local real estate market in Dallas Fort Worth. So keep reading.
Hi, I’m Jennifer Shannon. I’m a Realtor with Keller Williams serving the Dallas Fort Worth area, and I would love to be your resource for all things real estate. Part of that is updating you each month on what’s happening in our local real estate market.
This month we saw our first dip in prices since January. It was a 5% drop from the month before. Now, if you’re reading local news, you might have seen some of these headlines: “About 45% of D-FW Home Sellers Slashed their asking prices in July” and “Dallas-Fort Worth only U.S. Housing Market Where Home Sale Prices Dropped.”
I just want to point out that I did see this coming. In June’s update, I predicted we’d likely see month-over-month shifts in pricing.
So don’t be alarmed that this is actually happening. Because when we look at year-over-year data, we’re still incredibly strong. Our average sales price is up 14.3% year-over-year. We’re seeing this month-over-month price drop because people are no longer offering over-asking like they were and that was driving prices high. So it’s not that prices are necessarily going backwards, it’s just that people aren’t offering these crazy, over-asking amounts. In July 2022 homes sold at 99.9% of list price. In April 2022, that was our peak and homes sold for 104.3% of the list price. When you look at the average sales price for April 2022, that was $479,147 which means, on average, people offered more than $20,604 over asking.
And now interest rates are at 5.13% with .8% in fees and points. The latest data from the Mortgage Bankers Association says that applications for mortgages were down 16.1% from where they were one year ago. Clearly buyers are pulling back. This is interesting to me because of how the math of the market of today compares to the market we just finished.
So let’s go back to the market of early 2022. If you were a buyer in the $400,000 to $500,000 sales bracket, the average sales price was $447,538. That price was 5.4% over asking, which means homes were listed for $423,370.
Here’s was the typical scenario for this price range:
$423,370 list price
$24,168 over asking
$2,675 closing costs paid by the buyer for the seller
You also weren’t getting a lot in seller repairs.
If rates were at 3.75%, your monthly principal and interest payment would’ve been $1,569 and your cash out of pocket was an extra $26,843.
Let’s say you sell your home in seven years. If you spread that $26,843 over those 7 years, that’s an additional $320/month expense.
Today the average sales price at the $400,000 to $500,000 price bracket is $444,881. You are now more likely to negotiate with sellers and not have to pay over the asking price. In fact, I’ve been able to get sellers to pay to buy down the interest rate. So here’s what that looks like today:
$444,881 list price
$0 over asking
$0 closing costs paid by the buyer for the seller
Negotiate Seller Paid Closing costs to buy down your rate a half of a percent
Negotiate repairs
With this scenario with interest rates at 5.13%, (but remember, we’ve negotiated a half of a percent buy-down so the interest rate you pay is actually at 4.63%), that puts you at a monthly principal and interest payment of $1,831.
So, the principal and interest payment is $262 more a month in this scenario, but you get to keep the $26,843 that you had to bring in the first scenario. In the first scenario, you were actually paying more when you averaged out the extra you had to bring over the course of a 7-year-stay in your house.
So, if you’re a buyer who has been sitting out because of interest rates, you’re actually in a better financial position than you would’ve been buying earlier this year and now you have more to choose from than you would’ve before.
With all that said, let’s take a look at the market today here in Dallas Fort Worth.
For this data I’m looking at single-family home sales in our entire MLS.
These numbers are based on sales data from July.
The average sales price was down to $474,314. That’s up 14.3% from where it was the year before.
New listings actually went down this month to 15,808 homes and that’s a 4.1% increase from last year.
The overall number of homes for sale did go up month-over-month because things are taking more time to sell, and it also took a big leap from last year and currently has 23,705 homes for sale. We’re still well below our pre-Covid level of inventory when we had 38,614 homes for sale in July 2019.
We now have 2.4 months of inventory. In July of 2019 we had 4.2 months of inventory.
The time it takes for a home to go under contract is an average of 20 days and that was where we were last month. In July 2019, it took an average of 48 days before homes went under contract.
Our average sales price per square foot went down from last month and is now at $204 per SqFt. It’s up 17.9% from last year.
The amount homes are selling for over asking price has dropped for the third month in a row and is now averaging 99.9% of the asking price. This means sellers are negotiating!
So what’s the takeaway?
For these last few months, I have liked looking at our pre-Covid numbers because if you took the last two years out of the mix and compared 2022 to 2019, you’d see that we’re really not that far off from that market. Our inventory is lower, homes are still selling faster than that time, but prices are still strong for sellers.
In this blog I get a little bit of flack because I’m constantly pro buying and selling. And yep, lately, that has definitely been the case because the numbers are strong for both parties. In DFW, with our great job market and overall affordability, it’s attracting a lot of people. With more demand, prices won’t get lower. Now there are ways to negotiate deals to help ease a buyer’s fears of paying too much, whether it be on the overall sales price or with financing.
So, if you’re thinking of buying or selling in this market, let’s talk.
If you’re a seller, you can attend one of my upcoming home-selling webinars. In this webinar we’re going to talk about what it takes to sell your home in this market, give you a clear picture about the expectations of sellers right now, and give you insight as to how to get even more out of the sale of your home. There’s more to it than just putting your home on the MLS and naming your price. We’re also going to answer the question, Should you list now or wait? Just visit HomeSellingWebinar.com and sign up for an upcoming virtual home selling webinar. It’s free and online. You can also skip the webinar and contact me directly about selling your home. We’ve also just added home staging to our services and are excited to share how that has helped sellers in this shifting market.
For buyers, I’ve got one for you too. You can contact me directly about buying your next home in the Dallas Fort Worth area or attend one of my free upcoming home-buyer webinars. This webinar is a huge help for buyers. We’re going to talk about what to expect in this market as a buyer and where you can start negotiating on offers. We’ll discuss the process from a lending side and I’ll go into more details on market trends and which submarkets have the least demand which gives you more opportunity as a buyer. I will also answer the question most buyers are asking which is, Should you wait to see if prices come down before you buy? Visit HomePurchaseWebinar.com to get registered for this free online webinar.
Or, you can always reach out directly by contacting me by phone or text at 214-803-4444, or you can email me at JShannon@KW.com.
That’s all I have for this blog. Thanks for reading and I look forward to updating you on the Dallas Fort Worth real estate market next month.
Bye now!