Plano Real Estate Update July 2022
Hi there, Plano.
It’s happening! Our market is shifting.
This month we are talking about development in DFW, what that means for our local real estate market along with interest rates, and what our market looked like the last time they were at this level.
What does all of this mean for our local market in Plano? Keep reading to find out.
Hi, I’m Jennifer Shannon. I’m a Realtor with Keller Williams serving the Plano area, and I would love to be your resource for all things real estate. And part of that is updating you each month on what’s happening in our real estate market.
Our market is definitely shifting. You’ve probably heard all sorts of words to describe this in the news but the best word I’ve heard to describe what’s happening is, “Normalizing.” Meaning, no bubble is bursting. No sky is falling. Things are just getting back to normal.
How nice!
You might say, “Jennifer, it sure doesn’t feel normal! How is it possible for us to have this current national economy with a looming recession and you call this normal??”
Okay, anecdotally, I’ll agree. We got so used to the way things were because they went on so long. Record-low interest rates. Multiple offers on every listing. Prices growing at record-breaking rates. Now those days are over and it can feel like a scary place to be.
But this is why I love looking at the actual, local market data, and also why I love this area. Once we put our emotions aside and get analytical, we see that things are truly normalizing.
We are proving to be insulated from a lot of the turbulence other markets are suffering through right now.
When you look at the places where many people are coming from, we are still substantially more affordable. It’s a lot easier to withstand the impact of an inflationary cost increase in a market like Plano than, say, San Francisco. So if you think about it, inflation is actually making us even more attractive to those from the expensive west and northeast markets.
Not only is our cost of living a draw, but our area offers huge opportunities for businesses. And that’s why they’re moving here. Businesses go where the talent pool is abundant. Now that we have so many people moving here, our talent pool is just getting more dense.
In a report that was just published by the US Bureau of Labor and Statistics, DFW saw 294,700 jobs added during the year ending in May. That was three times the typical annual gains. And in June a report was released from The Perryman Group projecting 438,600 new jobs in DFW over the next five years. We also know that Goldman Sachs is adding 2,500 more jobs to the area. TI is expected to bring 3,000 jobs. Caterpillar is moving their headquarters from Illinois to DFW. And that’s just a few of the announcements!
Okay, so jobs are good. Now let’s look at our current interest rates and what that market was like in the past.
At the time I was writing this blog, interest rates were at 5.3% with .8% in fees and points. The last time rates were at this level was July 2009. You might remember that at the time we were just coming out of the Great Recession.
Let's take a look at this chart to give us a sense of demand when interest rates were at that level. We can see at that time the average days on market was 79 days and we had 2.9 months of inventory. That was also during a time of economic uncertainty. But today, our numbers differ greatly in DFW because our local economic outlook and housing demand is so different.
We’re averaging 20 days on the market and have 2 months of inventory.
What’s also interesting is to see that we have benefitted from historically low interest rates, never seen before the Great Recession. And the real estate market was not crashing every year before then with these higher rates. This chart shows average mortgage rates since 1971. As you can see, it wasn’t until the Great Recession that we consistently had interest rates under 5%. And it really wasn’t until after 2002 that interest rates were even consistently below 6%.
The point of all of this is that the real estate market is constantly in flux. It’s never consistent so it’s important to not panic when things start to normalize like they are now. And we know the real estate market can survive and be a good investment even when interest rates are over 6%. Consider all of those folks who bought before 2002. Their real estate investments are doing quite well right now.
Data from the Mortgage Bankers Association says that applications for mortgages were down just 17% from where they were one year ago. And remember, we had crazy demand last summer, so it’s okay for us to be down from those heightened levels.
Now let’s look at all of our stats for Plano.
For this data I’m looking at single-family home sales in the City of Plano.
These numbers are based on sales data from June.
The average sales price is at $637,791. Up 20.6% from where it was the year before.
The number of new listings increased again from last month and we had 409 new listings hit the market but we’re down .7% from last year.
We took a big leap from last year with the number of homes for sale and currently have 327 homes for sale. We’re still well below our pre-Covid level of inventory when we had 848 homes for sale in June 2019.
We now have 1.4 months of inventory. In June of 2019 we had 3.5 months of inventory.
The time it takes for a home to go under contract is an average of 13 days and that stayed consistent with last month. In June 2019, it took an average of 33 days before homes went under contract.
Our average sales price per square foot stayed flat compared to last month and is at $248 per SqFt. It’s up 34.8% from last year.
The amount homes are selling for over asking has dropped again and is now averaging 6.4% over asking. So if you consider our average sales price for June was $637,791, that means The average sales price is roughly $40,000 over the asking price.
So what’s the takeaway?
We can see from our actual data that things are still positive when we compare everything to our pre covid levels and that’s with our much higher interest rates and economic uncertainty we didn’t have three years ago.
There is no reason to panic and there’s nothing wrong with normalizing.
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.
For buyers, I’ve got 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 how to make strong offers. And it’s not just about the cash. 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, 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 Plano real estate market next month.
Bye now!